Report on the Administration of the 
Public Service Superannuation Act 
for the Fiscal Year Ended March 31, 2002

© Her Majesty the Queen in Right of Canada, 
represented by the President of the Treasury Board, 2003
Catalogue No. BT1‑13/2002
ISBN 0‑662‑66884‑7

This document is available in alternative formats 
and on the TBS Web site at the following address:
http://www.tbs-sct.gc.ca

Her Excellency the Right Honourable Adrienne Clarkson, C.C., C.M.M., C.D.
Governor General of Canada
Excellency:
I have the honour to submit to Your Excellency the Report on the Administration of the Public Service Superannuation Act for the Fiscal Year Ended March 31, 2002.
Respectfully submitted,

The paper version was signed by
Lucienne Robillard
President of the Treasury Board

Table of Contents
Public Service Pension Plan
Contributions
Benefits
Assets Available to Pay Pension Benefits
Retirement Compensation Arrangements Account
Funded Status
Plan Administration
Public Service Pension Advisory Committee
Further Information
Financial Statements of the Public Service Pension Plan and Notes to the Financial Statements
Public Service Pension Plan Statement of Responsibility for the Financial Statements
Auditor's Report	8
Public Service Pension Plan Statement of Net Assets Available for Benefits, of Accrued Pension Benefits and of Excess of Actuarial Value of Net Assets over Accrued Pension Benefits
Public Service Pension Plan Statement of Changes in Net Assets Available for Benefits
Public Service Pension Plan Statement of Changes in Accrued Pension Benefits
Public Service Pension Plan Statement of Changes in Excess of Actuarial Value of Net Assets over Accrued Pension Benefits
Public Service Pension Plan Notes to Financial Statements
Account Transaction Statements
Public Service Superannuation Account and Public Service Pension Fund
Retirement Compensation Arrangements (RCA) Account
Supplementary Death Benefit Plan

Statistical Tables
Table 1 – Annuities in Pay and Annuities That Became Payable
Table 2 – Benefits Other Than Immediate Annuities to Which Contributors Became Entitled
Table 3 – Retirements on Account of Age with Immediate Annuities, by Age at Retirement
Table 4 – Contributor Pensions and Survivor Allowances in Pay
Table 5 – Changes in the Number of Active Contributors
Table 6 – Changes to the Number of Contributors on Pension
Table 7 – Changes in the Number of Survivors on Pension
Table 8 – Types of Benefits to which Contributors Became Entitled
Table 9 – Supplementary Death Benefit Plan — Number of Participants and Death Benefits Paid
Table 10 – Supplementary Death Benefit Plan — Changes in the Number of Death Benefit Participants

Public Service Pension Plan

MEMBERSHIP PROFILE
(as at March 31, 2002)
(as at March 31, 2002)

Deferred Annuitants 1%

Employees 54%

Survivors 12%

Pensioners 33%

Source: Public Works and Government Services Canada

Established in 1924, the Public Service Pension Plan currently provides pension benefits for 255,231 employees of the Government of Canada, certain Crown corporations and territorial governments. It also pays annuities to 159,542 retired employees, 57,344 survivors and 5,429 deferred annuitants. (See membership profile below.)
Over the coming years the proportion of pensioners to current plan members is expected to rise as the baby boomers start to retire. Plan members can continue to be assured that they will obtain their benefits, as their benefits are fully guaranteed by the Government of Canada and the upcoming retirements have been anticipated and incorporated into the financial status of the Plan.
Contributions
In 2001–02, the plan received about $2,400 million in contributions, of which employees paid $702 million (about 30%) and the employer contributed $1,690 million. Employee contributions are compulsory and are set at a rate of 4% of annual salary up to $39,100 (2002 Maximum Pensionable Earnings defined by the Canada Pension Plan and the Quebec Pension Plan) and 7.5% of annual salary above that amount. The employer pays 2.56 times the employee rate for current service. 

Benefits

BENEFIT PAYMENTS
(2001–02)

Survivors
$509M (15%)

Pensioners
$2,929M (85%)

Source: Public Works and Government Services Canada

In 2001–02, the plan paid out $3,500 million in benefits, an increase of $164 million over the previous year. Benefits were paid to 216,886 pensioners and survivors, including 3,934 new pensioners during the year. New pensioners received an average annual pension of $23,837 in 2001–02. The number of beneficiaries has been fairly stable over the past few years, but is expected to rise in the future.
Pension benefits are fully indexed to annual increases in the Consumer Price Index. This adjustment is made each January and was 3.0% on January 1, 2002.
Benefits paid to pensioners represented 85.2% of 2001–02 pension payments and benefits paid to survivors represented 14.8%. Included in benefits paid are those to disabled pensioners. These represent 2.8% of the total.
Last year, 2,685 immediate annuities, 297 deferred annuities, and 952 annual allowances started becoming payable to plan members. Of those receiving an immediate annuity last year, 1,372 obtained a normal retirement benefit, 936 an early retirement benefit, and 377 a disability retirement benefit.
The Public Service Pension Plan has pension transfer agreements with some 50 employers, including other levels of government, universities, and private sector employers. Last year, approximately $32 million was transferred into, and $15 million (not including Crown corporations) was transferred out of the Pension Plan under these agreements. 
In addition, 1,079 plan members left the Public Service before age 50 and withdrew about $150 million (the present value of their future benefits) as lump sums that were transferred to locked‑in retirement vehicles of their choosing.

Assets Available to Pay Pension Benefits

TOTAL EXPECTED 
NUMBER OF
PENSIONERS 
AND SURVIVORS
(as at March 31, 2002)

245

240

235

230

225

220

2002–03

2004–05

2005–06

250

Fiscal Year

2003–04

2007–08

thousands

2006–07

Source: Office of the Superintendent of Financial Institutions

Up until March 31, 2000, all contributions and benefit payments were recorded in the Public Service Superannuation Account. The balance in the account earns interest income based on the Government of Canada long‑term bond rate.
Since April 1, 2000, contributions have been paid into the Public Service Pension Fund. Contributions net of current benefits and plan administration expenses are transferred to the Public Sector Pension Investment Board (PSPIB) for investment in capital markets to build assets to pay future benefits.

