Transcript Pension plan for the Canadian Forces Reserves

Department of National Defence
Modernization of the
Canadian Forces Pension Plan
Regular Force under Part 1
February 2007
Outline
 Eligibility, contributions, and definitions
 Benefits
 Grandfathering rules
 Pension formula
 Annuitant employment policy
 Coming into force
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For more information
 Presentation focuses on pension
policies not administration
 Consult the CFPMP website
www.forces.gc.ca/hr/dgcb/cfpmp
 For questions on “how do I” and
“what happens when”, contact
DAPP/Pension services
On-line
www.admfincs.forces.gc.ca/pension/intro_e.asp
Email
[email protected]
Toll-free
1-800-267-0325
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About CFSA Part I
 Provides a benefit based on set formulas (defined benefit)
 Uses best 5-year average (full-time)
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Eligibility rules
 Regular Force members join Part I when they join the
Regular Force
 “Once in, always in” rule
 Contributions to Part I will continue until retirement
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Contributions
 A fixed percentage of pensionable earnings
Year
Contributions
up to YMPE
Contributions
over YMPE
2007
4.6%
8.1%
2008
4.9%
8.4%
2009
5.2%
8.4%
2010
5.5%
8.4%
2011
5.8%
8.4%
2012
6.1%
8.4%
2013
6.4%
8.4%
 Reduces to 1% of pensionable earnings when member has
35 years of pensionable service
 Pensionable earnings include basic pay and pensionable
allowance
YMPE—Year’s Maximum Pensionable Earnings
Canada Pension Plan earnings ceiling
(2007 = $43,700)
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CF service
Definitions
 Days of service in the Regular Force for which pay was
authorized and authorized maternity and parental leaves
 Days of service in the Reserve Force for which pay was
authorized and authorized maternity and parental leaves
 Days of training or duty of less than 6 hours = half-day
 Days of Class “A” service = 1.4 days
After 25 years of CF service, a member is entitled to an immediate annuity.
Officers may have to meet different requirements.
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Pensionable service
Definitions
 Any period during which the member is a contributor
 Any period for which the member has elected to pay
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Vesting
Definitions
 Vesting is the right of a plan member to receive a benefit
from the pension plan other than a return of contributions
 An immediate annuity, or
 A deferred annuity that may be converted to an annual
allowance or transfer value
 Vesting occurs after 2 years of pensionable service
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Transfer value
Definitions
 A lump-sum amount, expressed in today’s dollars,
of your future pension benefits payable at age 60
 Received if...
• Vested,
• Not entitled to an immediate annuity, and
• Younger than age 50
 Must be transferred to...
• Locked-in RRSP,
• New employer’s plan (if accepted), or
• Insurance company, to buy an annuity
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Current retirement benefits
Terms of Service
Less than 10 YOS
ROC &
Interest
CTA
10 to 19 YOS
ROC &
Interest
20 to 24 YOS
or before RA
20 YOS-IE
25 NCMs/RA Officers
Reduced
Annuity
Immediate
Annuity
Deferred
Annuity
Age 60
Only
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Retirement benefits at CIF
Years of Pensionable Service (YPS) or CF Service
Less than 2 YPS
2 to 24 YPS
25 years CF service*
30 YPS
and 55 YOA
ROC &
Interest
Deferred
Annuity
Immediate
Annuity
Immediate
Annuity
Unreduced
60 YOA
Reduced
50 YOA
Transfer
Value
* Officers may have to meet different requirements (see slide 14)
 CF service (actual paid time)
 Regular Force
 Reserve Force
 Pensionable service (elapsed time)
 CF service
 Public/RCMP service
 Miscellaneous service
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Benefits at retirement or release
With 2 or more years of pensionable service
Immediate annuity if…
• 25 years of CF service (9,131 days)—officers may have to meet different
requirements (see chart on next slide)
• Age 60
• Age 55 with 30 years of pensionable service, or
• Released for workforce reduction (20 years of pensionable service or age 55
or older with 10 years)
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Benefits at retirement or release
Officer service requirements—immediate annuity
Rank
Release date between
March 1, 2007 and December 31, 2007
Colonel
and above January 1, 2008 and December 31, 2008
Other
officers
CF service
10,227 days (28 years)
9,861 days (27 years)
January 1, 2009 and December 31, 2009
9,496 days (26 years)
January 1, 2010 and after
9,131 days (25 years)
March 1, 2007 and December 31, 2007
9,496 days (26 years)
January 1, 2008 and after
9,131 days (25 years)
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Benefits at retirement or release
With 2 or more years of pensionable service and no immediate annuity
If age 50 or older, a reduced annuity (annual allowance)
If younger than age 50, a deferred annuity starting at age 60, or option of…
• Transfer value
• Reduced annuity (annual allowance) starting at or after age 50
With less than 2 years of pensionable service (not vested)
• Return of contributions with interest
Transitional rules
Opt to receive contributions plus interest, instead of deferred annuity, if:
• Regular Force contributor on February 28, 2007
• Release within two years of CIF, and
• Not entitled to an immediate annuity
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Grandfathering rules
 At CIF, all members entitled to benefits under new rules
 Regular Force contributors who are on track for certain
benefits at CIF may opt to have benefits calculated under
“old” rules
 Grandfathering rules apply only to members who serve
continuously from February 28, 2007 to release
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Grandfathering rules

