Pensions and other future benefits

Public Accounts of Canada 2017 Volume I—Top of the page Navigation

The obligations arising from public sector pensions and other employee and veteran future benefits, sponsored by the Government or some of the consolidated Crown corporations and other entities, are measured on an actuarial basis and are presented net of pension assets and unrecognized net actuarial gain or loss, as well as contributions and benefits paid by some of the consolidated Crown corporations and other entities after their measurement date of December 31 up to March 31.

Public sector pensions

The Government sponsors a number of defined benefit pension plans covering substantially all its employees, principally members of the federal public service, the Canadian Forces (including the Reserve Force) and the Royal Canadian Mounted Police, as well as employees of certain Public Service corporations and territorial governments. The Government also sponsors several other pension plans; the two most significant ones being for Members of Parliament and federally appointed judges. The Government has a statutory obligation to pay the pension benefits it sponsors.

The liabilities for public sector pensions sponsored by the Government are initially recorded through pension accounts, which are generally established pursuant to legislation. The pension accounts track transactions such as contributions, interest credits, benefit payments, transfers and administrative expenses. Any adjustments required under the Government's accounting policies are then recorded through allowance for pension adjustment accounts. The allowance accounts reflect the differential between accrual and cash accounting recognized through the years. They also reflect the accumulated difference in interest calculations and consolidation adjustments related to refundable tax amounts remitted to or refunded from the Canada Revenue Agency.

The Government's pension plans are generally financed from employer and employee contributions or from Government and member contributions. The contributions are either part of general funds or transferred to the Public Sector Pension Investment Board (PSPIB) for investment. Since April 1, 2000, amounts equal to contributions less benefits and other payments related to the public service, Canadian Forces—Regular Force and Royal Canadian Mounted Police pension plans, and since 2007 for the Canadian Forces—Reserve Force pension plan, that fall within the Income Tax Act limits are transferred to the PSPIB. The goal of the PSPIB is to maximize returns on investments without undue risk of loss, while considering the requirements and financial obligations of each of the pension plans. The PSPIB, a Canadian Crown corporation established by the Public Sector Pension Investment Board Act, reports the results of the investments in an annual report tabled in Parliament. Contributions for all the other pension plans sponsored by the Government are part of general funds.

More information on the above-mentioned plans can be found in the respective annual report on the administration of the plans tabled in Parliament.

In addition, some of the consolidated Crown corporations and other entities maintain their own defined benefit pension plans covering substantially all of their employees. The majority of the defined benefit pension plans are contributory plans. Employer and employee contributions are made in accordance with the provisions of the plans. Pension plans' funds are held in external trusts that are legally separate from Crown corporations and other entities.

i. Pension plans

Public Service Pension Plan, Canadian Forces Pension Plan including the Reserve Force Pension Plan and Royal Canadian Mounted Police Pension Plan

The pension plans for the public service, Canadian Forces—Regular Force and the Royal Canadian Mounted Police provide for the payment of a lifetime pension and a temporary bridge benefit payable normally until age 65, the age at which members generally become eligible for the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP). The annual lifetime pension is based on the average salary of five consecutive years of highest paid service and the years of pensionable service. For the Canadian Forces—Reserve Force pension plan, the annual lifetime pension is based on a percentage of indexed pensionable earnings with a temporary bridge benefit until members become eligible for the CPP or QPP. Pension benefits are indexed annually on January 1 to take into account the cost of living.

Pension benefits accrue at a rate of two per cent per year of pensionable service up to a maximum of 35 years, the exception being the benefits offered under the Canadian Forces—Reserve Force pension plan which accrue at a rate of 1.5 per cent up to a maximum of 35 years. Pension benefits are coordinated with those of the CPP or the QPP. Pension benefits for the public service pension plan members will accrue under either Group 1 for employees who were plan members prior to January 1, 2013, or Group 2 for employees joining the public service pension plan on or after that date. The normal retirement age for Group 1 members is 60. For Group 2 members, the normal retirement age is 65 and other age-related thresholds were increased by 5 years.

The contribution rates for current service for all members of the public service will increase gradually to a 50:50 cost sharing ratio with the government by 2017. Public service Group 1, Canadian Forces—Regular Force and Royal Canadian Mounted Police members contribute at different rates than public service Group 2 members. These rates are as follows:

Public service Group 1, Canadian Forces—Regular Force and Royal Canadian Mounted Police pension plan members contributed:

Public service Group 2 plan members contributed:

Contribution rates for Group 2 members were lower than for Group 1 members due to the lower cost of the benefits related to increasing the normal age of retirement from 60 to 65.

Members of the Canadian Forces—Reserve Force contribute 5.2 per cent on salary up to two thirds of the YMPE.

Employer contributions are made monthly to provide for the cost (net of employee contributions) of the benefits that have accrued in respect of that month at a rate determined by the President of the Treasury Board. For 2017, the employer contribution rates were about 1.1, 1.5 and 1.3 (1.2, 1.7 and 1.4 respectively in 2016) times the current year's employee contribution for the plans under the Public Service Superannuation Act, the Canadian Forces Superannuation Act (Regular Force pension plan) and the Royal Canadian Mounted Police Superannuation Act, respectively. For 2017, the employer contribution rate was about 2.0 (1.9 in 2016) times the current year's employee contribution for the Reserve Force pension plan.

The superannuation accounts, which record the transactions that pertain to pre April 1, 2000 service, are credited with interest at rates that are based on the Government of Canada long-term bond rate. The average interest rate credited to the superannuation accounts was approximately 4.4 per cent (4.8 per cent in 2016).

The pension fund accounts, which record the transactions that pertain to service since April 1, 2000, are flow through accounts used to transfer funds to the PSPIB. The balance in the pension fund accounts at year-end represents the amounts awaiting transfer to the PSPIB.