NET ASSETS
(as at March 31, 2002)

Account 95%

PSPIB 5%

Source: Public Works and Government Services Canada

On March 31, 2002, net assets available to pay current and future pension benefits consisted of $80,550 million recorded in the Superannuation Account and $4,264 million largely invested through the Public Sector Pension Investment Board. These invested assets consisted of approximately one‑third each of Canadian equities, foreign equities, and fixed income securities (Canadian federal, provincial and corporate bonds plus short‑term cash equivalent investments). These investments earned a time-weighted rate of return of 2.7% in 2001–02.
Retirement Compensation Arrangements Account 
A Retirement Compensation Arrangements Account (RCA) has been established to record contributions, benefit payments and interest credits in respect of benefits that are in excess of those permitted under the Income Tax Act for Registered Pension Plans. One portion of the Account provides benefits in relation to salaries above $99,800 in 2002 and certain survivor benefits. 
Another portion of the RCA Account records transactions for those employees who left the Public Service under the Early Retirement Incentive Program (between April 1, 1995 to September 30, 1998). 
Funded Status
The financial statements for the Public Service Pension Plan (see page 6) indicate that the plan assets exceeded the plan liabilities by $10,290 million in 2001–02. This figure is based on estimates calculated for accounting purposes.
Plan Administration
The costs of administering the plan totalled $48.7 million (or approximately $100 per member) in 2001–02, an increase of $8.6 million from the previous year. Relative to assets, administrative costs were $0.06 per $100 of plan assets. 
This was due to increased expenditures associated with system upgrades and modernization and the development of Web‑based facilities so that members will be able to obtain pension information on the Internet by 2003. One of the new features will allow members to estimate their pensions based on different retirement assumptions, using an on‑line “calculator.” A communications strategy was also launched to provide plan members with additional information about the benefits offered by their Pension Plan. 
For the first time this year, audited financial statements have been included in the annual report. These statements have been prepared in accordance with the federal government’s stated accounting policies for the pension plan, which are based on generally accepted accounting principles.

Public Service Pension Advisory Committee
An Advisory Committee comprised of 13 members — one pensioner, six members representing employees and six members chosen from the executive ranks of the Public Service — held meetings during 2001–02. Its mandate is to provide advice to the President of the Treasury Board on matters respecting the benefit design and funding of the Public Service Pension Plan.
Further Information
For additional information on the Public Service Pension Plan, you may consult the www.tbs-sct.gc.ca/hr-rh/bp-rasp Web site.

Financial Statements of the
Public Service Pension Plan and
Notes to the Financial Statements

Public Service Pension Plan
Statement of Responsibility for the Financial Statements
Responsibility for the integrity and objectivity of the financial statements of the Public Service Pension Plan rests with the department of Public Works and Government Services Canada and the Treasury Board of Canada Secretariat. The Treasury Board of Canada Secretariat carries out responsibilities in respect of the overall management of the Plan while Public Works and Government Services Canada is responsible for the day-to-day administration of the Plan and for maintaining the books of accounts.
The financial statements of the Public Service Pension Plan, for the years ended March 31, 2002 and 2001, have been prepared in accordance with the accounting policies set out in Note 2 of the financial statements, which are based on generally accepted accounting principles. They include management’s best estimates and judgements where appropriate.
To fulfil its accounting and reporting responsibilities, Public Works and Government Services Canada has developed and maintains books, records, internal controls and management practices, designed to provide reasonable assurance as to the reliability of the financial information and to ensure that transactions are in accordance with the Public Service Superannuation Act and regulations, as well as the Financial Administration Act and regulations.
Additional information, as required, is obtained from the Public Sector Pension Investment Board. The Board maintains its own records and systems of internal control to account for the funds managed on behalf of the Public Service Pension Plan in accordance with the Public Sector Pension Investment Board Act and regulations.
These statements have been audited by the Auditor General of Canada, the independent auditor for the Government of Canada.
Approved by:
The paper version was signed by 	The paper version was signed by	
Janice Cochrane
Deputy Receiver General
For Canada	Lysanne Gauvin
Assistant Deputy Minister
Accounting, Banking and Compensation	
The paper version was signed by	The paper version was signed by	
Jim Judd
Secretary of the Treasury Board and 
Comptroller General of Canada	James Lahey
Associate Secretary
Treasury Board of Canada Secretariat	

The paper version was signed by 
Sheila Fraser, FCA 
Auditor General of Canada 
Ottawa, Canada
February 14, 2003

PUBLIC SERVICE PENSION PLAN
Statement of Net Assets Available for Benefits, 
of Accrued Pension Benefits and of 
Excess of Actuarial Value of Net Assets over Accrued Pension Benefits

As at March 31

	2002	2001	
	($ millions)	($ millions)	

Net Assets Available for Benefits

Assets

Public Service Superannuation Account (notes 3 and 10)	$	80,550	$	81,575	
Public Service Pension Fund Account (note 3)		67		96	
Investments (note 4)		3,976		1,790	
Contributions receivable (note 5)		897		864	
		85,490		84,325	

Liabilities

Accounts payable		1		1	
Net Assets Available for Benefits		85,489		84,324	
Actuarial asset value adjustment (note 6)		160		180	
Actuarial Value of Net Assets Available for Benefits		85,649		84,504	
Accrued Pension Benefits (notes 6 and 10)		75,359		75,890	
Excess of Actuarial Value of Net Assets over Accrued				
  Pension Benefits (note 7)	$	10,290	$	8,614	

See accompanying notes to financial statements.

