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Reserve Pension- Merged

dapaterson

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If you are eligible, transfer values (up to 3 months out from the current date) are offered.
 

dapaterson

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Interesting case coming before the courts, objecting that RCMP officers working part-time can't buy back days not worked to increase the value of their pensions.  Simplified, it appears they want to treat days not worked as leave without pay, so they could pay member plus employer contributions for those days to increase their final benefits; right now, when working part-time, the calendar year counts against the 35 year limit, but the pension benefit is pro-rated based on the number of days worked.  Should they be successful, it may have an impact on Reservists in the part I (full-time) pension plan as their situation is similar.

http://www.cbc.ca/news/politics/rcmp-pension-plan-constitutional-challenge-women-part-time-1.3898780
 

NJD

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Hello,

I'm the CFO in the family and am an Omers member. My husband is the one in the military and it is his pension benefits that I'm asking about. I think I'm mixing up Omers terms with the CF Superannuation definitions and could use a bit of help. Omers uses 'Pensionable Service' and 'Qualifying Service' in pension calculations.

Pensionable Service versus CF Service question:

We did a lump sum buyback and top up for service back to 1986. He has 30 some years of 'pensionable service' now and reached his 9131 days at the end of 2015. The Pensionable Service number comes from the initial buyback forms plus subsequent years of continuous Class B contracts.

The new pension calculator uses 25 something years in his pension estimate with a release date this summer. I'm looking for clarification on the pension formula. For simplicity, I'm not breaking out the bridge benefit.

Pensionable Service x 2% x Average Salary

Is this the correct formula? The calculator uses 25 years instead of 30 years.

Average Salary question:

I could almost swear I read that the CF pension was based on the Best Consecutive 60 Months of Salary. But maybe I just saw what I expected it to be rather than what it said. Omers is Best 60 Consecutive Months.

I now found reference to a definition of 'Average Salary', that being the best five years of paid service.

Is this correct?

We are both taking a year off to travel with the kids while they still like us.

I was on a four over five plan where I took a 20% pay cut for four years and will now receive that deferred salary during our year off. I can buyback this year off by paying both the employee and employer pension contribution to Omers.

With regards to DH, we initially thought he had to release since there is no formal option to take Leave Without Pay. Now I've been told that he can release. Take an immediate annuity (receive his pension). Re enroll after our travel year. And start paying back into his pension without having to repay the benefits he received.

Further, because he did not receive any salary during that year off, his best five years just rolls over that year, kind of like it never happened.

For clarification,

I thought (using $100k and years for simplicity only):
2014 100k
2015 100k
2016 100k
2017 zero
2018 100k
Best five is (100k+100k+100k+0+100k)/5

But now I'm told this, if he comes back for two more years after the trip:
2014 100k
2015 100k
2016 100k
2018 100k
2019 100k
Best five is (100k+100k+100k+100k+100k)/5

Not even a requirement to buyback that missing year!?

This just seems TGTBT. It's difficult to throw away common wisdom on this. When it seems TGTBT than it probably is. Especially combined with being able to take just one year of pension and then re enroll.

If you've read this far, my apologies for a very long post and too many questions.

Any help or clarification on this would be very much appreciated.

Thanks much, NJD


 

dapaterson

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Get ready for a bumpy ride... things are complex.  (I'm also providing some info on Severance here, since I saw you asking about that in another thread).

1.  Severance (the old RFRG): Since your husband is releasing (and he must release; a transfer to the Supp Res will not trigger pension entitlements), the severance is a "retiring allowance" under the income tax act.  Therefore, for all years prior to 1996, you may put $1500 into RRSPs above and beyond your normal contribution room. If he enrolled in 1986, that makes 10 years or $15K that can be rolled into RRSPs above your available contribution room.  Ref: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/rtrns/t4/spcl/trnsfr-eng.html

2. For Reservists in part I of the CFSA, like your husband, there are two numbers that are important: Years of pensionable service, and days of CAF service.  A year of pensionable service is a year enrolled in the plan.  That year can include both paid and unpaid days.  The benefit is calculated based on Days of CAF Service.  Thus, any years where your husband was enrolled in the CAF but not working full-time, he does not receive credit for days he did not work.  So a benefit calculated on 25 years out of 30 years is not, om its face, unusual. Ref: http://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._396/page-7.html#h-18

3. Average salary for a Reservist in Part I is calculated differently; there's a formula in the Superannuation Regulations.  Annualized earnings are calculated for each calendar year of service.  Simplified description: Take pay earned in the year, divide by the number of days worked in the year, and multiply by 365 to get the annual salary for the year.  The best 5 consecutive years of annual salary are used to determine the benefit. Ref: http://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._396/page-7.html#h-18

So, assuming you husband does re-enrol after a year away, and assuming that he is not absent for one full calendar year, then as long as he has some earnings in each calendar year he will have his earnings for those years included in a future benefit calculation.

Note that if your husband does re-enrol he cannot buy back the year away.  No service = no buyback.

