Office of the Superintendent of Financial Institutions
Public Service: Avg. age at retirement has been 59* with 28 years of service
RCMP: Average age at retirement has been 55* with 32 years of service
CF: Average age at retirement has been 49* with 27 years of service
*Average over past three years
Real rate of return assumption for Pension Fund is derived using a building block approach:
1996 to 2013: Government of Canada Marketable Bonds, Average Yield: Over 10 Years (V122487), 2014+ : Projections
Forecasts for the Govt. Canada LT bonds with duration over 10 years are obtained by adjusting upwards the projections for 10-years Govt. Canada LT bonds by 0.4% for average private sector forecasts presented prepared in September 2013
Source: Credit Suisse Global Investment Returns Yearbook 2014, Dimson, Marsh and Staunton
Due to current low interest rates environment, we assume real rate of return of 3.4% for the next 5 years and 3.7% over next 10 years.
* Offset by 24% of borrowed money market securities.
Source: Actuarial Study No. 14, Mortality Study on the Public Service of Canada, September 2014
Section 1.24 of the Auditor General Spring 2014 Report:
“The OCA determines the demographic and economic assumptions for funding valuations, which occur every three years, in an independent manner. All actuarial assumptions are best-estimate assumptions made by the OCA. We found that the Secretariat, National Defence, and the RCMP respected the independence of the Chief Actuary”
Retirement is expensive and could become even more expensive in the future with improved longevity and uncertain future global economic growth.