Unions warn pension move sets a “dangerous precedent”
The federal government has said last week that it will transfer $900 million from the Public Service Pension Fund into its general revenue account, marking the second consecutive year it has moved surplus funds from the plan despite criticism from public sector unions.
Treasury Board president Shafqat Ali announced Thursday that the government would redirect the surplus from the pension fund into the Consolidated Revenue Fund, as required by law. The move follows the release of the Special Actuarial Report on the financial position of the Public Service Pension Fund as of March 31, 2025.
“As a result of strong market performance, the public service pension fund continues to be in a surplus position,” Ali said in a statement.
The report found the pension fund was in a non-permitted surplus position, with a funded ratio of 125.5% and an excess surplus of about $900 million. Under the Public Service Superannuation Act, a non-permitted surplus exists when plan assets exceed 125% of liabilities, requiring government action to bring the surplus below that threshold.
Ali said the surplus would be held in the Consolidated Revenue Fund alongside last year’s transfer while next steps are considered. The combined surplus now totals $2.8 billion.
Unions push back
The Public Service Alliance of Canada expressed disappointment with the decision.
“Our position has always been that any public service pension surplus should be invested back into the workers who’ve contributed to the plan their entire careers,” said Sharon DeSousa, PSAC national president, in a statement released Friday.
DeSousa said a better path forward would be for the government to reverse the discriminatory two-tier pension system for federal public service workers and to integrate the early retirement initiative into the existing workforce adjustment process negotiated by unions.
Sean O’Reilly, president of the Professional Institute of the Public Service of Canada, said in a statement that he was alarmed by the government’s continued treatment of the surplus.
“Using workers’ own pension surpluses to finance their departure sets an extraordinary and dangerous precedent,” O’Reilly said, as noted by a report from Ottawa Citizen. “It risks hollowing out the public service at precisely the wrong moment.”
The two-tier pension system, introduced by the Harper government in 2012 for federal workers who started on or after Jan. 1, 2013, requires affected employees to work five additional years to qualify for full retirement benefits.
Mohammad Kamal, director of communications for Ali, said no benefits are affected and pensions remain fully protected.
“The government is following the law to manage the non-permitted surplus responsibly,” Kamal told Ottawa Citizen.
Budget 2025 introduced an early retirement incentive program for public servants, with about 68,000 notices issued to eligible workers. The Treasury Board Secretariat has confirmed the incentives will be sourced from the pension fund as part of a plan to cut the public service by about 30,000 jobs.
From 2013 to 2018, the federal government made deficit payments totalling $2.8 billion into the pension plan when it was underfunded.
