The federal government is preparing to transfer a nearly $900 million surplus from the Public Service Pension Fund into a central government account, reigniting tensions with public sector unions who criticized a similar $1.9-billion move just last year.
Government Cites Law and Strong Market Performance
On December 18, Treasury Board President Shafqat Ali announced the decision, stating the transfer is required by law when the pension fund's assets reach a certain level, creating what is deemed a "non-permitted surplus." The funds will be placed in the consolidated revenue fund, the government's general account for taxes and revenues used for public expenses.
Ali attributed the ongoing surplus to "strong market performance" and noted the combined total from this and last year's transfer now amounts to $2.8 billion. The surplus will be held in the central account while next steps are considered.
Union Backlash and Historical Context
The move has drawn immediate criticism from public sector unions. Sean O’Reilly, president of the Professional Institute of the Public Service of Canada, expressed alarm at "the government’s continued treatment of that surplus as a piggy bank it can access at will."
This action echoes a contentious dispute from the previous year, when the Public Service Alliance of Canada (PSAC) fiercely opposed the transfer of a $1.9-billion surplus. That move sparked a public war of words between then-Treasury Board president Anita Anand and PSAC president Sharon DeSousa.
At the time, PSAC argued the surplus should be used to reverse pension changes made in 2012 under Prime Minister Stephen Harper, which created a two-tier system with a later retirement age for public servants hired after 2013. The union vowed to oppose any unilateral allocation of the funds.
Broader Implications and Early Retirement Plans
This pension fund issue unfolds against the backdrop of the government's plan to reduce the size of the public service. The November federal budget revealed an early retirement incentive program, with approximately 68,000 notices already issued to eligible public servants.
The Treasury Board Secretariat has confirmed these incentives, part of a plan to cut roughly 30,000 jobs, will be sourced from the pension fund. As of the December 18 announcement, PSAC had not immediately responded to a request for comment on the latest surplus transfer.