The retirement compensation arrangements (RCA) accounts records transactions for those pension benefits above the pension limits set under the Income Tax Act. The RCA, Regulations No. 1 and No. 2 are registered with the Canada Revenue Agency (CRA) and a transfer is made annually between these RCA regulations and the CRA, either to remit a 50 per cent refundable tax in respect of the net contributions and interest credits or to receive a refund based on the net benefit payments.

Members of Parliament retiring allowances

Members of Parliament are eligible at a certain age to receive a basic allowance upon termination of membership and after having contributed to the plan for at least six years. Retirement age is set at 55 for pensionable service accrued before January 1, 2016 and at 65 for pensionable service accrued on or after January 1, 2016, with the option of reduced benefits for early retirement at age 55. The basic allowance accrues at a rate of 3 per cent per year of pensionable service for both Members of the House of Commons and for Senators. For service accrued before January 1, 2016, the accrual rate is multiplied by the average of the best five consecutive years of sessional indemnity up to a maximum of 75 per cent of the plan member's average sessional indemnity. For service accrued after December 31, 2015, the accrual rate is multiplied by the average of the best five consecutive years of pensionable earnings up to a maximum of 75 per cent of the plan member's average pensionable earnings. Basic allowances are indexed annually on January 1 to the cost of living once recipients reach age 60. Pensionable service accrued on or after January 1, 2016, under the Members of Parliament pension plan, is coordinated with the CPP or QPP at age 60.

The contribution rates have increased over time to bring the plan members' share to 50 per cent as at January 1, 2017. For the 2017 fiscal year, plan members contributed at a rate of 15.8 per cent (10 per cent in 2016) of their salary for the first nine months and a rate of approximately 19.5 per cent (15.8 per cent in 2016) for the last three months.

The Government contributions are made monthly to provide for the cost (net of plan member contributions) of the benefits that have accrued in respect of that month at a rate determined by the President of the Treasury Board. The Government contributions, expressed as a multiple of plan member contributions, are on average as follows:

  2017 2016
Members of Parliament
Retiring Allowances Account 1.5 3.7
Compensation Arrangements Account 1.6 3.0

Contributions are credited to the appropriate pension account, either the Members of Parliament Retiring Allowances Account or the Members of Parliament Retirement Compensation Arrangements Account. The pension accounts are also credited with interest at a rate determined by the Chief Actuary of Canada. The average interest rate credited to the pension accounts in 2017 was approximately 4.6 per cent (4.1 per cent in 2016).

Pension plan for federally appointed judges

This plan provides fully indexed annuities to judges and to all eligible survivors providing they meet minimum age and service requirements. The full benefit amount is generally payable when the member has completed 15 years of pensionable service and the sum of the member's age and years of service totals 80.

Judges appointed to the bench before February 17, 1975, make required contributions of 1.5 per cent of salary. All other judges contribute 7 per cent of salary.

Legislation does not require a specific pension account to be maintained to record the transactions pertaining to this plan. Therefore, except for the portion recorded in the Supplementary Retirement Benefit Account, the liability pertaining to this plan is recorded through an allowance account. During the year, benefits paid are recorded as expenditures against the statutory payment authority. The expense is adjusted at year-end through an allowance account, to bring the current year expense from cash to an accrual accounting basis, similar to that of the other pension plans. During the year, the benefit payments charged to the expenditure authority amounted to $152 million ($143 million in 2016). At March 31, 2017, the portion of the pension liability recorded through an allowance account for the judges' pension plan amounted to $2,547 million ($2,421 million in 2016).

Consolidated Crown corporations and other entities pension plans

Pension benefits provided under consolidated Crown corporations and other entities defined benefit pension plans accrue depending on the terms of the plans. Generally, they are based on a combination of an accrual rate per years of pensionable service and some type of pensionable earnings average. Some of the consolidated Crown corporations and other entities defined benefit pension plans are closed to new entrants.

ii. Actuarial valuations

As required under the Public Pensions Reporting Act, actuarial valuations of the pension plans sponsored by the Government are performed at least every three years for funding purposes. The actuarial valuations are performed by the Office of the Chief Actuary, submitted to the President of the Treasury Board, and tabled in Parliament.

The most recent date for the actuarial valuation of each pension plan sponsored by the Government is as follows:

  1. Public Service—March 31, 2014;
  2. Royal Canadian Mounted Police—March 31, 2015
  3. Canadian Forces—Regular Force—March 31, 2016, valuation currently in progress;
  4. Canadian Forces—Reserve Force—March 31, 2016, valuation currently in progress;
  5. Members of Parliament—March 31, 2016, valuation currently in progress; and
  6. Federally appointed judges—March 31, 2016, valuation currently in progress;

The actuarial valuations for the public service, Canadian Forces, Royal Canadian Mounted Police and Members of Parliament pension plans include the valuation of the Retirement Compensation Arrangements (RCA) component related to each plan.

Where applicable, the funding valuations provide the Government with recommendations for setting both employer and employee contribution rates, as well as any actuarial adjustment to amortize deficiencies or excesses. These actuarial adjustments are made in equal instalments over a period not exceeding 15 years commencing in the year in which the actuarial report is laid before Parliament.

To address actuarial deficiencies, no adjustment ($681 million in 2016) was made to the Public Service Superannuation Account, $340 million ($340 million in 2016) to the Public Service Pension Fund Account, $170 million ($170 million in 2016) to the Canadian Forces Pension Fund Account, $4 million ($2 million in 2016) to the Reserve Force Pension Fund Account, $234 million ($12 million in 2016) to the Royal Canadian Mounted Police Superannuation Account, $9 million ($74 million in 2016) to the Royal Canadian Mounted Police Pension Fund Account, nil ($129 million in 2016) to the Public Service Retirement Compensation Arrangements (RCA) Account No. 2, and nil ($12 million in 2016) to the Public Service Retirement Compensation Arrangements (RCA) Account No. 1. The actuarial adjustments recorded in pension fund accounts are transferred to the PSPIB for investment. To address deficiencies, the consolidated Crown corporations and other entities made special funding payments of $18 million in 2017 ($59 million in 2016).

