Reserve Force Retirement Gratuity

[McInnes]

<div align="center"><u>Retirement Gratuity</u></div align>

As a way of rewarding long service with the Reserves, there is a one-time gratuity payable on retirement from the Reserves after 20 or more years of service. (Personnel retiring after 10-20 years’ service will receive half the normal amount.) Simplified, it is calculated on the basis of seven days’ pay (at the time of retirement) times the number of full years that the member has served. Some examples of this benefit are as follow (based on April 2003 pay rates):

A Corporal retiring after 20 years’ service will receive $15,422.

A Warrant Officer retiring after 25 years’ service will receive $24,206.

A Captain retiring after 30 years’ service will receive $38,564.

This benefit is taxable unless rolled into an RRSP.


<div align="center"><u>Others</u></div align>
A number of other allowances and benefits are also available, including medical, dental and disability insurance and an upcoming pension plan for long-term members.

 

[Griswald DME]

I have a large chunk of cash coming from the Reserve Gratuity.  I'm CTíng to Reg. Force and was advised to place it into an RRSP for the time being, then transfer it over to a pension buy back.  HOWEVER I was told by the Pensions Corp. that I have to be careful what I put it into (within the RRSP) because it has to be something that is allowed to be transferred direct into the pension buy back (or else I'll get taxed on it for withdrawing it, which I don't want, even though I realize I'd get the tax back at the end of the year).

Anyone here been in the same situation?  Where did you go for advice?  I'd appreciate some heads up, I realize SISIP may be able to help but I've dealt with them from a distance, which is the case for me where I am currently and it was a bloody pain in the arse.  I'm looking more for some online docs I can read up on, or some advice from others who have been thru the same ordeal as I am going thru with the pension and RRSP thing.

Thanks very much,

DME

 

[Gunner]

RRSP is the best place for it in the short term (make sure you have invested it conservatively).  I'm not sure why the Pension Corp told you that.  I suppose it is possible that you RFRG will be more money than what you are eligible to buy back. 

http://www.admfincs.forces.gc.ca/admfincs/subjects/daod/5001/1_e.asp

DAOD on RFRG. 

http://www.admfincs.forces.gc.ca/pension/handbook_e.asp?sel=null#toc_Part_I

Buying into the CFSA, costs, etc.

You may just want your orderly room (or yourself) to contact DAPPP directly.

Hope this helps.

 

[Griswald DME]

Hi Gunner,

Thanks for the info.  Great links, I'm going to read over them today and from what I can see briefly, they will give me a lot of information.  I was mistaken, it was the DAPPP I spoke with, not the Pension Corp.  The lady I spoke with answered my questions, but so vaguely it seemed like she just wanted to get me off the phone - kinda weird.  Maybe I'll read over the documents you sent and then give them another call, maybe I just caught her on a bad day.

Thanks again,

DME

 

[Horse_Soldier]

Gentlemen, I am the individual who designed and implemented the RFRG when I was working at NDHQ/DPSP.  The RFRG is considered a severance payment under tax rules, not a pension payment even though some of the brass marketed this benefit as a "pension replacement".  As a severance payment, there are limits to what you can roll over tax free into an RRSP.  You can roll-over $2,000 per year for each year of service prior to January 1, 1996.  You can also roll-over whatever amount would fill the RRSP room you have for the current and past seven years - for this latter case, you will require a letter from CRA stating the room you have available.  Anything beyond that is considered taxable income and will be treated as such.

As far as transferring from an RRSP to buy back elective service, this is a very simple process and usage of the correct CRA forms will make it a tax-free event, provided the annual limits are respected.  I would suggest that after you move the money into an RRSP, you sit down with a financial advisor of whatever bank/firm you used to buy the RRSP to calculate what the best buy-back schedule would be.  That being said, elective service bought back is often such a small monthly deduction on your pay, that it might be financially more advantageous to keep the RFRG proceeds in an RRSP.  Once again, you would have to sit down with a financial advisor and do the math.

 

[neutmiller]

Can someone please clarify to me how the reserve pension plan works? It says if you have more than 10 years you get 3.5 days and if you have more than 20 days you get 7 days? I am puzzled on what this means. Can anyone clarify? Thanks.... 


edit to clarify title

 

[Fishbone Jones]

That's not the pension. That's the gratuity.

 

[dapaterson]

You are referring to the Reserve Force Retirement Gratuity (RFRG).

Unless it is for medical or force strucutre downsizing reasons, it is payable on release as 3.5 days of pay per year served, if you have more than ten but less than twenty years served, and as 7 days of pay per year served if you have twenty or more years served (to a limit of210 days of pay).

This is a one-time payment, different from the pension payments made under the CFSA part I.1 (for part-time reservists) and part I (for long-serving full-time Reservists and for Regular Force members).


The actual calculation for time served is a bit more complex:

All time enrolled up to and including 28 Feb 2007 is counted as one for one - that is, one day enrolled (and not NES or on ED&T for other than MATA/PATA) counts as a day served.

After that date, days are only counted when you have recorded attendance; class B and C days are counted as one day each; class A days are counted as 1.4 days each (to account for weekends).

The total of those two numbers determines "how many years" you multiply by 3.5 or 7 days; the eligibility thresholds for 3.5 and 7 days are based on enrolled time (less, of course, NES and non-MATA/PATA ED&T).

There is a CBI that provides the details.


For lots of information on Reserve Pensions, see:
http://forums.army.ca/forums/threads/28418.930/topicseen.html

 

[Tetragrammaton]

There seems to be this general notion that the gratuity disappeared now that the pension is in place.

I can confirm that members releasing from the reserve, if they have the qualifying periods of service, get both.

