Reserve Pension- Merged

[Rifleman62]

Geo,
After 35 YOS, and still serving, the contribution rate is 1%. All service prior to the 35 YOS are subject to the 2007 contribution rates of 4.3% for all earnings under 2007 YMPE, and 8.1% for all earnings over 2007 YMPE. That is if you made the election in 2007. If you wait to 2008, both contribution rates increase (and you keep paying 7% CI on everything you owe). From your reply, it could be interpreted that you are only paying 1% for all of contributions. Also, as I found out, once you make your election, they go back 35 years from your election date. So if you are still serving full time, or part time, none of that service will count in the calculation of your annuity. For example, if you have served 15 years full time, and 20 years part time, and will serve till e.g. 2010, and elected in 2007, your buy back will be from 2007: 20 years part time and 15 years full time (total 35 years). Service from 2007 to 2010 will add nothing to your pension. Somewhat of a surprise to me when I received a spreadsheet from the pension folks.

 

[geo]

Oh no, not paying 1% on the whole shebang..... nosireee..... 4.3% like everyone else.
Elected in 2007.
.... still 2007 was my 35th.  I can continue on Cl B full time till 2014... so for another 7 years.
There are a whole bunch of years at the beginning where there's only Cl A and small bit of Cl B.
I contributed to other pension plans & RRSPs during that time... Overall, I have a buyback of 13 years service over the 35 yr period.
My early years are relatively "cheap" ones... and what should be the expensive ones will be bought at 1%...

at least that's the way I saw it...  awaiting the pension folks spreadsheet....

 

[dapaterson]

The online buyback calculator has been updated.  It's as user-hostile as ever, and the math remains a black box.

It is however quite interesting to see the difference that rolling over into the full-time plan makes.  For an additional contribution of 14% I get an increase in benefit of 34%.  Certainly suggests that the part-time plan is being over-charged for the benefits members will receive...

 

[Nfld Sapper]

Anyone want to crunch my numbers through that thing  ???

 

[Rifleman62]

dapaterson

I have a copy of one of the calculation spread sheets that they are manually calculating my pension. The following are the summary heading as to how they figure it out for someone in the Part l plan:

Contributions owing under Part l >            $ (the amount you would have contributed if you were in the Reg F)
Contributions owing under Part l.1>>        $ (the amount you would have contributed under the part time plan without interest)
Full top-up amount >>                            $ (the difference between the above)

"Full amount" owing for elected reserve service if elected under Part l.1>>      $ (the amount you would have contributed under the part time plan with interest)
"Full amount" owing for top-up election made on day of election >                    $ (the figure in the "Full top-up amount" above)
"Full amount" owing for elected reserve service                                                $ (the total of these two items = this is your total buy back)

Everyone is considered to have been in the part time plan (Plan l.1) first. Everyone. You are considered a Part I "contributor", as opposed to a Part I.1 "participant".

Do not expect any breaks. They figure out how much of a benefit you are entitled for each year to a maximum of $1,794.92 no matter how much you have been paid. Your best five years may not be your last five years due to adjusted earnings. Mine were 1988 - 1992!!

There were two sets of regulations for the Reserve Pension:

http://canadagazette.gc.ca/partII/2007/20070307/html/sor32-e.html

Registration
SOR/2007-32 February 16, 2007

CANADIAN FORCES SUPERANNUATION ACT
FINANCIAL ADMINISTRATION ACT
Reserve Force Pension Plan Regulations
T.B. 833341 February 15, 2007

And:

http://canadagazette.gc.ca/partII/2007/20070307/html/sor33-e.html

Registration
SOR/2007-33 February 16, 2007

CANADIAN FORCES SUPERANNUATION ACT
FINANCIAL ADMINISTRATION ACT
Regulations Amending the Canadian Forces Superannuation Regulations
T.B. 833341 February 15, 2007

Interesting,  that the Notes to SOR/2007-33 states:

"The regulations will also provide for a number of members of the Reserve Force (an estimated 1000 members), to come under the Regular Force Pension Plan on March 1, 2007. These members will be required to pay the same contributions as members of the Regular Force.".