Table 6.15 presents a summary of the balances and transactions for public sector pension plan liabilities. In particular, receipts and other credits for the Government's pension accounts consist of contributions from plan members, the Government of Canada, participating Public Service corporations and territorial governments, as well as transfers from other pension funds, actuarial adjustments to amortize deficiencies, refunds of refundable tax and interest. Payments and other charges for the Government's pension accounts consist of annuity payments, minimum benefits, cash termination allowances (lump sum payments to employees suffering a disability), returns of contributions, pension division payments, transfer value payments, transfers to other funds, remittances of refundable tax, payments of administrative expenses, actuarial adjustments to amortize excesses, and transfers to PSPIB. Adjustments to the Government's allowance accounts result from the differential with annual actuarial valuations performed for accounting purposes. These include differences between benefits earned and contributions and interest calculations, as well as from other adjustments required under the Government's accounting policies such as recognition of actuarial gains and losses and consolidation adjustments related to refundable tax amounts.

Pension benefits funded by the Government relate to post March 2000 service that falls within the Income Tax Act limits for the three main public sector pension plans and all service for the Canadian Force—Reserve Force pension plan, as funds are invested through the PSPIB. Funded pension benefits also relate to consolidated Crown corporations and other entities where pension plans' funds are held in external trusts that are legally separate from Crown corporations and other entities. For unfunded pension plans, separate market invested funds are not maintained. These relate to all pre April 2000 service and only to post March 2000 service that falls above the Income Tax Act limits for the three main public sector pension plans, all service periods for the pension plans of the federally appointed judges and Members of Parliament, and some of the consolidated Crown corporations and other entities pension plans.

Table 6.15
Public sector pensions

(in millions of dollars)

  April 1, 2016 Receipts and other credits Payments and other charges March 31, 2017
Funded pension benefits
Public Service Pension Fund Account, Table 6.18 355 4,855 4,887 323
Allowance for pension adjustments 3,233 161 756 2,638
Subtotal 3,588 5,016 5,643 2,961
Canadian Forces Pension Fund Account, Table 6.20 169 1,387 1,383 173
Allowance for pension adjustments 1,007 96 174 929
Subtotal 1,176 1,483 1,557 1,102
Reserve Force Pension Fund Account, Table 6.21 (negative 51) 57 69 (negative 63)
Allowance for pension adjustments 171 5 21 155
Subtotal 120 62 90 92
Royal Canadian Mounted Police Pension Fund Account, Table 6.23 15 463 462 16
Allowance for pension adjustments 220 6 58 168
Subtotal 235 469 520 184
Total pension fund accounts 488 6,762 6,801 449
Total allowance for pension adjustments 4,631 268 1,009 3,890
Pension benefit liabilities related to funded plans sponsored by the Government 5,119 7,030 7,810 4,339
Pension benefit assets related to funded plans sponsored by consolidated Crown corporations and other entities (negative 1,639) 105 366 (negative 1,900)
Net pension benefit liabilities related to funded plans 3,480 7,135 8,176 2,439
Unfunded pension benefits
Public Service Superannuation Account, Table 6.17 95,566 4,148 5,505 94,209
Allowance for pension adjustments (negative 9,312) 1,235 20 (negative 8,097)
Subtotal 86,254 5,383 5,525 86,112
Canadian Forces Superannuation Account, Table 6.19 45,695 1,984 2,470 45,209
Allowance for pension adjustments (negative 4,501) 661 5 (negative 3,845)
Subtotal 41,194 2,645 2,475 41,364
Royal Canadian Mounted Police Superannuation Account, Table 6.22 13,155 804 684 13,275
Allowance for pension adjustments (negative 1,192) 154 235 (negative 1,273)
Subtotal 11,963 958 919 12,002
Members of Parliament Retiring Allowances Account, Table 6.24 502 37 30 509
Allowance for pension adjustments (negative 78) 15 12 (negative 75)
Subtotal 424 52 42 434
Members of Parliament Retirement Compensation Arrangements Account, Table 6.25 249 29 23 255
Allowance for pension adjustments 208 20 6 222
Subtotal 457 49 29 477
Retirement Compensation Arrangements (RCA) Account, Table 6.26 2,396 200 242 2,354
Allowance for pension adjustments 1,697 176 11 1,862
Subtotal 4,093 376 253 4,216
Supplementary Retirement Benefits Account (Judges), Table 6.27 215 9 224
Allowance for pension adjustments 2,421 139 13 2,547
Subtotal 2,636 148 13 2,771
Supplementary Retirement Benefits Account (Others), Table 6.27 1 1
Total superannuation accounts 157,779 7,211 8,954 156,036
Total allowance for pension adjustments (negative 10,757) 2,400 302 (negative 8,659)
Pension benefit liabilities related to unfunded plans sponsored by the Government 147,022 9,611 9,256 147,377
Pension benefit liabilities related to unfunded plans sponsored by consolidated Crown corporations and other entities 86 8 4 90
Pension benefit liabilities related to unfunded plans 147,108 9,619 9,260 147,467
Net pension benefit liabilities 150,588 16,754 17,436 149,906
The net pension benefit liabilities were recognized and presented in the Consolidated Statement of Financial Position as follows:
Public sector pension liabilities 152,227 16,649 17,070 151,806
Public sector pension assets (negative 1,639) 105 366 (negative 1,900)
Net pension benefit liabilities 150,588 16,754 17,436 149,906

Table 6.16 presents a summary of transactions in public sector pensions that resulted in charges to expenses. Interest is calculated based on the accrued pension obligations under the various plans. The net interest expense represents interest of $6,817 million ($7,333 million in 2016) credited to the superannuation accounts in accordance with the pension legislation, a provision of $5,247 million ($4,439 million in 2016) and interest of $428 million ($421 million in 2016) on the consolidated Crown corporations and other entities' obligations, shown net of $5,793 million ($4,899 million in 2016) in expected return on pension investments.

