Statement by Minister Anand on Intention to Address a Surplus in the Public Service Pension Fund
November 25, 2024
OTTAWA, ON – The Honourable Anita Anand, Minister of National Defence and Minister responsible for the Public Service Pension Plan, today issued the following statement:
“Today, I am announcing the Government’s intention to address the projected surplus in the Public Service Pension Fund (PSPP).
The PSPP is a defined benefit pension plan that provides retirement, disability, and death benefits to current and former federal public service employees. The plan is jointly funded by the Government of Canada and its employees.
The PSPP has a long history of sound financial management and has consistently exceeded its funding target. This is due in part to the plan’s conservative investment strategy and the contributions made by both the Government and its employees.
As a result of this sound management, the PSPP is currently projected to have a surplus of approximately $14 billion by 2030. This surplus is the result of a number of factors, including:
- Strong investment returns
- Conservative assumptions about future expenses
- Changes to the plan’s design in recent years
The Government is committed to ensuring that the PSPP remains sustainable and affordable for both the Government and its employees. We are therefore taking steps to address the projected surplus.
The Government has consulted with stakeholders, including the unions that represent public service employees, on how to address the surplus. We have also received advice from the PSPP’s independent actuary.
Based on these consultations and advice, the Government has decided to take the following steps:
- Reduce the Government’s contribution rate to the PSPP by 0.5% effective January 1, 2025. This will reduce the Government’s annual contribution by approximately $250 million.
- Increase the employee contribution rate to the PSPP by 0.25% effective January 1, 2025. This will increase the employee contribution by approximately $100 million annually.
- Use the remaining surplus to provide a one-time payment to current and former PSPP members. This payment will be made in the form of a lump sum and will be calculated based on the member’s years of service and salary.
The Government believes that these steps will address the projected surplus in a fair and equitable manner. The changes to the contribution rates will ensure that the plan remains sustainable and affordable, while the one-time payment will provide a benefit to current and former PSPP members.
The Government will continue to monitor the PSPP’s financial position and make adjustments as necessary to ensure that the plan remains sustainable and affordable.”
Statement by Minister Anand on intention to address a surplus in the public service pension fund
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