This means nothing and is misleading. 33 is  housekeeping only to allow thoes reserves who meet the threshold, to be in the Regular Force (Plan l). You are in the Part l plan, butyour contributions, rate of interest, and repayment period are established and regulated as if you are in the part time plan, except you pay more - the "Top Up".  Note above how the total amount of your buy back is calculated. .Here are the regulations in 33 that state this:

10.3 A member who has made a past earnings election, and is still paying in respect of the election by way of instalments on the day before the day on which the member becomes a contributor, is required to pay into the Canadian Forces Pension Fund, by instalments reserved from pay and allowances or otherwise, amounts equal to the unpaid instalments on the same terms and conditions as set out in sections 18 to 23 of the Reserve Force Pension Plan Regulations as those that would apply to a participant under those Regulations in respect of a past earnings election.

12(2) In respect of a member, or former member, of the reserve force who becomes a contributor on or after March 1, 2007, clauses 6(b)(ii)(G) and (H) of the Act are adapted as follows:

(G) any period of reserve force service, as prescribed in subsection 12.2(1) of the Canadian Forces Superannuation Regulations, if — during the period commencing on the day on which they become a contributor and ending the day before the later of one year after the date of the written notice advising the contributor that they have become entitled to make it and March 1, 2010 — the contributor elects to pay for that service,

  (3) The election for reserve force service set out in clauses 6(b)(ii)(G) and (H) of the Act, as adapted by subsection (2), is for all of the contributor’s reserve force service. However, there shall be counted as pensionable service only the most recent years that would result in not more than 35 years of pensionable service to the contributor’s credit.

Manner of Payment for Elective Pensionable Service
14.1 In respect of a member of the reserve force who is a contributor and who makes an election under any of clauses 6(b)(ii)(A) to (F) and (I) to (L) of the Act and 6(b)(ii)(G) and (H) of the Act as adapted by subsection 12.2(2) of these Regulations, or a member or former member of the reserve force who makes a top-up election under section 14.2 of these Regulations, subsection 9(1) of the Act is adapted as follows:

9. (1) Any amount required to be paid by a contributor who makes an election under any of clauses 6(b)(ii)(A) to (F) and (I) to (L) and 6(b)(ii)(G) and (H) as adapted by subsection 12.2(2) of the Canadian Forces Superannuation Regulations or a member or former member of the reserve force who makes a top-up election under section 14.2 of those Regulations shall be paid on the same terms and conditions as set out in sections 16 to 21 of the Reserve Force Pension Plan Regulations as those that would apply to a participant in respect of a past earnings election under those Regulations and section 23 of those Regulations applies to any member or former member of the reserve force, who was in receipt of an annuity or annual allowance, in respect of any instalments resulting from a top-up election as if that member or former member had been a participant under those Regulations.

The CFSA  http://laws.justice.gc.ca/en/ShowFullDoc/cr/C.R.C.-c.396///en still states 4% simple interest, and a repayment for life, but there are Regulations for reserves in the CFSA that negate that. Now is there any doubt that we are being hosed?

 

[Rifleman62]

Quotes from the CFSA:

EQUALITY OF STATUS

Status of males and females
3. Male and female contributors under this Act have equality of status and equal rights and obligations under this Act.
1974-75-76, c. 81, s. 31.

Definition of “interest”
7. (2) In this section, unless otherwise specified, "interest" means simple interest at four per cent per annum from the middle of the fiscal year in which the contributions would have been made, had the contributor been required to make those contributions during the period for which he elected to pay, until the time of the election.
R.S., 1985, c. C-17, s. 7; 1992, c. 46, s. 36; 1999, c. 34, s. 120.

Unpaid instalments
9. (2) Where a contributor who has elected under this Act or Part V of the former Act to pay for any period of service and has undertaken to pay for that period by instalments, ceases to be a member of the regular force before all the instalments have been paid, the unpaid instalments may be reserved, in accordance with the regulations, from any amount payable to him by Her Majesty including any annuity or other benefit payable to him under this Act, until such time as all the instalments have been paid or the contributor dies, whichever occurs first.

