I have received my letter from Pension Services to buyback my previous Reg Force and Reserve time. I have the option of using my current RRSP's to pay for the amount of election or having a monthly deduction amount. Is it better to pay off the amount using my RRSP's or do monthly contributions. And how does PSPA play into it, if I don't use my RRSP's to buy down. Anybody else go through the same thing. I am currently in the reg force.
Buying back previous reg force time/reserve time and RRSP's
- Thread starter dandy1234
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I just went through this nausea and paid off everything with an RRSP transfer a few months ago.
I saved an absolute ton of interest and my PSPA was reduced enough that I could easily absorb it into my RRSP overhead. If I had paid monthly I have no doubt that over the 20 years of interest I would have paid twice the original amount
In my case it was better to just pay off everything and be done with it.
I saved an absolute ton of interest and my PSPA was reduced enough that I could easily absorb it into my RRSP overhead. If I had paid monthly I have no doubt that over the 20 years of interest I would have paid twice the original amount
In my case it was better to just pay off everything and be done with it.
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Regardless of whether you use RRSPs or not, the PSPA will factor into it. Under tax law, you are limited to the amount of income you can shield from taxes each year. Since you're now receiving an increased benefit due to the government paying a portion of the cost of the pension, a PSPA may be required.
If you lack sufficient unused contribution room you may be required to withdraw some RRSPs and have them taxed in your hands. The CF pension office should be able to inform you about all this.
If you lack sufficient unused contribution room you may be required to withdraw some RRSPs and have them taxed in your hands. The CF pension office should be able to inform you about all this.
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It's more or less a wash.
Yes, by paying it directly from RRSPs you avoid paying interest, but assumingly those RRSPs are providing returns for you. The interest DND is charging is low (the number 4.4% sticks in my head for some reason) which is about normal for a low risk dividend paying stocks.
As always, paying a debt (which this essentially is) is equivlent to a guarenteed return. But the interest would most likely lag behind the gains you'd make on RRSPs that are invested at a balanced level of risk.
Yes, by paying it directly from RRSPs you avoid paying interest, but assumingly those RRSPs are providing returns for you. The interest DND is charging is low (the number 4.4% sticks in my head for some reason) which is about normal for a low risk dividend paying stocks.
As always, paying a debt (which this essentially is) is equivlent to a guarenteed return. But the interest would most likely lag behind the gains you'd make on RRSPs that are invested at a balanced level of risk.
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No, you just need to go to your Wing/Base Orderly Room and let them know you want to buy back previous time. They will initiate the paperwork.
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If you go for the repayment plan you will pay the following rate:
Regular Force plan: 4% simple interest and a mortality charge based on you age, amt financed, and length of term;
Reserve Force plan: 4% compound interest and mortality charge as above.
The mortality charge for the Reg and Res are different, utilizing different Life Tables.
You should count on at least 1 % ++ compound interest for the Res plan on top of the 4% CI.
Not exactly:
Regular Force plan: 4% simple interest and a mortality charge based on you age, amt financed, and length of term;
Reserve Force plan: 4% compound interest and mortality charge as above.
The mortality charge for the Reg and Res are different, utilizing different Life Tables.
You should count on at least 1 % ++ compound interest for the Res plan on top of the 4% CI.
Not exactly:
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And those calculations are taken off the rank that you currently hold. It is much cheaper for a Pte to be buying back time than a WO.
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Rifleman62 said:
Still... Last year I made 25% on my RRSPs. Granted you don't see too many years like last year, but again this year I'm up 12%.
George Wallace said:
Much cheaper, yet at the same time, it's much more expensive relatively for a Pte to buy it back. Few Ptes have that kind of money laying around, and fewer still have had time to build sizable RRSPs.