PUBLIC SERVICE PENSION PLAN
Statement of Changes in Net Assets Available for Benefits

Year ended March 31

	2002	2001	
	($ millions)	($ millions)	

Net Assets Available for Benefits, Beginning of Year	$	84,324	$	87,279	

Increase in Assets:					
Interest income from the Public Service Superannuation
Account (note 3)		6,887		7,652	
Transfers from other pension funds		32		15	
Investment (loss) income (note 4)		(164)		2	
Current year change in fair value of investments and
currency		269		(164)	
Contributions (note 8)		2,392		2,550	
Total Increase in Assets		9,416		10,055	

Decrease in Assets:					
Benefits (note 9)		3,451		3,287	
Refunds and transfers (note 10)		4,746		1,580	
Public Service Superannuation Account 
actuarial adjustment (note 11)		–		8,100	
Administrative expenses (note 12)		54		43	
Total Decrease in Assets		8,251		13,010	
Increase (Decrease) in Net Assets		1,165		(2,955)	
Net Assets Available for Benefits, End of Year	$	85,489	$	84,324	

See accompanying notes to financial statements.

PUBLIC SERVICE PENSION PLAN
Statement of Changes in Accrued Pension Benefits

Year ended March 31

	2002	2001	
	($ millions)	($ millions)	

Accrued Pension Benefits, Beginning of Year	$	75,890	$	72,061	

Increase in Accrued Pension Benefits:					
Interest on accrued pension benefits		5,922		6,336	
Benefits earned		2,153		2,111	
Experience losses (gains)		263		(534)	
Transfers from other pension funds		32		15	
Total Increase in Accrued Pension Benefits		8,370		7,928	

Decrease in Accrued Pension Benefits:					
Benefits (note 9)		3,451		3,287	
Refunds and transfers (note 10)		4,746		1,580	
Administrative expenses included in the service cost		49		40	
Changes in actuarial assumptions (note 6)		655		(870)	
Plan settlement		–		62	
Total Decrease in Accrued Pension Benefits		8,901		4,099	
(Decrease) Increase in Accrued Pension Benefits		(531)		3,829	
Accrued Pension Benefits, End of Year	$	75,359	$	75,890	

See accompanying notes to financial statements.

PUBLIC SERVICE PENSION PLAN
Statement of Changes in Excess of Actuarial Value of Net Assets over Accrued Pension Benefits

Year ended March 31

	2002	2001	
	($ millions)	($ millions)	

Excess of Actuarial Value of Net Assets over Accrued
Pension Benefits, Beginning of Year	$	8,614	$	15,218	

Increase (decrease) in net assets available for benefits		1,165		(2,955)	
Change in actuarial asset value adjustments		(20)		180	
Increase (decrease) in actuarial value of net assets available for benefits	1,145		(2,775)	
Net decrease (increase) in accrued pension benefits	531		(3,829)	
Excess of Actuarial Value of Net Assets over Accrued
Pension Benefits, End of Year	$	10,290	$	8,614	

See accompanying notes to financial statements.

PUBLIC SERVICE PENSION PLAN
Notes to Financial Statements

Years ended March 31, 2002 and 2001

1.	Description of Plan:
The Public Service Pension Plan (the “Plan”), which is governed by the Public Service Superannuation Act (the “PSSA” or the “Act”), provides pension benefits for public service employees. This Act has been in effect since January 1, 1954. 
The following description of the Plan is a summary only.  
(a)	General:
The Plan is a contributory defined benefit plan covering substantially all of the employees of the Government of Canada, certain Crown corporations and Territorial Governments. Membership in the Plan is compulsory for all eligible employees.
The Government of Canada is the sole sponsor of the Plan. The President of the Treasury Board is the Minister responsible for the PSSA. The Treasury Board of Canada Secretariat is responsible for the management of the Plan, while Public Works and Government Services Canada (“PWGSC”), provides the day-to-day administration of the Plan. The Office of the Superintendent of Financial Institutions makes periodic actuarial valuations of the Plan. 
Until April 1, 2000, separate market invested funds were not set aside to provide for payment of pension benefits. Instead, transactions relating to the Plan were recorded in a Public Service Superannuation Account created by legislation in the Accounts of Canada. Pursuant to the PSSA as amended by the Public Sector Pension Investment Board Act, transactions relating to service subsequent to March 31, 2000 are now recorded in the Public Service Pension Fund (the “Pension Fund”), where the excess of contributions over benefits are invested in capital markets through the Public Sector Pension Investment Board (“PSPIB” or the “Board”). The Board is a separate corporate body that started operations on April 1, 2000. Its goal is to achieve maximum rates of return on investments without undue risk while respecting the requirements and financial obligations of the Plan.
(b)	Funding policy:
The Plan is funded from contributions whereby plan members contribute 4% of pensionable earnings up to the maximum covered by the Canada or Quebec Pension Plan (“CPP” or “QPP”) and 7.5% of pensionable earnings above that maximum, and 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. The determination of the cost of the benefits is made on the basis of actuarial valuations, which are performed triennially.  

public service pension plan
Notes to Financial Statements

Years ended March 31, 2002 and 2001

1.	Description of Plan (continued):
(b) Funding Policy (continued):
Until April 1, 2000, a separate market invested fund was not maintained, however, the legislation provides that all pension obligations arising from the Plan be met by the Government of Canada. In addition, the legislation governing the Plan requires actuarial deficiencies found in the Public Service Superannuation Account to be dealt with by increasing the Account in equal installments over a period not exceeding fifteen years and actuarial deficiencies found in the Public Service Pension Fund to be dealt with by transferring amounts to the Fund in equal installments over a period not exceeding fifteen years.  The legislation allows surpluses in the Public Service Superannuation Account to be dealt with by reducing the Account over a period of up to fifteen years and surpluses in the Pension Fund to be dealt with by a reduction of government and/or plan member contributions, or by withdrawing amounts from the Fund.
(c)	Benefits:
The Plan provides benefits based on the number of years of pensionable service to a maximum of 35 years.  Benefits are integrated with the CPP and QPP.  The basic benefit formula is 2% per year of pensionable service times the average of the best five consecutive years of earnings.  When benefits under the CPP/QPP become payable, the basic benefit formula becomes 1.3% per year of pensionable service for earnings subject to the CPP/QPP, up to the average of the maximum earnings under the CPP/QPP for the year of termination and the previous four years, and 2% on earnings above that average. The benefits are fully indexed to the increase in the Consumer Price Index. The benefits are determined by a formula set out in legislation.  They are not based on the financial status of the Plan. 
Other benefits include survivor pensions, unreduced early retirement pensions and disability pensions. To reflect the Income Tax Act restrictions on registered pension plan benefits, separate Retirement Compensation Arrangements have been implemented to provide benefits that exceed the income tax maximum. These arrangements are not part of these financial statements since they are covered by separate legislation. 
(d)	Income taxes:
The Plan is a Registered Pension Plan under the Income Tax Act and as such is not subject to income taxes.

