February 2007

Department of National DefenceDepartment of National Defence

Modernization of theCanadian Forces Pension PlanRegular Force under Part 1

Modernization of theCanadian Forces Pension PlanRegular Force under Part 1

2Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

OutlineOutline

Eligibility, contributions, and definitions

Benefits

Grandfathering rules

Pension formula

Annuitant employment policy

Coming into force

3Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Presentation focuses on pension policies not administration

Consult the CFPMP websitewww.forces.gc.ca/hr/dgcb/cfpmpwww.forces.gc.ca/hr/dgcb/cfpmp

For questions on “how do I” and “what happens when”, contact DAPP/Pension services

For more informationFor more information

1-800-267-0325Toll-free

www.admfincs.forces.gc.ca/pension/intro_e.aspOn-line

pensioninquiries@forces.gc.caEmail

4Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

About CFSA Part IAbout CFSA Part I

Provides a benefit based on set formulas (defined benefit)

Uses best 5-year average (full-time)

5Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Eligibility rulesEligibility 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

6Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

ContributionsContributions

A fixed percentage of pensionable earnings

Reduces to 1% of pensionable earnings when member has 35 years of pensionable service

Pensionable earnings include basic pay and pensionable allowance

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%

YMPE—Year’s Maximum Pensionable EarningsCanada Pension Plan earnings ceiling

(2007 = $43,700)

7Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

CF serviceCF service

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

DefinitionsDefinitions

After 25 years of CF service, a member is entitled to an immediate annuity. Officers may have to meet different requirements.

8Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Pensionable servicePensionable service

Any period during which the member is a contributor

Any period for which the member has elected to pay

DefinitionsDefinitions

9Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

VestingVesting

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

DefinitionsDefinitions

10Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Transfer valueTransfer value

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

DefinitionsDefinitions

11Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Current retirement benefitsCurrent retirement benefits

Terms of Service

Less than 10 YOS 10 to 19 YOS 20 to 24 YOSor before RA

20 YOS-IE25 NCMs/RA Officers

ROC &Interest CTA ROC &

InterestDeferredAnnuity

Age 60Only

Reduced Annuity

ImmediateAnnuity

12Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Retirement benefits at CIFRetirement benefits at CIF

CF service (actual paid time) Regular Force Reserve Force

Pensionable service (elapsed time) CF service Public/RCMP service Miscellaneous service

Years of Pensionable Service (YPS) or CF Service

Less than 2 YPS 2 to 24 YPS 25 years CF service* 30 YPSand 55 YOA

ROC &Interest

DeferredAnnuity

Unreduced 60 YOA

Reduced50 YOA

TransferValue

ImmediateAnnuity

ImmediateAnnuity

* Officers may have to meet different requirements (see slide 14)

13Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Benefits at retirement or releaseBenefits 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)

14Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Benefits at retirement or releaseBenefits at retirement or release

Officer service requirements—immediate annuity

Rank Release date between CF service

Colonel and above

March 1, 2007 and December 31, 2007 10,227 days (28 years)

January 1, 2008 and December 31, 2008 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)

Other officers

March 1, 2007 and December 31, 2007 9,496 days (26 years)

January 1, 2008 and after 9,131 days (25 years)

15Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Benefits at retirement or releaseBenefits 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

16Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Grandfathering rulesGrandfathering 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

17Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Grandfathering rulesGrandfathering 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

18Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Grandfathering rulesGrandfathering 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

19Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Benefits in case of deathBenefits 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

20Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Benefits in case of disabilityBenefits 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.

21Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Other featuresOther 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

22Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Pension formulaPension formula

2 %

X

pensionable service

X

best average earnings

0.7 %

X

pensionable service

X

best average earnings

up to the average YMPE

Note: Percentage will gradually decrease from 0.7% in 2007 to 0.625% in 2013

Temporary bridge pension payable to age 65, included

in the annuityAnnuity

23Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Annuitant employment policyAnnuitant 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

24Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Coming into forceComing into force

25Modernization of the Canadian Forces Pension Plan—Regular Force under Part I

Questions?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.