Too bad that Reserve Force contributors do not have "equality of status and equal rights" under the Act as Regular Force contribitors. Regulations have been passed (see above 32 and 33) to ensure there is not equality of status and equal rights.

 

[dapaterson]

Remember, sections 7 and 9 of the CFSA are within "Part I" of the Act, not part I.1.  While one can argue that the intent of the legislature was to charge 4% simple interest for all buy-backs, the legislation as proclaimed does not include that direction within part I.1.  This would make a challenge through the courts more difficult.

In my own case, the top-up under part I is about 14% of my part I.1 contributions - but increases the benefit by 34%.  That suggests that either (a) contributors under part I.1 are over charged or (2) contributors under part I are undercharged.


There's actually an interesting issue percolating now that is getting some senior attention - the CFS Regulations state that a Reg F member who retures and resumes service in the Reserves winthin the first 60 days after their release who does not receive an annuity payment is re-enrolled into the part I pension - so rather than drawing an annuity and a Reserve paycheque, they are Reserve contributors to part I - far from what they intended.

All this to say:  there's a lot about the implementation that was poorly done.

 

[COBRA-6]

The buyback calculator keeps kicking me off 

Same thing for me WRT the top-up contribution (before it was "fixed") a small contribution almost doubled my benefits, hmmm...

 

[geo]

There's actually an interesting issue percolating now that is getting some senior attention - the CFS Regulations state that a Reg F member who retires and resumes service in the Reserves winthin the first 60 days after their release who does not receive an annuity payment is re-enrolled into the part I pension - so rather than drawing an annuity and a Reserve paycheque, they are Reserve contributors to part I - far from what they intended.

As they say.... it's the squeeky wheel (knees) that get the grease... so it will be the Reg force retirees who will accelerate the process' to "fix" what should have been done before CIF date.

 

[begbie]

The buyback calculator keeps kicking me off 

Same thing for me... I veiw my personal data and captured earnings but as soon as I click the benefits & option icon I am immediately kicked out.

 

[dapaterson]

The "Benefits" option doesn't work - but if you go into captured earnings and then select the benefits button, things should work.  The user interface remains somewhat rough (how's that for an understatement?).

I think the programmers fixed the math, but not the interface.

 

[Rifleman62]

A quick check. The difference between the on line calculator figures and the official spread sheet I was sent is 3 K due to some adjustments. I have not bothered to update the figures on line. Utilizing the official spread sheet, compared to the on line calculator, without doing the on line rollover, the official cost without rollover is 86%. Roll over of 14% increases the pension by 11%.

On the Canadian Forces Pension Home Page (2007-12-10), it states: " Monthly Pensions: These payments are usually completed within 8 weeks to 12 weeks of the CF member's release date" http://www.admfincs.forces.gc.ca/pension/benefits_e.asp?sel=pb  This period of time to get a pension was communicated to all Regular Force release clerks in June as I previously posted. So the problem dapaterson stated, WRT ex Regular Force CT to the Reserves and now being re enrolled into the Part l plan should have been anticipated. It could all be a grand plot, or incompetence. take your pick. For a Regular Force member who puts in their release in the normal course, and then have to wait 2 - 3 months for a pension, is ridiculous. Once the CF pension services gets their act together, a Reserve retiree should also not have to wait that long. What civilian company would do that and get away with it. There may even be a law, but it will not apply to the Federal government.
Geo- I do not know too many, in fact none, ex Regular Force who would not want their pension and their Cl A or B pay concurrently. So consequently I do not expect resolution from them. Possibly things are different in your AOR.

 

[dapaterson]

... and the ongoing Reserve Pension schmozzle continues.

A week ago I printed copies of the estimated benefits calculated by the online calculator.  Today, a week later, I've done the same.

Over the course of seven days, with no changes to the tombstone data, my Part I.1 benefit has increased by 17%.  However, my part I benefit hasn't budged.

After nearly a year on line they still can't get the calculations right.


Naturally, the head of pensions has just been honoured with an award for "HR Leadership" or some such nonsense.