public service pension plan
Notes to Financial Statements

Years ended March 31, 2002 and 2001

2.	Significant accounting policies:
(a)	Basis of presentation:
These financial statements present information on the Public Service Pension Plan on a going concern basis. They are prepared to assist plan members and others in reviewing the activities of the Plan for the fiscal period, but they are not meant to portray the funding requirements of the Plan. These financial statements are prepared using the accounting policies stated below, which are based on generally accepted accounting principles. 
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the period. Actual results could differ from those estimates.
(b)	Valuation of assets:
The Public Service Superannuation Account held in the Accounts of Canada is considered a non‑marketable asset and is valued at cost. 
Investments are recorded as of the trade date and are stated at fair value. Fair value is the amount of the consideration that would be agreed upon in an arm’s length transaction between knowledgeable, willing parties who are under no compulsion to act.  
Fair value for investments in pooled funds is based on unit values, which reflect the quoted market prices of the underlying securities.
Contributions receivable for past service elections are recorded at their estimated net present value, which approximates their fair value.
(c)	Income recognition:
Interest income from the Public Service Superannuation Account and investment income are recorded on the accrual basis. Investment income represents realized gains and losses on the disposal of investments, interest and dividend income and distribution from pooled funds. 
The current year change in fair value of investments and currency is the difference between the fair value and the cost of investments at the beginning and end of each year. 
(d)	Contributions:
Contributions for current service are recorded on the accrual basis in the year in which the related payroll costs are incurred. Contributions for past service that are receivable over a period in excess of one year are recorded at the estimated net present value of the contributions to be received. 
public service pension plan
Notes to Financial Statements

Years ended March 31, 2002 and 2001

2.	Significant accounting policies (continued):
(e)	Benefits, refunds and transfers:
Benefits are recognized when paid. Refunds and transfers are recognized at the moment the refund or transfer occurs, until which time they remain presented with the net assets available for benefits and the accrued pension benefits. 
(f)	Translation of foreign currencies:
Transactions in foreign currencies are recorded at the rates of exchange on the transaction date. Investments denominated in foreign currencies and held at year-end are translated at exchange rates in effect at the year-end date. The realized gains (losses) on disposal of investments that relate to foreign currency translation are included in investment income. Unrealized gains and losses resulting from year-end translation of foreign currency denominated investments are included in the current year change in fair value of investments and currency.
3.	Public Service Superannuation Account and Pension Fund Account:
The Public Service Superannuation Account is held in the Accounts of Canada pursuant to the Public Service Superannuation Act. This Account records transactions such as contributions, benefits and transfers that pertain to pre-April 2000 service. The Account earns interest quarterly at rates that are calculated as though the amounts recorded in the Account were invested quarterly in a notional portfolio of Government of Canada 20 year bonds.
Transactions pertaining to post March 31, 2000, service are recorded in the Public Service Pension Fund through the Public Service Pension Fund Account, which is also held in the Accounts of Canada.  The net amount of contributions less benefits and payments is regularly transferred to the PSPIB for investment in the capital markets. The Pension Fund Account is only a flow through account, and, as such, does not earn interest. At March 31, the balance in the Public Service Pension Fund Account represents amounts in transit or impending transfer to the PSPIB.

public service pension plan
Notes to Financial Statements

Years ended March 31, 2002 and 2001

4.	Investments:
(a)	The portfolio of investments held through the PSPIB at March 31, is as follows:

	2002	2001	
	Cost	Fair 
Value	Cost	Fair 
Value	
	($ millions)	($ millions)	
Canadian equities:			
PSP Canadian Equities Fund	$ 1,276	$ 1,392	$   743	$   603	
Foreign Equities:					
PSP Foreign Equities Fund	1,142	1,190	539	483	
Fixed Income					
PSP Fixed Income Fund	1,316	1,257	656	688	
Cash Equivalents:					
PSP Cash Equivalent Fund	118	118	16	16	
Cash	19	19	–   	–	
	$ 3,871	$ 3,976	$ 1,954	$ 1,790	

At March 31, 2001, the investments were exclusively in pooled funds managed by State Street Global Advisors (SSgA). On October 2, 2001, the PSPIB created the PSP Funds and the investments in SSgA pooled funds previously held were transferred into the PSP Funds. PSP Funds represent unit interests in the assets of the PSPIB.

public service pension plan
Notes to Financial Statements

Years ended March 31, 2002 and 2001

4.	Investments (continued):
(b)	Investment policy:
At March 31, asset mix policy and benchmarks of the investment portfolio held through the PSPIB are as follows:

Asset class	Policy mix	*Benchmark	
	2002	2001		
Canadian Equities	35%	35%	TSE 300	
Foreign Equities	30%	27%	S&P 500, MSCI EAFE	
Fixed Income	32%	38%	SC Bond Universe	
Cash Equivalents	3%	0%	SC 91-day T-bill	
	100%	100%		
	* Benchmarks include the following:
TSE 300 – Toronto Stock Exchange 300 Composite Index
S&P 500 – Standard and Poor’s 500 Composite Index
MSCI EAFE – Morgan Stanley Capital International Index (Europe, Australia, Far East)
SC Bond Universe – Scotia Capital Bond Universe Index
SC 91-day T-bill – Scotia Capital 91-day Treasury Bill Index
	(c)	Foreign currency exposure:
The Plan’s investments are exposed to currency risk through holdings of units in pooled funds of non-Canadian equities where investment values will fluctuate due to changes in foreign exchange rates. The underlying foreign currency exposure by currency as at March 31, is as follows:

Currency	2002	2001	
	Fair value	% of total	Fair value	% of total	
	($ millions)	($ millions)	
US dollars	$       683	57.4%	$       241	49.8%	
Euro	190	16.0	100	20.6	
British pound	126	10.6	52	10.9	
Yen	104	8.7	58	12.0	
Others	87	7.3	32	6.7	
	$    1,190	100.0%	$       483	100.0%	

public service pension plan
Notes to Financial Statements

Years ended March 31, 2002 and 2001

4.	Investments (continued):
(d)	Investment (loss) income:
	2002	2001	
	($ millions)	($ millions)	
Interest and dividend income	$          94	$            2	
Realized losses	(258)	_	
	$      (164)	$            2	

5.	Contributions receivable:

	2002	2001	
	($ millions)	($ millions)	
Contributions receivable from employees for past service	$        399	$        398	
Contributions receivable from employers for past service	473	446	
Other contributions receivable	25	20	
	$        897	$        864	

6.	Accrued pension benefits:
(a)	Present value of accrued pension benefits:
The present value of accrued pension benefits is determined using the projected benefit method pro-rated on service.  Actuarial valuations are performed triennially for funding purposes and are updated annually for accounting purposes, using the government’s best estimate assumptions. The information in these financial statements is based on this annual valuation.  The most recent actuarial valuation for funding purposes was made as of March 31, 1999 by the Chief Actuary of the Office of the Superintendent of Financial Institutions.

public service pension plan
Notes to Financial Statements

Years ended March 31, 2002 and 2001

6.	Accrued pension benefits (continued):
(a)	Present value of accrued pension benefits (continued):
The assumptions used in determining the actuarial value of accrued pension benefits were developed by reference to short-term forecast and expected long-term market conditions.  Many assumptions are required in the actuarial valuation process, including estimates of future inflation, interest rates, expected return on investments, general wage increases, work-force composition, retirement rates and mortality rates.  The accounting assumption for the long-term rate of inflation used in the valuation is 2% (2% in 2001).  The assumed rate of return on investments and on the Public Service Superannuation Account is 6.5% (6.5% in 2001) and 8.2% (9.0% in 2001), respectively, for the year.  
(b)	Actuarial asset value adjustment: 
The actuarial value of net assets available for benefits has been determined at amounts that reflect long-term market trends consistent with assumptions underlying the valuation of the accrued pension benefits.  Marketable investments are valued at market related values, whereby fluctuations in market values are averaged over a five-year period. The actuarial asset value adjustment represents the difference between investments valued at fair value and investments valued at market related values.  

7.	Excess of actuarial value of net assets over accrued pension benefits:
For funding purposes, the pre-April 1, 2000 and post-March 31, 2000 excess of actuarial value of net assets over the accrued pension benefits is determined separately. Based on the accounting assumptions used for these financial statements, the breakdown as at March 31, 2002 is as follows:

	Pre	Post		
	April 1, 2000	March 31, 2000	Total	
	($ millions)	($ millions)	($ millions)	
Net assets available for benefits	$   81,225	$     4,264	$   85,489	
Actuarial asset value adjustment	–	160	160	
Actuarial value of net assets available
for benefits	81,225	4,424	85,649	
Accrued pension benefits	(71,010)	(4,349)	(75,359)	
Excess of actuarial value of net assets 
over accrued pension benefits	$   10,215	$          75	$   10,290	

public service pension plan
Notes to Financial Statements

Years ended March 31, 2002 and 2001

8.	Contributions:

	2002	2001	
	($ millions)	($ millions)	
From employees	$	702	$	779	
From employers	1,690	1,771	
	$	2,392	$	2,550	

During the period, employees contributed approximately 28% (28% in 2001) of the total contributions made in respect of current service. 

9.	Benefits:

	2002	2001	
	($ millions)	($ millions)	
Annuities	$	3,438	$	3,274	
Minimum benefits	13	13	
	$	3,451	$	3,287	

10.	Refunds and transfers:

	2002	2001	
	($ millions)	($ millions)	
Pension division payments	$	38	$	31	
Returns of contributions and transfer value payments	159	172	
Transfers to other pension funds	4,549	1,377	
	$	4,746	$	1,580	

During the year ended March 31, 2001, Canada Post Corporation and three other corporations implemented their own pension plans and their employees ceased to be members of the Public Service Pension Plan. In partial settlement, amounts totaling approximately $4,500 million ($1,300 million in 2001) were transferred to the pension plans of these corporations during the year.  An additional amount estimated at $2,100 million before interest is expected to be transferred to these pension plans within the next year. This amount remains part of the Public Service Superannuation Account and of the accrued pension benefits at March 31, 2002.
public service pension plan
Notes to Financial Statements

Years ended March 31, 2002 and 2001

11.	Public Service Superannuation Account actuarial adjustment:
In accordance with the legislation governing the Plan, the President of the Treasury Board is required to direct that any actuarial deficiency found in either the Public Service Superannuation Account or the Pension Fund be credited to the Plan in equal installments over a period not exceeding fifteen years commencing in the year in which the actuarial report is laid before Parliament.  
The legislation also provides comparable provisions, which grant authority to deal with surpluses in the Public Service Superannuation Account by reducing the Account over a period of up to fifteen years.  Surpluses in the Pension Fund may be dealt with by a reduction of government and/or plan member contributions, or by withdrawing amounts from the Fund.  As a result of the triennial actuarial valuation of the Public Service Pension Plan, which was tabled in Parliament in 2001, the Public Service Superannuation Account was reduced by an adjustment of $8,100 million in 2001.  No additional adjustment was required during the year ended March 31, 2002.  
12.	Administrative expenses:
Administrative expenses consist of the following:

	2002	2001	
	($ millions)	($ millions)	
PWGSC administrative expenses	$	47	$	38	
Treasury Board of Canada Secretariat administrative expenses	2	2	
PSPIB administrative expenses	5	3	
	$	54	$	43	