He will have to meet the enrolment standard for the CAF, the same as anyone coming in off the street; serving members who no longer meet the enrolment standard or their occupational standard can be retained; once they're out, they are a new entrant, like any other person.  There is no guarantee of re-enrolment or resumed full-time employment.
 

NJD

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dapaterson, crystal clear.

Thanks for the great explanation. Especially the 'average salary'. I never would have figured that out.

With regards to CAF Service, yesterday I was speaking with a guy in Pension Services (he called for DH but was kind enough to speak with me in his absence). I aked for clarification and he kept saying Pensionable Service. Your info makes alot more sense.

Thanks again!
 

NJD

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dapaterson said:
So, assuming you husband does re-enrol after a year away, and assuming that he is not absent for one full calendar year, then as long as he has some earnings in each calendar year he will have his earnings for those years included in a future benefit calculation.

I've had some time to think about this and have more questions if you don't mind.

Assuming he re enrolled successfully upon our return, if he does 10 Class A days each month (instead of full time) is this math correct:

Using the $100,000 per year salary in my previous posts, that's a $274 Class A work day. He could earn $10,960 in the remaining four months of 2018 (10 days per month x four months x $274 per day).

The average salary calculation for 2018 would be $100,010 ($10,960/40*365)?
As if he was still Class B for the whole year?

Of course, CAF Service would only accumulate at the actual number of days worked, so just 40 days for 2018?

But the average salary calculation is pretty sweet. I must still be missing something?
 

dapaterson

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No, you're (almost) correct.

The only thing (and it's a Good News thing) is that class A pay is credited for 1.4 days of CAF service per day worked, so if he works 40 class A days, he would be credited for 56 days of CAF service.
 

NJD

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Ah, 1.4...
is this to account for not being paid for weekends like Class B (5 days x 1.4 is 7)?

He is part of the succession plan upon our return. No guarantee of a full time contract but a Brigade position is probable. Our concern was based on things I had all wrong.

I thought he couldn't accept a pension and then later re enroll (without having to pay it back).
I thought the best five clock would have to reset or include a year of zero earnings
And I certainly didn't think that Class A days would have such a generous effect on pension benefits.

It seems that this year off won't have too much impact on our finances in the long run. Nor on his career.

Thanks so much for your guidance.

 

NJD

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I seem to recall reading,  but can't easily find it, that once a member becomes part of the Part 1 Superannuation then remains in Part 1. Is that right?
 

dapaterson

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dapaterson said:
Interesting case coming before the courts, objecting that RCMP officers working part-time can't buy back days not worked to increase the value of their pensions.  Simplified, it appears they want to treat days not worked as leave without pay, so they could pay member plus employer contributions for those days to increase their final benefits; right now, when working part-time, the calendar year counts against the 35 year limit, but the pension benefit is pro-rated based on the number of days worked.  Should they be successful, it may have an impact on Reservists in the part I (full-time) pension plan as their situation is similar.

http://www.cbc.ca/news/politics/rcmp-pension-plan-constitutional-challenge-women-part-time-1.3898780

And the appeal was unsuccessful.

The judge agreed that while the majority of Mounties who work part-time are women with young children, she said they also benefited from spending more time with their children and less stress in trying to find child care.

As for the overall impact on their pensions, Kane found it would be reduced, on average, by five per cent but that "it is difficult to conclude that the impact is necessarily adverse."

The women's lawyer, Paul Champ, said today's judgment is a big disappointment for his clients, who fought the issue inside the RCMP for 10 years before turning to the courts.

"The court recognized that care for children disproportionately falls to women in Canada, including women in dual-earner families, Champ wrote in an email to CBC News.

He said his clients are reviewing the judgment and considering an appeal.

"Hopefully the federal government will take a close look at this decision and recognize that pension plans for RCMP and public service workers need to be reformed to be more equitable for parents who choose to temporarily work part-time to care for their children. This would be the right policy choice for a feminist prime minister," Champ said, in reference to Prime Minister Justin Trudeau's own oft-stated description.

http://www.cbc.ca/news/politics/rcmp-pension-young-mothers-federal-court-1.4151519
 

KanD

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I need some guidance and ELI5 explanation surrounding my pension situation:

- I am a full-time indeterminate employee with the public service and contribute to the pension plan

- I am also a reservist with the CAF and also contribute to the reserve pension plan

- The Canadian Armed Forces Pension Centre informs me that this is a great position to be in as it will allow me to reach my full 35 years of pensionable service earlier

- The Canadian Public Service Pension Centre informs me that this is a terrible situation to be in as I contribute to both pension plans and will max out my contributions to both plans in 17.5 years and receive a reduced pension when I retire.

I intend to remain in both the PS and CAF (reserves) as long as possible, well beyond my 60s.

I am very confused as to what the best course of action is and what all this means. No one at either pension centres has offered to explain this situation to me and have simply asked that I decide what I want to do.