 

[geo]

For those regs contemplating retiring and transfering to the Reserve... CANFORGEN 018/08 is hot off the press....

COMPONENT TRANSFER - EFFECT ON CFSA PENSION BENEFIT ENTITLEMENT
UNCLASSIFIED


REFS: A. CANFORGEN 036/07 CMP 016/07 221340Z FEB 07
B: CFSA 19(1)
C: CFSA 22(1)
D: CFSR 8.1(1)(C)
E: CFSR 16.91
F: CFSR 27.1(2)
SUBJ: COMPONENT TRANSFER - EFFECT OF CFSA PENSION BENEFIT
ENTITLEMENT



REF A ANNOUNCED THE IMPLEMENTATION OF PENSION MODERNIZATION EFFECTIVE 1 MAR 07. PARA 5 OF REF A MENTIONS GRANDFATHERING PROVISIONS AVAILABLE UNDER SPECIFIED CONDITIONS.


WITH MODERNIZATION CAME AMENDED PENSION PLAN RULES. THE RULES COVERED UNDER REFS B TO F PROVIDE THE FOLLOWING:


IF A CF MEMBER IS ENTITLED TO EXERCISE AN OPTION FOR A GRANDFATHERED IMMEDIATE ANNUITY UPON RELEASE FROM THE REGULAR FORCE, THE OPTION MUST BE MADE PRIOR TO BECOMING ENTITLED TO RECEIVE EARNINGS AS A MEMBER OF THE RESERVE FORCE IN ORDER TO BE A VALID OPTION. IF THE OPTION IS MADE PRIOR TO RELEASE FROM THE REGULAR FORCE IT IS DEEMED TO HAVE BEEN MADE ON THE DAY FOLLOWING RELEASE AND WOULD BE A VALID OPTION ONLY IF THERE IS NO ENTITLEMENT TO EARNINGS AS A MEMBER OF THE RESERVE FORCE ON THE DAY FOLLOWING RELEASE FROM THE REGULAR FORCE.


IF A CF MEMBER IS ENTITLED TO A TRANSFER VALUE UPON RELEASE FROM THE REGULAR FORCE, THE OPTION MUST BE MADE NO LATER THAN ONE YEAR FOLLOWING RELEASE. THE OPTION FOR THE TRANSFER VALUE IS DEEMED NOT TO HAVE BEEN MADE IF PRIOR TO PAYMENT BEING ISSUED THERE IS AN ENTITLEMENT TO EARNINGS AS A MEMBER OF THE RESERVE FORCE.


THE SITUATION DESCRIBED IN PARA 2A LARGELY AFFECTS MEMBERS LEAVING THE REGULAR FORCE WITH MORE THAN 19 YRS REGULAR FORCE SERVICE AND LESS THAN 25 YEARS CF SERVICE. WITH LESS THAN 25 YEARS CF SERVICE, AN IMMEDIATE ANNUITY MAY NOT BE PAYABLE UNDER NEW PENSION RULES. UNDER NEW RULES, MEMBERS NOT ENTITLED TO AN IMMEDIATE ANNUITY ARE ENTITLED TO A DEFERRED ANNUITY. A DEFERRED ANNUITY MAY BE CONVERTED TO A TRANSFER VALUE IF THE OPTION FOR A TRANSFER VALUE IS MADE BEFORE AGE 50. A DEFERRED ANNUITY MAY ALSO BE CONVERTED TO AN ANNUAL ALLOWANCE PAYABLE AT AGE 50 OR LATER. NEW PENSION RULES PROVIDE THAT MEMBERS WHO ARE ENTITLED TO A DEFERRED ANNUITY ARE AGAIN CONSIDERED MEMBERS OF THE REGULAR FORCE AND ARE BACK IN THE PENSION PLAN EFFECTIVE THE FIRST DAY THERE IS AN ENTITLEMENT TO EARNINGS AS A MEMBER OF THE RESERVE FORCE. THE MEMBERS STATUS AS THE HOLDER OF A DEFERRED ANNUITY ENTITLEMENT REMAINS IN EFFECT UNTIL A VALID OPTION HAS BEEN MADE FOR A BENEFIT OTHER THAN A DEFERRED ANNUITY. IF A VALID OPTION FOR A GRANDFATHERED IMMEDIATE ANNUITY IS MADE, THE DEFERRED ANNUITY ENTITLEMENT ENDS AND IS REPLACED BY THE GRANDFATHERED IMMEDIATE ANNUITY ENTITLEMENT. IF A VALID OPTION FOR A TRANSFER VALUE IS MADE, THE DEFERRED ANNUITY ENTITLEMENT ENDS AND IS REPLACED BY THE TRANSFER VALUE ENTITLEMENT.


