Pension Changes Explained
Following our previous press release, we can now provide more details on the federal budget cuts that would directly affect pension benefits.
As you know, federal public service pensions are integrated with the Canada Pension Plan (CPP), or the Québec Pension Plan (QPP) for members in Québec. Until 2019, this setup ensured that retirees continued to receive about 2% per year of pensionable service, up to 70% of their pre-retirement income from the combined pension (PSS + CPP/QPP).
In 2016, legislation was adopted to increase the CPP/QPP replacement rate from 25% to 33% of maximum insurable earnings. This change, phased in between 2019 and 2023, raised both contribution rates and future CPP/QPP benefits. The maximum insurable earnings also rose, from roughly $71,000 to $83,000 between 2024 and 2025.
Because the public service pension plan didn’t change, benefits after age 65 increased in line with CPP/QPP improvements. In other words, at age 65, total pension income (from combined benefits) may exceed 2% for each year of service.
Now, the government is proposing changes that would generate savings of about 1% of the total salary mass by reducing its pension contributions. Since the Federal Public Sector Labour Relations Act (FPSLRA) prevents pension matters from being collectively bargained, the government is taking advantage of this loophole to quietly reduce overall benefits. They claim that employee contributions will decrease but fail to mention that pension benefits at age 65 would also be reduced.
What This Means for You
Members who are close to retirement age now would not be affected much. The proposed changes, if adopted by parliament, would have most impact for members who are at the beginning of their careers.
Since 2016, UCCO-SACC–CSN has negotiated three collective agreements under the clear understanding that pension improvements were part of the total compensation package. Never once did the employer indicate an intention to claw back these gains at age 65. Doing so now, outside of the collective bargaining process, is a breach of good faith.
Had the union known this was the government’s intent, we could have demanded fair compensation elsewhere to offset the loss, an amount equivalent to roughly 1% of the total salary mass.
What Happens Next
We have already reached out to opposition parties to make them aware of the situation and to seek their support in blocking this unfair measure. Meetings are already scheduled in the coming days.
Rest assured, we will not stand by idly. We intend to fight to protect our members’ rights and the benefits they have earned.
We will continue to keep you informed as this situation develops. More information will follow.