Any advice/guidance or clarification?
 

dapaterson

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Are you paying into CFPP or RFPP on your reserve pay?  If RFPP, then your time in the military plan does not affect your 35 year limit. If in the CFPP (due to 5 years full time military service) then your situation is much more complex and fraught.
 

KanD

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I am paying into the RFPP and Public Service Pension Plan.

Could you please elaborate as to why it does not affect the 35 year limit?

dapaterson said:
Are you paying into CFPP or RFPP on your reserve pay?  If RFPP, then your time in the military plan does not affect your 35 year limit. If in the CFPP (due to 5 years full time military service) then your situation is much more complex and fraught.
 

dapaterson

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The RFPP (strictly speaking, CFSA part I.1) is designed as a stand alone plan that is not interfaced with the other federal plans.  While there is a 35 year limit, it is not integrated with the PSSA and RCMPSA like the CFSA part I is.

That lack of integration is to your benefit.  "Reaching 35 years earlier" would be a bug, not a feature.  Remember that eligibility thresholds depend on attaining a certain number of years of pensionable service; if you were to hit 35 combined early, it's very possible that you'd not reach any of the magic thresholds and be unable to draw an unreduced annuity until age 60 (or 65, depending on when you joined the PS plans).

Here's why: In my case, I was a simultaneous contributor to CFSA part I ("CFPP") and the PSSA for 8 years, with 19 years of prior pensionable service under CFSA part I.  However, CFSA part I pensions are based not on the number of years of pensionable service you have, but on the number of days of CAF service you have.  If you are Reg F four your entire career with no leave without pay, the two are the same.  In my case, as a part-time Reservist with about 10 years of full-time service, it means that of my 27 years of pensionable service under the CFSA, I have about 16 years of CAF service.  The eleven year gap represents a period where I can never get pensionable service - a hit of about 22%.

The pension offices are poorly equipped for this.  Most staff have not the faintest of schmicks about the Reserve pension plan and confuse it with the Reg F pension plan.  It's part of the disastrous implementation of pension benefits for the Reserve Force.  The frontline staff are ill-informed and have poor resources to draw on; my past experience was that I knew more than they did - and usually ended up educating them.

As long as you never work 55 out of 60 months full-time for the military you'll remain in the part I.1 (Reserve Force) plan.  You'll be able to accumulate 35 years in that plan (assuming you stay in the P Res that long); you'll also be able to accumulate 35 years in the PSSA (again assuming you stay in the public service that long).



One note: Unless you transfer to the COATS, your service in the Reserves will cease at age 60.
 

runormal

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Thanks for that Dapeterson. I was worried that the reserve pension was going to mess up my PS pension. The girl on the phone said no, but I wasn't convinced..

Would you recommend buying back the first two years of a reserve pension? I'm quite confused of what the benefit will ne and it's hard to see the res pension amounting to much as I work at best 60-80 days a year.. Like wise I have no idea how much longer I plan on staying on the reserves. I've started the buy back process a year ago, but I've heard nothing back from the pension centre.

I'm really expecting it to amount to a small of mount of money that I can eventually transfer to am RRSP when I get out and then rely more on the PSSA . However, I honestly have no idea.
 

dapaterson

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runormal said:
Thanks for that Dapeterson. I was worried that the reserve pension was going to mess up my PS pension. The girl on the phone said no, but I wasn't convinced..

Would you recommend buying back the first two years of a reserve pension? I'm quite confused of what the benefit will ne and it's hard to see the res pension amounting to much as I work at best 60-80 days a year.. Like wise I have no idea how much longer I plan on staying on the reserves. I've started the buy back process a year ago, but I've heard nothing back from the pension centre.

I'm really expecting it to amount to a small of mount of money that I can eventually transfer to am RRSP when I get out and then rely more on the PSSA . However, I honestly have no idea.

As a rule, I suggest buying back - it does contribute nicely to future value.

Did you know that (provided you have a PKI card) you can check the value of your pension online (DWAN only)?  It will show both the current payout you can expect (and lets you play what-if scenarios), and, if you're under 50, will show the potential transfer value of your pension.
 

runormal

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dapaterson said:
As a rule, I suggest buying back - it does contribute nicely to future value.

Did you know that (provided you have a PKI card) you can check the value of your pension online (DWAN only)?  It will show both the current payout you can expect (and lets you play what-if scenarios), and, if you're under 50, will show the potential transfer value of your pension.

Wouls you mind posting the link? I have a PKI card, but I have no idea where to look for this.
 

dapaterson

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At this time, I beleive if you do not have a PKI card you'll have to call the pension office for information on your current pension value and related information.

Toll free: 1-800-267-0325
Monday to Friday
8:00 a.m. to 4:00 p.m. (your local time)

If you have a PKI card and a DWAN connection, the CAF pension applications are available at: https://protege-secure.tpsgc-pwgsc.gc.ca/nonprotege-unprotected/partactapppenfc-actmemcfpenapp/demandeacces-accessrequest-eng.html
 
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