PARA 2 ABOVE DESCRIBES THE CONDITIONS FOR A VALID OPTION FOR A GRANDFATHERED IMMEDIATE ANNUITY AND TRANSFER VALUE. IN CASES WHERE AN OPTION FOR EITHER OF THOSE BENEFITS EXIST, MEMBERS WHO ARE RELEASING FROM THE REGULAR FORCE WITH MORE THAN 19 YRS REGULAR FORCE SERVICE AND LESS THAN 25 YEARS CF SERVICE AND ARE TRANSFERRING TO THE RESERVE FORCE MUST MAKE A VALID OPTION IN ORDER TO RECEIVE EITHER OF THOSE BENEFITS.


MEMBERS ENTITLED TO A DEFERRED ANNUITY TRANSFERRING FROM THE REGULAR FORCE TO THE RESERVE FORCE WHO DO NOT WISH TO END PENSION PLAN MEMBERSHIP DO NOT HAVE TO MAKE A CHOICE OF BENEFITS IN ORDER TO CONTINUE PLAN MEMBERSHIP. THOSE MEMBERS REGAIN PLAN MEMBERSHIP STATUS IMMEDIATELY UPON BECOMING ENTITLED TO RECEIVE EARNINGS AS A RESERVE FORCE MEMBER.


THERE MAY BE MEMBERS WHO WERE UNAWARE OF THE NEED TO EXERCISE THEIR OPTION UNDER THE GRANDFATHERED CONDITIONS DESCRIBED ABOVE BEFORE COMMENCING RESERVE FORCE SERVICE. WORK HAS COMMENCED TO IDENTIFY THESE MEMBERS AND A REMEDY TO THE SITUATION IS BEING DEVELOPED. FURTHER DIRECTION APPLICABLE TO THIS ISSUE WILL BE PROVIDED SHORTLY


AS THE DEPARTMENTAL PENSION ADMINISTRATOR, THE DIRECTOR CF PENSION SERVICES IS THE PRIMARY POINT OF CONTACT FOR BOTH REGULAR AND RESERVE PENSION ARRANGMENTS. DCFPS MAY BE CONTACTED TOLL-FREE 1-800-267-0325 OR LOCALLY AT 613-996-7980.

 

[Rifleman62]

Well David, things have not changed. The Bde Compt and I phone them on this problem last May. They said impossible, but went off line shortly later. To add most angst, see the following:

The following is from the CFSA Regulations.

Manner of Payment for Elective Pensionable Service

14. (1) If, under paragraph 9(1)(b) of the Act, a contributor — other than a contributor who is a member of the reserve force or, in respect of a top-up election under section 14.2, a contributor who was a member of the reserve force — has exercised an option to pay in instalments for pensionable service, those payments shall be made by reservation from pay and allowances or otherwise, for life or for a period of years not greater than for life, and are payable in the following manner:

(a) the first instalment is due and payable on the first day of the month immediately following the month of election and succeeding instalments monthly after that time during the term corresponding to the plan of payment selected by the contributor, computed in accordance with Canadian Life Table No. 2 (1941), Males four per cent or Females four per cent, as the case may be; and

(b) the contributor may amend the plan of payment to provide for payment of the instalments still to be paid in a lump sum or by larger monthly instalments on a basis similar to that described in paragraph (a), calculated as of the date of the amendment.

The following is from the RFP Regulations.