 

[SuperTrooper]

Hello

Well it's time to get out as I have no more time to give to the reserves.
I just want to get a better idea about gratuity before I walk into the ROR.
If memory serves me correct, 10 yrs at rank you get % amount per year, 20 yrs at rank you get % per year.
My question is...what is the percentage?

or

have things changed?

Thanks

 

[kratz]

The RFRG is:
50% for between 10 years - 20 years.
100% for over 20 years.

It also depends on your release item.
If you release 4c, the above applies.
If your release is 3(medical) or CRA then it is 100%.

 

[dapaterson]

CBI 204.54 provides the detailed information on the calculation of the RFRG.

See:

http://www.cmp-cpm.forces.gc.ca/dgcb-dgras/pub/cbi-dra/204-eng.asp

 

[justmyalias]

<div align="center"><u>Retirement Gratuity</u></div align>
.... times the number of full years that the member has served....

Is that consecutive only, or cumulative?
EX:
In 10years you've worked throughout, a total of 7 'full-time class B/C'...or?

What if you worked full time the first 7years, and only worked part-time the remaining 3yrs...do you get shafted, or do you get the benefit 'times' those 7 first years-but at your most senior rate of pay?

EDIT:  Upon reflection, it's probably irrelevant when those full-time were eh?  Rather, simply, you 'served 7 full-time years' and so it'd be times 7?

 

[dapaterson]

Is that consecutive only, or cumulative?
EX:
In 10years you've worked throughout, a total of 7 'full-time class B/C'...or?

What if you worked full time the first 7years, and only worked part-time the remaining 3yrs...do you get shafted, or do you get the benefit 'times' those 7 first years-but at your most senior rate of pay?

EDIT:  Upon reflection, it's probably irrelevant when those full-time were eh?  Rather, simply, you 'served 7 full-time years' and so it'd be times 7?

Hang on, it's going to be a bumpy ride...

(1) Determine continuous CF enrolment.  Remove ED&T (unless it's MATA/PATA time), NES, Supp Res / Ranger time.

Assuming you are releasing 4c, the continuous enrolment period determines how many days per year you get.  Less than 10 years, nothing.  Ten to nineteen complete years, 3.5 days pay.  Twenty complete years or more, 7 days pay.


(2) Determine paid enrolment after 28 Feb 07, and continuous enrolment on and prior to 28 Feb 07.

So, if you enrolled on June 1st 1997, served continuously as a Primary Reservist since then:

On 28 Feb 07 you had 9 years, 273 days.

If, since then, you have 180 days class B, 270 days class C, and 40 days class A:

You get 273 (remainder from pre 28 Feb 07) + 180 (class B) + 270 (class C) +40*1.4 (class A) = 779 days = 2 years 69 days

So, grand total = 11 years 69 days paid service, 12 years 317 days  continuous service (as of 13 April 2010)


Therefore: with 12 years of continuous service, you get 3.5 days pay per year of paid service.  You have 11 years of paid service.  Therefore, you would receive as your RFRG 38.5 days of pay at your current rank and IPC.  It can be transferred directly to an RRSP, if you have contribution room, otherwise it is paid out in a lump sum with taxes withheld.

Clear as mud?

 

[justmyalias]

So, if you've been enrolled for exactly 10years and decide to retire, if you only have 9.5yrs paid service after all the math and the "x1.4's"...you get squat? ;D

For those who just did the Pension Buy-Back Calculations...would a relatively exact calculation for the 'pensionable time' figure acquired from that-be what your 'paid service time' be?

 

[SeanNewman]

The RFRG is:
50% for between 10 years - 20 years.
100% for over 20 years.

It also depends on your release item.
If you release 4c, the above applies.
If your release is 3(medical) or CRA then it is 100%.

So are you saying I won't be getting anything for my 18 months in the Reserves earning the rank of Pte(T) with a 5F release for deciding I would rather go to the movies on a date on Tuesday nights than the Armouries?

Redress to follow! 

 

[dapaterson]

justmyalias:

Enrolled for 10, 9.5 paid would be 3.5*9 = 31.5 days pay.

Remember:  Enrolled determines 3.5 or 7 days; paid determines what you multiply the 3.5 or 7 by.

 

[justmyalias]

...
Remember:  Enrolled determines 3.5 or 7 days; paid determines what you multiply the 3.5 or 7 by.

This makes it clear, thank you.

 

[justmyalias]

Hang on, it's going to be a bumpy ride...

(1) Determine continuous CF enrolment.  Remove ED&T (unless it's MATA/PATA time), NES, Supp Res / Ranger time.....

Just to be super clear.

If you have say 10yrs enrolled time., but 1/2yr in that was ED&T (not mata/pata or other)., then is your enrolled time then effectively 10-.5?

Is it simply treated as a mathematical deduction (no other penalties or negative implications?), IE your work after the ED&T period allows your 'enrolled' time to just add-up?  So one would need to be effective strength to allow the NET 'enrolled period' to exceed 10yrs?

For those who just did the Pension Buy-Back Calculations...would a relatively exact calculation for the 'pensionable time' figure acquired from that-be what your 'paid service time' be?

You may have missed this one I asked the other day, would this be a correct figure to get your 'paid service yrs'?  I'm a little unclear about it...seems to be a good calculation, but somehow I'm thinking maybe it's not?

 

[acronym]

I didn't want to start a new thread so I hijacked this one. I apologize, but it is basically the same topic.


Anyways, I am releasing after 22 years of service from the reserves. I joined Nov 89' and released 97' briefly to go to University (ya i know i should've just ED&Ted) I rejoined Jan 98'. 

My issue is that, "currently" they are only calculating my gratuity from 98 on, which is only 13 years, when in fact I have 22 years. This is in the hands of my OR, whom are quite proficient, but I was just wondering if anyone here have any expertise on this?