The Canadian federal government, under the leadership of Treasury Board President Shafqat Ali, has announced plans to redirect nearly $1-billion from the public-service pension fund into general revenues. Though this action is legally permitted, it has stirred considerable controversy and criticism from unions. The decision, announced on Thursday, is a reflection of the government’s strategy to manage the surplus funds in the pension scheme.
Public-Service Pension Fund: Well Managed and Sustainable
Shafqat Ali, the Treasury Board of Canada Secretariat, affirmed the decision was based on independent actuarial reports which indicated that the public-service pension fund remains well managed and sustainable. According to the Public Service Superannuation Act, the pension’s funded ratio cannot exceed 125 per cent. The fund currently stands at 125.5 per cent, resulting in an excess surplus of approximately $0.9-billion as of March 31, 2025.
Intention to Transfer Surplus
The government intends to transfer this non-permitted surplus to the consolidated revenue fund, a central government bank account. This will be held along with last year’s non-permitted surplus. Ali stated that stakeholders will be consulted about the utilization of these funds at an appropriate time. This move will effectively eliminate any non-permitted surplus in the fund.
Government Guarantee on Public Pension Plan
The Treasury Board, in a press release, reassured that the public pension plan is fully guaranteed by the Government of Canada. It also highlighted the government’s obligation to top up the fund in the event of a deficit. This scenario occurred between 2013 and 2018, when $2.8-billion in deficit payments were made to the fund. Last year, Ottawa collected a $1.9-billion non-permitted surplus from the fund.
Union Opposition to Surplus Shift
The Public Service Alliance of Canada (PSAC) has been a vocal critic of the practice of shifting surpluses into general revenue. The union has an ongoing “Stop Pension Theft Campaign” on its website. PSAC argues that both workers and employers contribute to the pension fund, and the government alone should not benefit from the surplus. The union warns that this practice could set a dangerous precedent that might encourage other employers in Canada to follow suit.
Expected Collection from Pension Surplus
PSAC estimates that Ottawa will collect $9.3-billion from the pension surplus between 2024 and 2027. The union has made it clear that it will oppose any unilateral attempts to allocate these funds. As the debate continues, the government’s decision has highlighted the sensitive issue of surplus pension funds and their management.