Members may opt for an immediate annuity if they meet any of
these conditions at release…
1. Reached retirement age, with at least 10 years of Regular Force
pensionable service
2. Have completed an IE 20 that started before CIF, but are not on an
Indefinite Period of Service
3. Have between 19 and 20 years of Regular Force pensionable service—
at least 10 of it at CIF—and:
 Were never offered an IE 25 years
 Are not serving an IE or Indefinite Period of Service
 Did not refuse an offer to re-engage (if a Non Commissioned
Member)
 Did not refuse an offer to serve on an Indefinite Period of Service
(if an officer)
4. Have not reached retirement age, and:
 Have at least 20 years of Regular Force pensionable service—
at least 10 of it at CIF
 Do not meet any of the conditions to opt for a reduced annuity
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Grandfathering rules

Members may opt for an annual allowance (immediate reduced
annuity) if they meet either of these conditions at release…
1. Are NOT serving on an Indefinite Period of Service and:
 Have not reached retirement age
 Have at least 20 years of Regular Force pensionable service—
10 or more of it at CIF
 Never served on an Intermediate Engagement of 25 years
 Release without 25 years of Regular Force pensionable service
OR did not accept an offered Intermediate Engagement of
25 years (other than while on, or after completing an IE 20)
2. Are serving on an Indefinite Period of Service and:
 Have not reached retirement age
 Have at least 20 years of Regular Force pensionable service—
10 or more of it at CIF
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Benefits in case of death
 At death of vested member or pensioner, his or her…
 Spouse receives a survivor lifetime pension
• 1% X pensionable service X best average earnings
 Dependent children receive a child annual allowance
• Payable to age 18 or age 25 during periods of full-time
school attendance
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Benefits in case of disability
 If participants have 10 or more years of pensionable service
and have not ceased participation, they are entitled to…
 An immediate annuity
 After participation ceases and eligible for a deferred pension
or annual allowance and become eligible for C/QPP disability
pension, they are entitled to…
 An immediate annuity
• Once eligible for C/QPP disability pension, the bridge
pension ends
You are considered disabled if you suffer from a mental or
physical impairment that prevents you from performing
your duties.
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Other features
 Annual increases for inflation—indexing for CPI
 For annuity and annual allowance, indexing begins at...
• Age 60, or
• Age 55 or older, if age plus full years of pensionable
service total 85 or more
 For survivor and child annual allowance and disability
pension, indexing is...
• Immediate
 At death, minimum guarantee of 5 years of annuity
payments
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Pension formula
Annuity
Temporary bridge pension
payable to age 65, included
in the annuity
0.7 %
2%
X
X
pensionable service
pensionable service
X
X
best average earnings
best average earnings
up to the average YMPE
Note: Percentage will gradually decrease
from 0.7% in 2007 to 0.625% in 2013
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Annuitant employment policy
 Members are not permitted to continue to receive their "Regular
Force" pension AND contribute under the CFSA
 A CFSA annuitant has the option of:
 Serving up to a maximum of 330 days of Reserve Force service within
any one-year period while continuing to receive an annuity
 Ceasing to be an annuitant at any time and contributing to Part 1
of the CFSA on a voluntary basis
 Serving more than 330 days, and at least 365 days, at which time the
member automatically:
• Ceases to be an annuitant, and
• Again becomes a contributor under Part I of the CFSA
 If re-enrolled, the member will be allowed to elect past service,
but, if the election is for time when the member received an annuity,
the member will have to return the annuity for the days during which
he/she worked and for which he/she wants to elect
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Coming into force
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Questions?
This presentation provides an overview of the some of the provisions
under the Canadian Forces Superannuation Act. If there is a
discrepancy between this presentation and the Act, the Act prevails.
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