Table 6.16
Summary of transactions in public sector pensions that resulted in charges to expenditures

(in millions of dollars)

  2016–2017 2015–2016
Government contributions and otherLink to footnote 1 Adjustment Net benefits earned Actuarial adjustmentsLink to footnote 2 Costs recorded in previous yearsLink to footnote 3 Plan amendments/
curtailment
Actuarial losses (gains) recognized Pension expense Net interest expense Pension expense Net interest expense
Funded pension benefits
Public Service Pension Fund Account 2,126 161 2,287 340 (negative 340) (negative 338) 1,949 (negative 78) 2,182 11
Canadian Forces Pension Fund Account 711 54 765 170 (negative 170) 22 787 20 869 41
Reserve Force Pension Fund Account 34 (negative 7) 27 4 (negative 4) (negative 10) 17 1 (negative 2) (negative 4)
Royal Canadian Mounted Police Pension Fund Account 250 28 278 9 (negative 9) (negative 22) (negative 46) 210 (negative 3) 263 (negative 2)
Consolidated Crown corporations and other entitiesLink to footnote 1 82 (negative 5) 77 18 (negative 18) 28 (negative 118) (negative 13) (negative 148) (negative 62) (negative 164)
Total funded pension benefits 3,203 231 3,434 541 (negative 541) 6 (negative 490) 2,950 (negative 208) 3,250 (negative 118)
Unfunded pension benefits
Public Service Superannuation AccountLink to footnote 4 9 (negative 20) (negative 11) 1,215 1,204 4,148 818 4,477
Canadian Forces Superannuation Account 2 (negative 5) (negative 3) 651 648 1,988 444 2,119
Defence Services Pension Continuation ActLink to footnote 1 2 2 2 3
Royal Canadian Mounted Police Superannuation Account (negative 1) (negative 1) 234 (negative 234) (negative 4) 145 140 582 105 619
Royal Canadian Mounted Police Continuation ActLink to footnote 1 9 9 9 10
Members of Parliament Retiring Allowances Account 8 1 9 14 23 11 12 11
Members of Parliament Retirement Compensation Arrangements Account 11 6 17 8 25 6 17 6
Retirement Compensation Arrangements (RCA) Account 70 32 102 34 136 97 133 107
Supplementary Retirement Benefits Account 4 4 4 4 1
Judges ActLink to footnote 1 152 (negative 13) 139 70 209 71 182 69
Other (diplomatic services, lieutenant governors, etc.)Link to footnote 1 2 2 2 2
Consolidated Crown corporations and other entities 2 2 2 4 4 5 3
Subtotal 269 2 271 234 (negative 234) (negative 4) 2,139 2,406 6,907 1,735 7,412
Contributions from the Judges' plan recorded to revenues (negative 15) (negative 15) (negative 15) (negative 15)
Total unfunded pension benefits 254 2 256 234 (negative 234) (negative 4) 2,139 2,391 6,907 1,720 7,412
Total reported in the Consolidated Statement of Operations and Accumulated Deficit 3,457 233 3,690 775 (negative 775) 2 1,649 5,341 6,699 4,970 7,294

Public Service Superannuation Account

This account, established by the Public Service Superannuation Act, is used to record all transactions (contributions, benefit payments, transfers and interest credits) in respect of service accrued by public service members up to March 31, 2000.

Table 6.17
Public Service Superannuation Account

(in dollars)

  2016–2017 2015–2016
Opening balance 95,566,249,001 95,875,945,459
Receipts and other credits
Employee contributions
Government employees 1,501,715 2,066,031
Retired employees 9,012,222 11,616,885
Public Service corporation employees 154,532 102,705
Employer contributions
Government 8,770,006 11,189,841
Public Service corporations 126,595 61,360
Actuarial adjustment 681,000,000
Transfers from other pension funds 5,009 6,789
Interest 4,128,334,225 4,443,345,828
Total receipts and other credits 4,147,904,304 5,149,389,439
Subtotal 99,714,153,305 101,025,334,898
Payments and other charges
Benefit payments
Annuities 5,380,371,208 5,328,099,116
Minimum benefits 18,161,964 12,803,758
Pension division payments 26,427,720 22,922,806
Pension transfer value payments 20,129,143 29,994,197
Return of contributions
Government employees 379,702 38,788
Public Service corporation employees 41,739 41,606
Transfers to other pension funds 4,093,957 5,416,461
Administrative expenses 55,274,322 59,769,165
Total payments and other charges 5,504,879,755 5,459,085,897
Closing balance 94,209,273,550 95,566,249,001

Public Service Pension Fund Account

This account is used to record the transactions in respect of service accrued on or after April 1, 2000, under the Public Service Superannuation Act. An amount equal to contributions less benefits and other payments is transferred to the PSPIB for investment. The closing balance in this account represents the net cash position prior to the transfer to the PSPIB.

Table 6.18
Public Service Pension Fund Account

(in dollars)

  2016–2017 2015–2016
Opening balance 355,052,200 402,290,387
Receipts and other credits
Employee contributions
Government employees 1,919,728,160 1,773,737,501
Retired employees 45,599,636 41,559,748
Public Service corporation employees 189,381,592 168,640,289
Employer contributions
Government 2,125,185,996 2,205,355,883
Public Service corporations 206,551,912 206,059,867
Actuarial adjustment 340,000,000 340,000,000
Transfers from other pension funds 28,481,630 33,350,235
Total receipts and other credits 4,854,928,926 4,768,703,523
Payments and other charges
Benefit payments
Annuities 1,779,822,584 1,558,724,353
Minimum benefits 12,206,438 12,641,148
Pension division payments 38,740,034 30,273,474
Pension transfer value payments 254,365,622 316,963,114
Return of contributions
Government employees 7,973,419 10,507,898
Public Service corporation employees 3,960,135 4,837,063
Transfers to other pension funds 36,371,533 47,446,792
Administrative expenses 41,664,160 42,400,198
Total payments and other charges 2,175,103,925 2,023,794,040
Receipts and other credits less payments and other charges 2,679,825,001 2,744,909,483
Transfers to PSPIB 2,712,347,217 2,792,147,670
Closing balance 322,529,984 355,052,200

Canadian Forces Superannuation Account

This account, established by the Canadian Forces Superannuation Act, is used to record all transactions (contributions, benefit payments, transfers and interest credits) in respect of service accrued by Canadian Armed Forces members up to March 31, 2000.

