Report

Assessing the Impact of Canada Pension Plan Enhancements on the Public Service Pension Plan

Mar 7, 2025

This report examines how the Canada Pension Plan (CPP) enhancements from 2019 to 2025 affected the Public Service Pension Plan (PSPP). The Parliamentary Budget Officer (PBO) commissioned the Office of the Chief Actuary (OCA) to compare the PSPP’s actual contribution rates with a hypothetical scenario that fully integrated each stage of the enhanced CPP.

Highlights

The CPP was enhanced from 2019 to 2025 by increasing contribution rates and expanding pensionable earnings to provide higher retirement benefits, while the PSPP did not adjust its contribution and benefit rates accordingly.
Under a hypothetical scenario from the Office of the Chief Actuary where the PSPP rates were adjusted to reflect the CPP enhancement, the difference in the PSPP’s annual contributions grow over time, reaching a projected 9% of service costs (about $616 million) in 2025–26; summing across the 2017-18 to 2025-26 fiscal years, these differences total approximately $2 billion.
Although actual PSPP contributions were higher than they would have been under a fully integrated framework, so were the benefits accrued by participants. Since the contributions collected correspond to the benefits that were accrued, there is no impact on the funded status of the PSPP.