The legislation provides for administrative expenses to be charged to the Plan. PWGSC, as the administrator of the Plan recovers from the Plan administrative expenses for the activities directly attributable to its administration. These costs include salaries and benefits, systems maintenance and development, accommodation and other operating costs of administering the Plan within the department.   
The Treasury Board of Canada Secretariat, as the program manager of the Plan, provides program advice to the members and charges its administrative costs to the Plan. 
The PSPIB, as the manager of the investment funds of the Plan, charges its operating expenses, salaries and benefits, as well as other operating and investment expenses.
public service pension plan
Notes to Financial Statements

Years ended March 31, 2002 and 2001

13. Contingency:
The Public Sector Pension Investment Board Act that received Royal Assent in September, 1999 amended the PSSA to enable the federal government to deal with surpluses in the Public Service Superannuation Account and the Public Service Pension Fund.  The legal validity of these provisions has been challenged in the courts.  The outcome of these lawsuits is not determinable at this time.

Account Transaction Statements

Public Service Superannuation Account
and Public Service Pension Fund
The Public Service Superannuation Account is used to record all transactions (contributions, benefit payments, and interest credits) with respect to pensionable service accrued by Plan members up to March 31, 2000.
The Superannuation Account earns interest at rates that are based on Government of Canada long‑term bond rates. The interest credited to this Account changes every three months.
All contributions made by Plan members, the government, and participating employers in respect of service accrued on or after April 1, 2000, are credited to the Public Service Pension Fund. The contributions to the Pension Fund, net of benefits and other payments, are transferred to the Public Sector Pension Investment Board (PSPIB) to be invested in financial markets. The contributions and benefits are recorded in an internal government account — the Public Service Pension Fund Account. The balance in this account at year‑end represents impending amounts to be transferred to the PSPIB.

Public Service Superannuation Account Statement
(for the year ended March 31, 2002
with comparative figures for the year ended March 31, 2001)
	2001–02	2000–01	
	(in dollars)	
Opening Balance	81,574,680,376	86,494,731,024	
Receipts and Other Credits			
Contributions			
Government employees	21,416,935	119,651,710	
Retired employees	43,513,583	47,331,221	
Public service corporation employees	1,645,455	21,138,121	
Employer contributions			
Government	51,145,083	207,710,680	
Public service corporations	1,056,601	18,499,246	
Transfers from other pension funds	30,199,675	11,545,247	
Interest	6,887,142,785	7,652,287,530	
Total	7,036,120,117	8,078,163,755	
Payments and Other Charges			
Annuities	3,433,214,119	3,273,397,466	
Minimum benefits	12,258,850	12,948,394	
Pension divisions payments	38,377,896	30,414,056	
Transfer value and interest payments	139,493,717	161,881,563	
Returns of contributions			
Government employees	2,132,695	4,240,528	
Public service corporation employees	701,138	1,697,027	
Transfers to other pension funds	205,715,794	142,167,708	
Transfers to CPC pension plan	4,181,784,000	1,235,000,000	
Administrative expenses	46,748,738	36,467,661	
Total	8,060,426,947	4,898,214,403	
Receipt Less Payments	(1,024,306,830)	3,179,949,352	
Actuarial Adjustment 1		8,100,000,000	
Closing Balance	80,550,373,546	81,574,680,376	
1.	In accordance with legislation, a debit adjustment was made to the account following the tabling in Parliament of a triennial report in 2000–01. The adjustment reduces the account surplus to 10% of account liabilities.	
Public Service Pension Fund Account Statement
(for the year ended March 31, 2002
with comparative figures for the year ended March 31, 2001)
	2001–02	2000–01	
	(in dollars)	
Opening Balance	96,391,625	0	
Receipts and Other Credits			
Contributions			
Government employees	577,865,100	489,200,042	
Retired employees	2,985,847	873,360	
Public service corporation employees	51,959,786	89,030,944	
Employer contributions			
Government	1,499,118,490	1,287,810,313	
Public service corporations	109,148,635	188,683,338	
Transfers from other pension funds	1,967,666	3,426,756	
Total	2,243,045,525	2,059,024,753	
Payments and Other Charges			
Annuities	5,275,333	804,321	
Minimum benefits	333,339	84,566	
Pension divisions payments	142,459	54,327	
Transfer value and interest payments	10,116,112	1,947,267	
Returns of contributions			
Government employees	5,128,183	1,895,715	
Public service corporation employees	1,196,630	469,406	
Transfers to other pension funds	1,506,759		
Transfers to CPC pension plan	160,000,000		
Administrative expenses	1,978,318	3,661,932	
Total	185,677,133	8,917,534	
Receipt Less Payments	2,057,368,392	2,050,107,219	
Transfers to Public Sector Pension Investment Board	2,086,331,862	1,953,715,594	
Closing Balance	67,428,155	96,391,625	

Retirement Compensation Arrangements (RCA) Account
Supplementary benefits for public servants are provided under the authority of RCA Regulations No. 1, parts I and II (Public Service portion) and No. 2 (special Early Retirement Incentive [ERI] Program). The Special Retirement Arrangements Act provided the authority for those regulations and established the RCA Account. 
Retirement Compensation Arrangements No. 1
Financial transactions for plan members who earned more than $99,800 in 2002 are recorded separately. As at March 31, 2002, there were 4,952 public servants in this category and 836 former contributors receiving benefits.