Table 6.19
Canadian Forces Superannuation Account

(in dollars)

  2016–2017 2015–2016
Opening balance 45,695,153,093 46,118,650,563
Receipts and other credits
Contributions from personnel 2,495,966 2,618,412
Contributions by the Government 2,495,966 2,618,412
Interest 1,977,892,099 2,139,615,656
OtherLink to footnote 5 1,197,539 1,032,682
Total receipts and other credits 1,984,081,570 2,145,885,162
Subtotal 47,679,234,663 48,264,535,725
Payments and other charges
Benefit payments
Pensions and retiring allowances 2,416,264,910 2,506,191,226
Minimum benefits 214,999 151,581
Pension division payments 21,544,020 23,313,757
Pension transfer value payments 2,549,143 1,690,394
Return of contributions 462 1,669
Transfers to other pension funds 239,863
Administrative expenses 30,134,267 37,794,142
Total payments and other charges 2,470,707,801 2,569,382,632
Closing balance 45,208,526,862 45,695,153,093

Canadian Forces Pension Fund Account

This account is used to record the transactions in respect of service accrued on or after April 1, 2000, in accordance with Part I of the Canadian Forces Superannuation Act. An amount equal to contributions less benefits and other payments is transferred to the PSPIB for investment. The closing balance in this account represents the net cash position prior to the transfer to the PSPIB.

Table 6.20
Canadian Forces Pension Fund Account

(in dollars)

  2016–2017 2015–2016
Opening balance 168,858,041 183,465,777
Receipts and other credits
Contributions from personnel 470,440,531 450,157,686
Contributions by the Government 711,455,007 756,955,116
Actuarial adjustment 170,000,000 170,000,000
Transfers from other pension funds 35,740,250 83,887,837
OtherLink to footnote 6 177,292 390,497
Total receipts and other credits 1,387,813,080 1,461,391,136
Payments and other charges
Benefit payments
Pensions and retiring allowances 514,332,647 442,037,547
Minimum benefits 857,560 634,061
Pension division payments 25,013,839 23,871,536
Pension transfer value payments 160,121,474 133,358,475
Return of contributions 1,283,915 902,196
Transfers to other pension funds 500,975 1,310,261
Administrative expenses 21,821,366 24,572,429
Total payments and other charges 723,931,776 626,686,505
Receipts and other credits less payments and other charges 663,881,304 834,704,631
Transfers to PSPIB 659,149,235 849,312,367
Closing balance 173,590,110 168,858,041

Reserve Force Pension Fund Account

This account is used to record the transactions in respect of service accrued on or after March 1, 2007, in accordance with Part I.1 of the Canadian Forces Superannuation Act. When the closing balance of this account is in a positive net cash position, an amount equal to contributions less benefits and other payments is usually transferred to the PSPIB for investment.

Table 6.21
Reserve Force Pension Fund Account

(in dollars)

  2016–2017 2015–2016
Opening balance (negative 51,192,066) (negative 2,551,843)
Receipts and other credits
Contributions from personnel 19,402,652 27,843,256
Contributions by the Government 33,551,813 41,716,967
Actuarial adjustment 4,200,000 1,900,000
OtherLink to footnote 6 124 11,955
Total receipts and other credits 57,154,589 71,472,178
Payments and other charges
Benefit payments
Pensions and retiring allowances 6,948,606 6,061,830
Minimum benefits 14,560 110,167
Pension transfer value payments 14,890,399 13,529,206
Return of contributions 87,644 45,315
Transfer to other pension funds 35,740,545 83,889,742
Administrative expenses 11,296,087 16,476,141
Total payments and other charges 68,977,841 120,112,401
Receipts and other credits less payments and other charges (negative 11,823,252) (negative 48,640,223)
Transfers to PSPIB
Closing balance (negative 63,015,318) (negative 51,192,066)

Royal Canadian Mounted Police Superannuation Account

This account, established by the Royal Canadian Mounted Police Superannuation Act, is used to record all transactions (contributions, benefit payments, transfers and interest credits) in respect of service accrued by Royal Canadian Mounted Police members up to March 31, 2000.

Table 6.22
Royal Canadian Mounted Police Superannuation Account

(in dollars)

  2016–2017 2015–2016
Opening balance 13,154,521,368 13,197,207,777
Receipts and other credits
Contributions from personnel (current services and arrears) 446,137 512,522
Contributions by the Government 401,884 466,488
Actuarial adjustment 234,000,000 12,000,000
Interest 569,395,397 613,018,941
Total receipts and other credits 804,243,418 625,997,951
Subtotal 13,958,764,786 13,823,205,728
Payments and other charges
Benefit payments
Annuities and allowances 667,750,533 650,137,646
Cash termination allowance and gratuities 1,273,743
Pension division payments 7,662,725 10,561,426
Pension transfer value payments 1,661,895 1,296,063
Return of contributions 105,668 324,530
Transfers to other pension funds 45,325
Administrative expenses 5,337,946 6,364,695
Total payments and other charges 683,837,835 668,684,360
Closing balance 13,274,926,951 13,154,521,368

Royal Canadian Mounted Police Pension Fund Account

This account is used to record the transactions in respect of service accrued on or after April 1, 2000, under the Royal Canadian Mounted Police Superannuation Act. An amount equal to contributions less benefits and other payments is transferred to the PSPIB for investment. The closing balance in this account represents the net cash position prior to the transfer to the PSPIB.

