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Assets Available to Pay Pension Benefits
Retirement Compensation Arrangements Account
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
Public Service Pension Plan: Statement of Changes in Net Assets Available for Benefits
Public Service Pension Plan: Statement of Changes in Accrued Pension Benefits
Account Transaction Statements
Public Service Superannuation Account and Public Service Pension Fund
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
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
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.
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.
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.
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.
On March 31, 2002, net assets available to pay current and future pension benefits consisted of $80,550(1) 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.
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).
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.
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.
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.
For additional information on the Public Service Pension Plan, you may consult the www.tbs-sct.gc.ca/hr-rh/bp-rasp Web site.
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 |
To the Minister of Public Works and Government Services and to the President of the Treasury Board
I have audited the statement of net assets available for benefits, of accrued pension benefits and of excess of actuarial value of net assets over accrued pension benefits of the Public Service Pension Plan as at March 31, 2002 and 2001 and the statements of changes in net assets available for benefits, changes in accrued pension benefits and changes in excess of actuarial value of net assets over accrued pension benefits for the years then ended. These financial statements are the responsibility of the Plan's management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audits in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
In my opinion, these financial statements present fairly, in all material respects, the net assets available for benefits, and accrued pension benefits and the excess of actuarial value of net assets over accrued pension benefits of the Plan as at March 31, 2002 and 2001 and the changes in net assets available for benefits, changes in accrued pension benefits and changes in excess of actuarial value of net assets over accrued pension benefits for the years then ended in accordance with Canadian generally accepted accounting principles.
Further, in my opinion, the transactions of the Plan that have come to my notice during my audits of the financial statements have, in all significant respects, been in accordance with the Public Service Superannuation Act and regulations.
The paper version was signed by
Sheila Fraser, FCA
Auditor General of Canada
Ottawa, Canada
February 14, 2003
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 |
$ |
10,290 |
$ |
8,614 |
See accompanying notes to financial statements.
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 |
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 |
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 |
- |
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.
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.
Year ended March 31
|
||
2002 |
2001 |
|
|
||
($ millions) |
($ millions) |
Excess of Actuarial Value of Net Assets over Accrued |
$ |
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 |
$ |
10,290 |
$ |
8,614 |
See accompanying 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, whichare performed triennially.
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.
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.
(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.
4. Investments:
(a) The portfolio of investments held through the PSPIB at March 31, is as follows:
|
|||||
2002 |
2001 |
||||
Cost |
Fair |
Cost |
Fair |
||
|
|||||
($ 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.
(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% |
(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.
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 |
81,225 |
4,424 |
85,649 |
Accrued pension benefits |
(71,010) |
(4,349) |
(75,359) |
|
|||
Excess of actuarial value of net assets |
$ 10,215 |
$ 75 |
$ 10,290 |
|
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.
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.
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.
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 |
|
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 |
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 |
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. |
Table 1
Annuities in Pay and Annuities That Became Payable
April 1, 2001 to March 31, 2002
Annuities in Pay |
New Annuities1 |
||||||
|
|||||||
Fiscal |
Contributor Pensions |
Survivor Allowances |
Total |
Men |
Women Retired |
Total Annual |
Average Annuity2 |
|
|||||||
2001-02 |
159,542 |
57,344 |
216,886 |
2,308 |
1,626 |
$93,776,578 |
$23,837 |
New Allowances |
||||||
|
||||||
Females |
Males |
Children |
Students |
Total |
Average Allowance |
Average Allowance |
|
||||||
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 |
Deferred Annuities1 |
|||||
|
||||||
Fiscal |
Number |
Average |
Number |
Average |
||
Men |
Women |
$ |
Men |
Women |
$ |
|
2001-02 |
454 |
498 |
20,344 |
8 |
10 |
13,669 |
|
Deferred Annuities |
Lump Sum |
||||
|
|||||
Fiscal |
Number |
Average |
Number |
Amount |
|
|
|||||
Men |
Women |
$ |
|||
2001-02 |
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 |
Age at Retirement |
|||||||||||||
|
||||||||||||||
55 |
56 |
57 |
58 |
59 |
60 |
61 |
62 |
63 |
64 |
65 |
66 and |
Total |
Average Age |
|
|
||||||||||||||
2001-02 |
447 |
154 |
119 |
115 |
101 |
508 |
190 |
143 |
107 |
93 |
170 |
161 |
2,308 |
60.14 |
Note |
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 |
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 |
Active Participants |
Retired Participants |
Death Benefits Paid |
Amount |
||||||
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 |
1. This amount does not include contributions receivable.Return