Retirement Compensation Arrangements (RCA) No. 1 Statement
(Public Service Portion)
(for the year ended March 31, 2002
with comparative figures for the year ended March 31, 2001)
	2001–02	2000–01	
	(in dollars)	
Opening Balance	158,940,085	102,689,332	
Receipts and Other Credits			
Contributions			
Government employees	7,052,166	4,429,215	
Retired employees	373,851	331,469	
Public service corporation employees	1,298,485	1,537,277	
Employer contributions			
Government	106,719,013	58,993,384	
Public service corporations	14,441,769	18,077,138	
Interest	18,224,088	11,306,675	
Actuarial liability adjustment 	77,700,000		
Total	225,809,372	94,675,158	
Payments and Other Charges			
Annuities	1,125,174	736,067	
Minimum benefits	3,174		
Pension divisions payments	325,472	437,592	
Transfer value and interest payments	182,724	436,897	
Returns of contributions			
Government employees	7,662	4,065	
Public service corporation employees	9,063	22,062	
Refundable tax	72,721,689	36,787,722	
Total	74,374,958	38,424,405	
Receipt Less Payments	151,434,414	56,250,753	
Closing Balance	310,374,499	158,940,085	

Retirement Compensation Arrangements No. 2
During the three‑year period commencing on April 1, 1995, a number of employees between the ages of 50 and 54 left the Public Service under the Early Retirement Incentive Program, which waived the normal pension reduction for employees of departments and certain agencies who were declared surplus.
Retirement Compensation Arrangements (RCA) No. 2 Statement
(for the year ended March 31, 2002
with comparative figures for the year ended March 31, 2001)
	2001–02	2000–01	
	(in dollars)	
Opening Balance	833,696,765	952,219,083	
Receipts and Other Credits			
Government contributions and interest			
Contributions			
Interest	70,593,558	83,126,279	
Actuarial Liability Adjustment	4,700,000		
Total	75,293,558	83,126,279	
Payments and Other Charges			
Annuities	75,375,028	70,548,170	
Refundable tax	159, 451	131,100,427	
Total	75,534,479	201,648,597	
Receipt Less Payments	(240,921)	(118,522,318)	
Closing Balance	833,455,844	833,696,765	

Supplementary Death Benefit Plan
As at March 31, 2002, there were 255,231 participants employed in the Public Service and 119,778 retired elective participants in the Supplementary Death Benefit Plan. During fiscal year 2001–02, 4,623 death benefits were paid.
Public Service Death Benefit Account Statement
(for the year ended March 31, 2002
with comparative figures for the year ended March 31, 2001)
	2001–02	2000–01	
	(in dollars)	
Opening Balance	1,799,147,082	1,707,010,592	
Receipts and Other Credits			
Contributions			
Employees (government and public service corporations)	53,108,598	53,229,561	
Government			
One‑twelfth of benefit payments	6,519,919	6,809,707	
Single premium for $10,0001 benefit	1,150,570	1,282,817	
Public service corporations	749,676	1,844,903	
Interest	 155,511,816	 151,386,327	
Total	217,040,579	214,553,315	
Payments and Other Charges			
Benefit payments			
General2	77,978,543	81,499,261	
$10,000 benefit3	40,746,080	40,700,342	
Other 	231,231	217,222	
Total	118,955,854	122,416,825	
Receipt Less Payments	98,084,725	92,136,490	
Closing Balance	1,897,231,807	1,799,147,082	
1.	Single premium for a $5,000 benefit prior to September 14, 1999, and for a $10,000 benefit effective September 14, 1999.
2.	Benefits paid in respect of participants who, at the time of death, were employed in the Public Service or were in receipt of an immediate pension under the Act.
3.	Benefits of $10,000 ($5,000 prior to September 14, 1999) in respect of participants who, at the time of death, were employed in the Public Service, or were in receipt of an immediate annuity under the Act, and on whose behalf a single premium for $10,000 ($5,000 prior to September 14, 1999) death‑benefit coverage for life has been made.	
Statistical Tables

Table 1
Annuities in Pay and Annuities That Became Payable 
April 1, 2001 to March 31, 2002
	Annuities in Pay
as at March 31	New Annuities1 
That Became Payable to Contributors	
Fiscal
Year	Contributor Pensions	Survivor Allowances	Total	Men 
Retired	Women Retired	Total Annual
Value2	Average Annuity2	
2001–02	159,542	57,344	216,886	2,308	1,626	$93,776,578	$23,837	

New Allowances 
That Became Payable to Survivors	
Females	Males	Children	Students	Total
Value2	Average Allowance
per Payee2	Average Allowance 
per Family2	
2,532	284	142	207	$19,133,929	$6,045	$6,440	
1.	Annuities include immediate annuities, deferred annuities and annual allowances that became payable.
2.	These amounts do not include indexation.

Table 2
Benefits Other Than Immediate Annuities to Which Contributors Became Entitled
April 1, 2001 to March 31, 2002
	Allowances1 
That Became Payable	Deferred Annuities1
to Which Contributors
Became Entitled	Deferred Annuities
That Became Payable	Lump Sum
Payments2	
Fiscal
Year	Number	Average Allowance3	Number	Average Annuity	Number	Average Annuity3	Number	Amount	
	Men	Women	$	Men	Women	$	Men	Women	$			
2001–02	454	498	20,344	8	10	13,669	193	104	11,292	7,515	403,042,093	
1.	Includes deferred annual allowances. An annual allowance is a deferred annuity reduced because of early payment.
2.	Includes transfer values, returns of contributions to contributors and employee/employer contributions transferred to other pension plans, under the provisions of the Pension Benefits Division Act.
3.	These amounts include indexation where applicable.	

Table 3
Retirements on Account of Age with Immediate Annuities, by Age at Retirement
April 1, 2001 to March 31, 2002
Fiscal 
Year	Age at Retirement	
	55	56	57	58	59	60	61	62	63	64	65	66 and
over	Total	Average Age	
2001–02	447	154	119	115	101	508	190	143	107	93	170	161	2,308	60.14	
Note
For the fiscal year 2001–02, the average retirement age for men was 59.88 and for women 60.55.	