Table 6.23
Royal Canadian Mounted Police Pension Fund Account

(in dollars)

  2016–2017 2015–2016
Opening balance 15,339,685 6,467,393
Receipts and other credits
Contributions from personnel (current services and arrears) 194,793,172 187,351,388
Contributions by the Government 250,220,300 270,691,194
Actuarial adjustment 9,000,000 74,000,000
Transfers from other pension funds 9,200,923 8,723,354
Total receipts and other credits 463,214,395 540,765,936
Payments and other charges
Benefit payments
Annuities and allowances 164,537,097 140,259,560
Minimum benefits 1,279,240 133,539
Pension division payments 9,606,685 12,771,171
Pension transfer value payments 31,728,533 27,393,208
Return of contributions
Personnel 195,894 4,317
Interest 41,444 355,247
Transfers to other pension funds 450,904 662,728
Administrative expenses 3,437,241 3,835,137
Total payments and other charges 211,277,038 185,414,907
Receipts and other credits less payments and other charges 251,937,357 355,351,029
Transfers to PSPIB 250,974,726 346,478,737
Closing balance 16,302,316 15,339,685

Members of Parliament Retiring Allowances Account

This account was established by the Members of Parliament Retiring Allowances Act to provide pension benefits to eligible Members of Parliament who contributed to the plan. "Member" means a Member of the Senate or the House of Commons. Benefits are also available to eligible surviving spouses or eligible dependent children of Members who served on or after a certain date and contributed under the Act.

Table 6.24
Members of Parliament Retiring Allowances Account

(in dollars)

  2016–2017 2015–2016
Opening balance 502,299,428 501,020,777
Receipts and other credits
Members' contributions
Current services 5,560,014 2,680,532
Arrears of principal, interest and mortality insurance 39,998 11,779
Government contributions (current services) 7,871,252 8,530,567
Interest 22,844,341 20,267,602
Total receipts and other credits 36,315,605 31,490,480
Subtotal 538,615,033 532,511,257
Payments and other charges
Benefit payments
Annual allowances 28,496,180 27,556,977
Pension division payments 405,062 571,436
Return of contributions
Withdrawals 220,861 2,001,009
Interest 10,465 82,407
Total payments and other charges 29,132,568 30,211,829
Closing balance 509,482,465 502,299,428

Members of Parliament Retirement Compensation Arrangements Account

This account was established by the Members of Parliament Retiring Allowances Act to provide for benefits in respect of pension credits accrued by Members of Parliament which are not payable out of the Members of Parliament Retiring Allowances Account. Benefits are also available to eligible surviving spouses or eligible dependent children of Members.

Table 6.25
Members of Parliament Retirement Compensation Arrangements Account

(in dollars)

  2016–2017 2015–2016
Opening balance 248,634,683 237,813,956
Receipts and other credits
Members' contributions
Current services 6,569,923 4,939,343
Arrears of principal, interest and mortality insurance 80,213 22,821
Government contributions (current services) 10,948,854 14,516,972
Interest 11,471,139 9,922,095
Total receipts and other credits 29,070,129 29,401,231
Subtotal 277,704,812 267,215,187
Payments and other charges
Benefit payments
Annual allowances 15,499,009 14,291,992
Pension division payments 592,203 539,467
Return of contributions
Withdrawals 327,501 3,289,508
Interest 12,709 109,969
Refundable tax 6,343,785 349,568
Total payments and other charges 22,775,207 18,580,504
Closing balance 254,929,605 248,634,683

Retirement Compensation Arrangements (RCA) Account

This account was established by the Special Retirement Arrangements Act to provide pension benefits for federal employees under retirement compensation arrangements.

The RCA Regulations, No. 1 (RCA No. 1) pays those pension benefits above the amount that may, in accordance with the Income Tax Act restrictions on registered pension plans, be paid under the Public Service Superannuation Act, the Canadian Forces Superannuation Act and the Royal Canadian Mounted Police Superannuation Act. The RCA No. 1 was created effective December 15, 1994.

The RCA Regulations, No. 2 (RCA No. 2) pays benefits to public service employees between the ages of 50 and 54, who were declared surplus as part of a three year Government downsizing initiative which ended on March 31, 1998. It pays the difference between an unreduced pension and the reduced pension for early retirement payable from the Public Service Superannuation Account. The RCA No. 2 was created effective April 1, 1995, and is funded entirely by the Government.

Table 6.26
Retirement Compensation Arrangements (RCA) Account

(in dollars)