Instalments 

18. (1) The instalments shall be payable in equal amounts that may not be less than $5.00, except the last one, and be calculated using the mortality rates set out in the Complete life table, Canada, 1995-97, published by Statistics Canada, and interest at four per cent compounded annually.

When payable (2) he instalments shall be payable on the first day of each month following the month of the election until the earlier of

(a) the end of the period chosen by the participant ending before the later of 20 years and the participant's 65th birthday, and

(b) the death of the participant.

See the difference? When you make your election, the 7% CI on the buy back stops, and is replaced with 4% CI, plus a Mortality Charge (life insurance) on the amount you owe. For example, say you elected in Apr, made a lump sum payment of $200,000, still owe $100,000. You will be charged 4% CI on that $100,000 commencing May. Plus the Mortality Charge. If you took the maximum 20 year repayment option, that $100,000 grows to $219,300 due to the 4% CI. Plus the Mortality Charge of course, which will add thousands more depending on your age.

Personally I am already paying 54% of the buy back in 7% CI costs. Add another $100K plus, plus, plus, and I am regioning over a quarter of a million dollars in interest alone. My personal problem. Just to keep you informed of what is really going on. I still do not have, after 6 months, all the figures.

What does the reserve community on this board think of that?

From dapaterson: "Naturally, the head of pensions has just been honoured with an award for "HR Leadership" or some such nonsense".  This is a natural event. The first Project Director of the CFPMP received a CDS Commendation, and promotion to Colonel for his outstanding work on the project. If she has received an award, the corporate last stand will be that it is impossible that this is a mess, we just gave the person in charge a prestigious award.

 

[Rifleman62]

First the estimate of the 4% CI based on $100 K carried over a 20 year repayment term in the above post is wrong. It was calculated as a investment, rather than a debt with the interest on a declining balance. It should be grows to $175 K including a Mortality charge (based on your age), vice $219 K.

Second, received my final figures yesterday (5 Aug to 31 Jan), with pension to commence with payment end Feb.

As stated before, the interest @ 7% CI, was 54% of the basic buy back. As I had to finance some of the basic buyback over 20 years, the additional interest cost of this amount financed, including a Mortality charge, increased the total interest costs to 81% of the basic buy back. Or, adding the cost of the basic buy back plus the interest on the amount financed over 20 years, the total interest to be paid will be 63.8 % of the total cost of the buy back. I will break even approx 7.9 years on a total buy back cost of over 1/3 of a million dollars. Almost a 26 year pension.

This is the best I can do to inform those who are interested on the cost without actually giving the exact figures. So it gives an idea.

Is it worth it? I say yes. A indexed pension, without having to worry about your RRSP's going up and down (as seen in the last weeks), opportunity for retired medical and dental benefits costing approx $600 per year (no pension = cannot apply for Med/Den coverage), survivor benefits.

They will get better at provision of the pension as the kinks come out.

 

[Rifleman62]

Amendment edited above: "grows to $175 K"

 

[darmil]

Does anybody know if you can still be payed out? After this tour I'm getting out I have 12 yrs TI.All reserve time.I have tried to get info from the website they emailed me all this sh**.I don't understand.I need someone to explain it to me. I guess they had someone talk about it at the south side Armouries here in Edmonton but I couldn't go.I found out like 2hrs before they meeting.

 

[Rifleman62]

MikeH
What do you mean "be payed out"? If you have all Cl A time, some Cl B time for courses etc, plus Cl C time for a tour, and you bought back all that paid service, then released you may be eligible for "Transfer Value". Send your specific questions and I will research and give you answers to the best of my knowledge.

"if you are younger than age 50, a transfer of the value of your deferred annuity and bridge benefit to a locked-in RRSP or , an insurance company to purchase an annuity, or another registered pension plan"

 

[darmil]

Well back before they had the reserve pension if you did 10 yrs it was 10,000.. 20yrs 20,000 etc.I was wondering if they still have this option?I have over 3,000 cl A days and over 500 cl B.I joined April 96.I'm 29 yrs old.I plan to get out after this tour and want to know what I can get if I can get paid out some way, and put that money into a mutual fund of some sort is better than waiting until I'm 65 .I don't think that little money will be worth much then.