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Ottawa targets public service pension plan for cutbacks Add to ...

The generous pension plan enjoyed by federal civil servants is being targeted for possible cuts, including an end to early-retirement provisions for new hires, federal documents and sources say.

Newly released documents show that a group of deputy ministers has been taking a hard look at the federal pension plan, with concerns that fewer and fewer private-sector plans offer the same type of benefits.

"The government of Canada cannot isolate itself from this discussion," said a Treasury Board presentation circulated in Ottawa's senior ranks.

The Conservative government raised the possibility this month of going after the bureaucracy's pension plan as it looks for ways to deal with a ballooning deficit.

But senior civil servants are also concerned that too many bureaucrats retire in their mid-50s, causing staff shortages that are set to worsen in coming years.

Any major change to the Public Service Superannuation Act, however, will be stiffly opposed by unions, which are trying to contain the growing criticism of their members' plans in an era of dwindling private-sector pensions.

One of the most controversial aspects of the federal pension plan is the ability to retire with a full pension at age 55, after 30 years of service. Federal officials expressed concerns that the provision is "reducing the pool of staff with experience," with half of the executives in government eligible to retire by 2012.

"Current provisions are typical of plan designs conceived during a period of excess labour supply," the presentation said.

Sources said the government has been exploring the possibility of modifying, or even removing, early-retirement incentives for new recruits as a long-term solution.

As it stands, federal officials feel that the provision "is working against us," especially with impending labour shortages.

Another possibility would be allowing bureaucrats to collect partial pensions while continuing to work for the government.

"The Treasury Board Secretariat is evaluating the needs for a phased retirement initiative in the context of all of the existing human-resources policy instruments," said spokesman Pierre-Alain Bujold.

The Canadian Federation of Independent Business has been arguing the current benefits and pensions offered to public servants are not sustainable. The CFIB is urging governments to increase the minimum retirement age and freeze benefits.

In a year-end interview, Finance Minister Jim Flaherty had said he discussed government pension plans at a recent meeting with his provincial counterparts.

"A good part of program spending relates to the cost of people of course," he said. "And one of the things we were talking about in Whitehorse when we were discussing pension plans is the fact that, you know, there is a group of people in Canada who work for federal governments or provincial governments and territorial governments that have handsome pension arrangements."

The minister's description of public-sector pensions drew immediate concern from one of the main unions representing federal public servants.

"It's no deep dark secret that this government has been talking about the pensions that federal public-sector workers receive being larger than they should be," said John Gordon, president of the Public Service Alliance of Canada. "But the fact of the matter is that the public-sector workers pay for their pension plan … it's somewhat deferred salary."

According to the Treasury Board, however, federal employees paid $1.2-billion into the plan in 2007-08, compared to the government's $2.6-billion share. That 32-per-cent employee contribution will go up, but only to 40 per cent by 2013.

Government pension plans in Ontario, Quebec and Alberta operate on a 50-50 basis, the Treasury Board says. On average, federal bureaucrats retire at 59 with a fully indexed pension of $38,000 a year.

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