  RCA No. 1 RCA No. 2 Total
Public Service Canadian Forces Royal Canadian Mounted Police Public Service
2016–2017 2015–2016 2016–2017 2015–2016 2016–2017 2015–2016 2016–2017 2015–2016 2016–2017 2015–2016
Opening balance 1,163,127,305 1,104,326,126 392,099,834 373,530,812 33,541,785 33,159,245 807,056,879 708,848,795 2,395,825,803 2,219,864,978
Receipts and other credits
Employee contributions
Government employees 6,579,649 8,426,624 2,377,758 2,389,298 102,724 59,511 9,060,131 10,875,433
Retired employees 384,934 448,109 890 592 385,824 448,701
Public Service corporation employees 2,188,425 2,349,289 2,188,425 2,349,289
Employer contributions
Government 44,338,063 60,783,610 25,331,352 26,464,154 425,361 290,768 70,094,776 87,538,532
Public Service corporations 13,569,038 16,570,859 13,569,038 16,570,859
Actuarial adjustment 12,000,000 129,000,000 141,000,000
Transfers from other pension funds 872 1,560 872 1,560
Refundable tax 21,937,738 21,937,738
Interest 51,842,117 53,426,014 17,658,754 18,043,320 1,473,820 1,558,394 34,240,959 32,077,055 105,215,650 105,104,783
OtherLink to footnote 6 1,691 1,691
Subtotal 118,903,098 154,006,065 45,367,864 46,898,463 2,002,795 1,909,265 34,240,959 183,014,793 200,514,716 385,828,586
Total 1,282,030,403 1,258,332,191 437,467,698 420,429,275 35,544,580 35,068,510 841,297,838 891,863,588 2,596,340,519 2,605,693,564
Payments and other charges
Benefit payments
Annuities 40,723,826 35,959,883 6,949,254 6,151,861 1,055,007 1,018,178 84,823,287 84,806,709 133,551,374 127,936,631
Minimum benefits 161,842 181,518 161,842 181,518
Pension division payments 643,887 1,263,060 400,343 240,394 82,572 1,044,230 1,586,026
Pension transfer value payments 555,752 587,002 686,747 1,252,386 3,561 2,266 1,246,060 1,841,654
Return of contributions
Government employees 15,601 11,141 15,601 11,141
Public Service corporation employees 11,540 9,896 11,540 9,896
Transfers to other pension funds 39,685 174,463 967 1,847 39,685 177,277
Refundable tax 46,632,558 57,017,923 20,213,265 20,683,833 489,382 421,862 38,952,365 106,287,570 78,123,618
Total 88,784,691 95,204,886 28,249,609 28,329,441 1,547,950 1,526,725 123,775,652 84,806,709 242,357,902 209,867,761
Closing balance 1,193,245,712 1,163,127,305 409,218,089 392,099,834 33,996,630 33,541,785 717,522,186 807,056,879 2,353,982,617 2,395,825,803

Supplementary Retirement Benefits Account

This account was established by the Supplementary Retirement Benefits Act to provide for pension benefit increases resulting from changes in the Consumer Price Index. The account continues to provide for increased pension benefits resulting from indexation for pensions of federally appointed judges, and recipients of pensions under various continuation acts and other related acts.

Table 6.27
Supplementary Retirement Benefits Account

(in dollars)

  Judges OthersLink to footnote 7 Total
2016–2017 2015–2016 2016–2017 2015–2016 2016–2017 2015–2016
Opening balance 215,089,000 206,383,198 767,192 688,982 215,856,192 207,072,180
Receipts and other credits
Employee contributions
Government 3,557,590 3,576,318 38,524 49,217 3,596,114 3,625,535
Employer contributions
Government 3,557,590 3,576,318 24,959 49,217 3,582,549 3,625,535
Interest 1,509,639 1,553,166 5,823 5,595 1,515,462 1,558,761
Total receipts and other credits 8,624,819 8,705,802 69,306 104,029 8,694,125 8,809,831
Subtotal 223,713,819 215,089,000 836,498 793,011 224,550,317 215,882,011
Payments and other charges
Return of contributions
Annuities 20,721 25,819 20,721 25,819
Closing balance 223,713,819 215,089,000 815,777 767,192 224,529,596 215,856,192

Allowance for pension adjustments

This account records the accounting adjustments resulting from annual actuarial valuations of public sector pension plans sponsored by the Government.

Actuarial losses of $1,765 million ($1,290 million in 2016), due to plan experience and changes in actuarial assumptions, were recognized in this account and increased pension expenses for the year.

An amount of $757 million ($1,420 million in 2016) was recorded in this account to offset the amortization of deficiencies charged to the account during the year but already accounted for in previous year's expenses or in actuarial gains and losses.

An amount of $236 million was credited ($191 million credited in 2016) to this account and increased (increased in 2016) pension costs to adjust for the difference between the Government contributions and the net cost of benefits earned.

An amount of $26 million (nil in 2016) was recorded in this account and pension costs were reduced (not adjusted in 2016) for a past service cost reduction related to a curtailment.

An amount of $5,247 million ($4,439 million in 2016) was credited to this account to adjust for the difference between interest based on the accrued pension obligations and interest credited to the superannuation accounts. In addition, an amount of $5,221 million ($4,317 million in 2016) was debited to this account to record the expected return on the pension investments.

As well, a consolidation adjustment of $113 million ($56 million in 2016) was credited to this account and debited against personal tax revenues to eliminate the effect of internal transactions resulting from tax amounts debited to the RCA accounts that were previously recorded as tax revenues.

The unrecognized net actuarial loss of $11,136 million ($11,674 million in 2016) will be recognized in this account and will affect expenses in future years.

As a result of annual actuarial valuations for accounting purposes, the accrued pension obligations of $289,005 million ($276,119 million in 2016) less the pension assets of $126,153 million ($112,304 million in 2016) were found to be $6,367 million ($5,548 million in 2016) higher than the balance of the pension fund accounts of $449 million ($488 million in 2016) and the superannuation accounts of $156,036 million ($157,779 million in 2016). The excess or shortfall is made up of the following:

(in millions of dollars)

  (Shortfall) excess
2017 2016
Public Service Pension Plan
Public Service Superannuation Account (negative 2,659) (negative 1,461)
Public Service Pension Fund 4,536 2,374
Retirement Compensation Arrangements (negative 1,855) (negative 1,691)
Total allowance for Public Service Pension Plan 22 (negative 778)
Canadian Forces Pension Plan
Canadian Forces Superannuation Account (negative 1,380) (negative 716)
Canadian Forces Pension Fund (negative 582) (negative 158)
Reserve Force Pension Fund (negative 107) (negative 78)
Retirement Compensation Arrangements (negative 361) (negative 314)
Total allowance for Canadian Forces Pension Plan (negative 2,430) (negative 1,266)
Royal Canadian Mounted Police Pension Plan
Royal Canadian Mounted Police Superannuation Account (negative 421) (negative 424)
Royal Canadian Mounted Police Pension Fund 121 95
Retirement Compensation Arrangements (negative 26) (negative 22)
Total allowance for Canadian Mounted Police Pension Plan (negative 326) (negative 351)
Members of Parliament Pension Plan
Members of Parliament Retiring Allowances (negative 28) (negative 5)
Retirement Compensation Arrangements (negative 276) (negative 259)
Total allowance for Members of Parliament Pension Plan (negative 304) (negative 264)
Pension plan for federally appointed judges (negative 3,329) (negative 2,889)
Total (negative 6,367) (negative 5,548)