Table 4
Contributor Pensions and Survivor Allowances in Pay 
April 1, 2001 to March 31, 2002
Fiscal Year	Description	Contributor Pensions	Survivor Allowances	
		Men	Women	Total	Females	Males	Total	Children	Students	
2001–02	Average annuity in pay									
	– excluding indexing	$16,081	$9,198	$13,770	$4,423	$4,371	$4,420	$1,397	$1,779	
	– including indexing	$21,609	$12,103	$18,418	$9,109	$6,107	$8,927	$1,558	$2,072	
	Average age	69.80	69.17	69.59	76.14	68.82	75.69			
	Average pensionable service of contributors	24.43	19.89	22.90	21.30	16.67	21.02			

Table 5
Changes in the Number of Active Contributors 
April 1, 2001 to March 31, 2002
	Men	Women	Total	
Number of Active Contributors, April 1, 2001	114,208	125,459	239,667	
Additions	12,433	17,324	29,757	
Deletions				
Employees leaving the Public Service				
Full return of contribution entitlements:				
– 2 years and over of pensionable service1	0	4	4	
– Less than 2 years of pensionable service1	1,631	2,588	4,219	
Transfer value	499	580	1,079	
Immediate annuities and annual allowances paid	1,882	1,361	3,243	
Deferred annuities chosen	15	10	25	
Deferred annuities locked in2	0	0	0	
Options not yet made3	2,014	2,594	4,608	
Transfers out	1	3	4	
Reversions to a non‑contributory status4	287	438	725	
Deaths in the Public Service				
Full return of contribution entitlements	11	5	16	
Benefits paid to survivors	146	124	270	
Total Deletions	6,486	7,707	14,193	
Number of Active Contributors, March 31, 2002	120,155	135,076	255,231	
1.	This includes employees who transferred to other pension arrangements.
2.	Partial return of contributions and entitlement to an annuity based on locked‑in service.
3.	Employees with a choice of benefits have until one year after leaving the Public Service to make a decision as to the type of benefit they wish to receive.
4.	Describes contributors who ceased contributions temporarily (e.g. part‑time).	

Table 6
Changes to the Number of Contributors on Pension 
April 1, 2001 to March 31, 2002
Number of Contributors on Pension, April 1, 2001	160,960		
Additions			
Retirements on pension	3,544		
Deferred annuities payable at age 60	297		
Deferred annuities payable due to disability	0		
Deferred annual allowances	49		
Locked‑in deferred annuities — age 60	0		
Locked‑in deferred annuities — disabled	0		
Annuities with normal reductions waived			
– age 50–54	0		
– age 55–59	         44		
Total Additions	3,934		
Deletions			
Death	5,196		
Re‑employment	       156		
Total Deletions	5,352		
Number of Contributors on Pension, March 31, 2002	159,542		

Table 7
Changes in the Number of Survivors on Pension 
April 1, 2001 to March 31, 2002
FEMALES			
Number of Females on Pension, April 1, 2001	50,796		
Additions			
Members who died in service	117		
Members who died after retirement	   2,415		
	2,532		
Deletions			
Deaths	   1,739		
Number of Females on Pension, March 31, 2002	51,589		
MALES			
Number of Males on Pension, April 1, 2001	3,153		
Additions			
Members who died in service	65		
Members who died after retirement 	      219		
	284		
Deletions			
Deaths	      106		
Number of Males on Pension, March 31, 2002	3,331		
CHILDREN			
Number of Children on Pension, April 1, 2001	1,350		
Additions			
Members who died in service	117		
Members who died after retirement	        25		
	142		
Deletions	      272		
Number of Children on Pension, March 31, 2002	1,220		
STUDENTS			
Number of Students on Pension, April 1, 2001	1,063		
Additions — Age 18	207		
Deletions			
Ceased attending school or reached age 25	        66		
Number of Students on Pension, March 31, 2002	1,204		
Table 8
Types of Benefits to which Contributors Became Entitled 
April 1, 2001 to March 31, 2002
Type of Benefits	Total
Number	Men	Women	Total Amount of New Benefits
$	Average Benefits
$	
Annuities and Annual Allowances						
Immediate annuities						
Age (60 and over)	1,372	812	560	28,939,133	21,093	
Early retirements1	936	684	252	37,017,012	39,548	
Disability	377	165	212	5,098,845	13,525	
Deferred annuities						
Payable at age 60	297	193	104	3,353,703	11,292	
Payable due to disability	0	0	0	0	0	
Annual allowances						
Normal allowances	908	424	484	18,196,671	20,040	
Annuities with normal reductions waived2						
– age 50–54	0	0	0	0	0	
– age 55–59	44	30	14	1,171,214	26,619	
Deferred benefits to which contributors became entitled3	18	8	10	246,036	13,669	
Total	3,952	2,316	1,636	94,022,614	23,791	
Lump Sum Payments						
Cash termination allowances	0	0	0	0	0	
Returns of contributions	4,239	1,662	2,597	9,158,646	2,161	
Total	4,239	1,662	2,597	9,158,646	2,161	
1.	These are employees age 55 with 30 or more years of pensionable service.
2.	These include annuities with normal reductions waived paid out of the Public Service Superannuation Account.
3.	These include deferred annuities and deferred annual allowances.	

Table 9
Supplementary Death Benefit Plan — Number of Participants and Death Benefits Paid
April 1, 2001 to March 31, 2002
Fiscal
Year	Active Participants	Retired Participants	Death Benefits Paid	Amount 
Paid	
	Total	Men	Women	Total	Men	Women	Total	Men	Women	$	
2001–02	255,231	120,155	135,076	119,769	83,026	36,743	4,623	3,533	1,090	118,955,854	

Table 10
Supplementary Death Benefit Plan — Changes in the Number of Death Benefit Participants, April 1, 2001 to March 31, 2002
ACTIVE PARTICIPANTS	
	Men	Women	Total	
Number of Active Participants, April 1, 2001	114,208	125,459	239,667	
Additions	12,433	17,324	29,757	
Deletions	6,486	7,707	14,193	
Number of Active Participants, March 31, 2002	120,155	135,076	255,231	
RETIRED PARTICIPANTS	
	Men	Women	Total	
Number of Retired Participants, April 1, 2001	84,578	36,408	120,986	
Additions				
– On annuities	1,985	1,464	3,449	
Total	1,985	1,464	3,449	
Deletions				
– Deaths	3,495	1,102	4,597	
– Other	42	27	69	
Total	3,537	1,129	4,666	
Number of Retired Participants, March 31, 2002	83,026	36,743	119,769