Report on the Administration of the Supplementary Retirement Benefits Act for the Fiscal Year Ended
March 31, 2004

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 annual Report on the Administration of the Supplementary Retirement Benefits Act for the Fiscal Year Ended March 31, 2004.

Respectfully submitted,

The paper version was signed by Reg Alcock
President of the Treasury Board

This is the 34^th annual report on the administration of the Supplementary Retirement Benefits Act (the Act), which came into force on April 1, 1970.

Supplementary Benefits

The Act makes it possible to provide supplementary benefits for - that is, to index - pensions or allowances payable under the Acts or regulations listed in the Appendix, as at March 31, 2004.

The original Supplementary Retirement Benefits Act of 1970 provided for increases in pensions of a maximum of 2 per cent per year, based on the year of retirement going back to 1952. The increases were payable at the age of 60, or earlier under specific conditions.

Effective January 1, 1974, the 2 per cent ceiling on increases was removed and an annual increase in pensions reflecting the full increase in the cost of living was permitted. The annual increase in pensions is payable in January of each year. This increase is based on the percentage increase in the average of the Consumer Price Index (CPI) for the 12 months ended on the preceding September 30 over the CPI average for the 12 months ended a year earlier.

The Act was amended in 1975 to permit interest to be paid on returns of contributions. The interest rate is 4 per cent compounded annually.

Since 1982, the legislation has required that the increase payable in the first year after a person retires be pro-rated according to the number of complete months of retirement.

In 1983 and 1984, the increases were limited to 6.5 and 5.5 per cent, respectively, under amendments to the Act passed in 1983.

In 1992, the Act was amended because changes were being made to the statutes governing four federal public sector pension plans: the Public Service Superannuation Act (PSSA); the Canadian Forces Superannuation Act (CFSA); the Royal Canadian Mounted Police Superannuation Act (RCMPSA); and the Members of Parliament Retiring Allowances Act (MPRAA). The amendments meant that the Act did not apply to pensions payable under those statutes. Consequently, each of those statutes now permits increases in these pensions, which are determined as they were under the Act. The amendments to the Act related to benefits payable under the PSSA, the CFSA and the RCMPSA were made retroactive to April 1, 1991. Those related to the MPRAA became effective on January 1, 1992. For more information on these amendments, see the section titled "Funding."

The increase in pensions payable in January 2004 was 3.3 per cent.

Funding

The Act establishes an account known as the Supplementary Retirement Benefits Account (the Account). Plan members who have not yet retired, except the Governor General, contribute to this account. The government matches these contributions.

Between April 1, 1970, and December 31, 1976, members contributed 0.5 per cent of their salary. Effective January 1, 1977, this rate was increased to 1 per cent.

Interest on the Account is payable at the end of each quarter. It is calculated monthly on the minimum balance in the Account at an interest rate that represents the yield on outstanding Government of Canada bonds having a term to maturity of five years, less one eighth of 1 per cent.

Before January 1, 1974, all supplementary benefits were charged to the Account. Since that date, however, the benefits paid to a former contributor have been charged to the Account only until they equal the total amount credited to the Account for that person. Supplementary benefits paid in excess of that total have been charged to the Consolidated Revenue Fund.

Under the 1992 amendments mentioned in the preceding section, the appropriate portions of the Account were transferred to the superannuation accounts established under the PSSA, the CFSA, the RCMPSA and the MPRAA. These transfers greatly reduced the size of the Account.

Account Transactions and Membership Statistics

During the fiscal year 2003-04, total receipts from contributors and the government, including interest, amounted to $8.3 million. The total amount paid under the Act was $46.442 million, of which $43,445 was charged to the Account; the remaining $46.399 million was charged to the Consolidated Revenue Fund, in accordance with subsection 8(2) of the Act. The balance in the Account at the end of the year was $98.4 million.

Details of the transactions in the Account during the fiscal year appear in Tables 1 and 2.

Table 3 is a comparative statement of receipts and payments since the Act came into force.

On March 31, 2004, there were 1,068 contributors to the Account and 1,978 beneficiaries.

Table 1
Supplementary Retirement Benefits Account (in thousands of dollars)

Note
Totals may not add up due to rounding.

Table 2
Supplementary Retirement Benefits Account
Details of Receipts and Payments for 2003-04 (in thousands of dollars)

1. In addition to these charges to the Account, $46,399,248 was charged to the Consolidated Revenue Fund under subsection 8(2) of the Act.

Note
Totals may not add up due to rounding.

Table 3
Supplementary Retirement Benefits Account
Comparative Data-April 1, 1970, to March 31, 2004 (in thousands of dollars)

Table 3 (cont'd)
Supplementary Retirement Benefits Account
Comparative Data-April 1, 1970, to March 31, 2004 (in thousands of dollars)

1. Includes $5,939,714 aggregate amounts transferred to the superannuation accounts established under the PSSA, the CFSA, the RCMPSA and the MPRAA, as explained earlier in this report.

2. Includes approximately $9.4 billion charged to the Consolidated Revenue Fund from 1973-74 to 2003-04 under subsection 8(2) of the Act.

Note
Totals may not add up due to rounding.

Appendix

The Supplementary Retirement Benefits Act applies to pensions or allowances payable under the following Acts or Regulations:

1. Governor General's Act

2. Part VI of the Members of Parliament Retiring Allowances Act, R.S.C. 1970, 
c. M-10

3. Lieutenant Governors Superannuation Act

4. Judges Act

5. Diplomatic Service (Special) Superannuation Act

6. Civil Service Superannuation Act

7. Defence Services Pension Continuation Act, R.S.C. 1970, c. D-3

8. Royal Canadian Mounted Police Pension Continuation Act, parts II and III, R.S.C. 1970, c. R-10

9. subsection 15(2) of the Currency, Mint and Exchange Fund Act

10. subsection 25(10) of the War Veterans Allowance Act

11. Annuities Agents Pension Regulations

12. Canadian Overseas Telecommunications Corporation Pension Regulations

13. Sydney Pilots Pension Regulations

14. National Harbours Board Pension Regulations

15. Atlantic Pilotage Authority Pension Regulations

16. Atomic Energy of Canada Ltd. Pension Regulations