CUPE has serious concerns that a hidden pension cut for federal public servants is buried deep in Mark Carney’s Budget 2025.
The “Equitable Public Sector Retirement Benefits” section describes an apparent “overcontribution” issue for federal government workers’ participating in their workplace pension plans and the Canada or Quebec Pension Plans (CPP/QPP). The federal government says correcting this problem will save both federal employees and the government money, and that workers will “continue to receive the same pension benefits.” This sounds like a win-win — members paying less for the same pension benefits—but CUPE thinks this is misleading.
In recent years, the benefits payable under the CPP and QPP have grown, a huge win for workers secured through the efforts of Canada’s labour movement. But a careful reading of the 2025 budget reveals the government is likely planning to reduce the pensions being earned under federal workplace pension plans by roughly the same amount that CPP/QPP has grown, effectively nullifying the benefits of CPP/QPP expansion for these workers. We believe that this is the government’s real agenda based on our experience with this issue at other pension tables. We have seen other instances of employers trying this very thing, but these have generally been beaten back by CUPE.
Federal government employees are not “overcontributing” for the level of pension benefits they are receiving now. Their level of contribution is appropriate unless the government plans for them to receive lower workplace pensions going forward. But the budget misleadingly said that members would receive the “same pension benefits.” No actual cuts are spelled out in the budget, but CUPE fears they could represent a 10 to 15% or more reduction of the basic rate at which pension is earned going forward.
Government estimates it will save almost $400 million annually from this change alone. But it is worth noting these cuts would be applied to a pension plan that is very healthy. The public service plan has such a huge surplus that the federal government has recently been scooping member money out of the plan and into general government coffers.
CUPE is calling for clarity on this important issue. Federal government workers do not deserve deceptive spin when it comes to their retirement security. They deserve full transparency and honesty at all times. And MPs deserve to fully understand the implications of the budget before they vote on it. As it stands, plan members are in the dark and even MPs are unlikely to understand there appears to be a major pension cut for federal workers proposed in the budget document.
Even more troubling, it appears the government plans to impose this change unilaterally. Government said it would “initiate consultations with key stakeholders,” but gave no indication that they would seek the consent of unions or plan members, or that the proposed changes would be brought to bargaining tables. The government savings associated with this cut are already baked into Budget 2025’s fiscal plan, giving all appearances that the decision is final. The Canadian Charter of Rights and Freedoms protects collective bargaining rights in Canada. The terms of pension plans, like all compensation issues for unionized workers, must only be decided in bargaining.
The federal government’s conduct in the recent Air Canada dispute and its heavy-handed use of controversial Section 107 of the Canada Labour Code have severely damaged the government’s relationship with Canada’s unionized workers. For a budget that purports to commit to “collective bargaining in good faith” with federal workers, the Carney government’s apparent secret pension attack is a very bad place to start.
CUPE is also concerned that if the federal government makes these changes to the federal workers’ pension plans, then other CUPE plans will be at risk from employers who want to attempt the same thing.