Other employee and veteran future benefits

The Government and the consolidated Crown corporations and other entities sponsor different types of future benefit plans with varying terms and conditions. The benefits are available to employees and former employees (including military or Royal Canadian Mounted Police members) during or after employment, or upon retirement. Some are considered retirement benefits, whereby benefits are expected to be provided after retirement to employees and their beneficiaries or dependants. Others are considered post-employment benefits, whereby benefits are expected to be paid after employment but before retirement. Benefits for veterans are paid to war veterans, as well as to Canadian Forces retired veterans and Canadian Forces still-serving members. Benefits for members of the Royal Canadian Mounted Police are paid to both current and former members. These are primarily post-employment benefits, but some benefits are also paid during employment to still-serving members. They include disability and associated benefits paid to veterans or Royal Canadian Mounted Police members, or to their beneficiaries and dependants.

The other major future benefits include health care and dental benefits available to retired employees and retired military and Royal Canadian Mounted Police members, accumulated sick leave entitlements and post-employment benefits such as workers' compensation benefits and severance benefits that accumulate.

Table 6.28 presents the balance of these liabilities at year-end.

Table 6.28
Other employee and veteran future benefits

(in millions of dollars)

  April 1, 2016 Receipts and other credits Payments and other charges March 31, 2017
Veterans' disability and other future benefits 47,462 7,849 3,366 51,945
Royal Canadian Mounted Police disability and other future benefits 5,650 1,254 202 6,702
Public Service Health Care Plan 23,623 2,272 439 25,456
Pensioners' Dental Services Plan 3,442 404 99 3,747
Severance and other benefits 2,285 406 290 2,401
Accumulated sick leave entitlements 1,617 336 267 1,686
Workers' compensation 1,273 159 132 1,300
Consolidated Crown corporations and other entities 329 29 27 331
Total 85,681 12,709 4,822 93,568

All of the Government and almost all of the consolidated Crown corporations and other entities' sponsored plans are unfunded. The health care and the dental plans are contributory plans. Contributions by retired plan members are made to the plans to obtain coverage. Therefore the liabilities and costs are shown net of members' contributions. The accrued benefit obligations related to these plans is determined actuarially for accounting purposes. As at March 31, the recorded liabilities included the following components:

(in millions of dollars)

  2017 2016
Accrued benefit obligations Other future benefit assets Unrecognized net actuarial (loss) gain Benefits paid after measurement date up to March 31 Future benefit liabilities Future benefit liabilities
Veterans' disability and other future benefits 78,474 (negative 26,529) 51,945 47,462
Royal Canadian Mounted Police disability and other future benefits 11,451 (negative 4,749) 6,702 5,650
Public Service Health Care Plan 29,233 (negative 3,777) 25,456 23,623
Pensioners' Dental Services Plan 4,801 (negative 1,054) 3,747 3,442
Severance and other benefits 2,437 (negative 36) 2,401 2,285
Accumulated sick leave entitlements 1,737 (negative 51) 1,686 1,617
Workers' compensation 1,418 (negative 118) 1,300 1,273
Consolidated Crown corporations and other entities 329 (negative 2) 6 (negative 2) 331 329
Total 129,880 (negative 2) (negative 36,308) (negative 2) 93,568 85,681

The cost of these benefits can accrue either during the service life of employees or upon occurrence of an event giving rise to the liability under the terms of the plans. An interest component is charged to expense based on the average accrued benefit obligation.

In 2017, amendments were made to veteran future benefits, thereby improving and expanding access for certain benefits. These include:

The amendments resulted in one-time past service costs of $353 million ($3,750 million in 2016). In 2017, with respect to the employee severance benefit plan, an amendment resulted in a one-time past service cost of $7 million (nil in 2016).

In 2011, the accumulation of severance benefits for voluntary departures ceased for certain employee groups. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. The curtailments this year resulted in a one-time past-service cost reduction of $48 million (nil in 2016) and the immediate recognition of a previously unrecognized net actuarial loss of $109 million ($2 million in 2016), representing the portion related to the obligation for employees subject to the curtailments.

In 2017, payments of $3 million ($63 million in 2016) were made to employees affected by the curtailments of severance benefits who opted to cash out the full or partial value of their accumulated benefits. The settlements did not result in the immediate recognition of a previously unrecognized net actuarial gain or loss (net actuarial loss of $28 million in 2016, representing the portion related to the obligation for employees subject to the settlements).

During the year, expenses relating to these benefits were as follows:

(in millions of dollars)

  2017 2016
Benefits earned Plan amendments Plan curtailments Actuarial losses (gains) recognized Net benefit expense Interest cost Total Total
Veterans' disability and other future benefits 2,908 353 3,001 6,262 1,587 7,849 10,049
Royal Canadian Mounted Police disability and other future benefits 544 468 1,012 242 1,254 1,050
Public Service Health Care Plan 1,187 394 1,581 691 2,272 1,827
Pensioners' Dental Services Plan 165 129 294 110 404 357
Severance and other benefits 127 7 (negative 48) 200 286 72 358 328
Accumulated sick leave entitlements 289 7 296 40 336 311
Workers' compensation 110 17 127 32 159 279
Consolidated Crown corporations and other entities 20 (negative 4) 16 9 25 26
Total 5,350 360 (negative 48) 4,212 9,874 2,783 12,657 14,227

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