CANFORGEN on Pay and PIL

[dapaterson]

SISIP has information posted to their website on the Severance cashout:

Main Page:

https://public.cfpsa.com/en/AboutUs/SISIPFS/Pages/Canadian-Forces-Severance-Pay-(CFSP).aspx


Presenatation:

https://public.cfpsa.com/en/AboutUs/SISIPFS/Documents/Severance%20options_Final_SEPT7_2012ENG.pdf

 

[bridges]

Thanks for those links - very informative.

In my reading on this issue, one thing that's not clear is whether it applies to mbrs who've already released? 

In my case I transferred to the Supp Res (and took RFRG at the time), then got back in the P Res for a couple of years, then out for good in 2009.  That last batch of time had no RFRG or other payout, IIRC.  Should I be looking for an election package for that period of time, or is anyone who's already out, out of luck on this one?

 

[dapaterson]

If you were out for good in '09 (not Supp Res) then AFAIK you've got no entitlement to severance.  If you went back to the Supp Res, the situation may be different - I'm not certain.


However: From your description of your situation - PRes, transfer to Supp Res and got RFRG, back to PRes, then release; your final period of P Res Service might have an entitlement to RFRG - you must have been back in for a minimum of three years.  See form 2454-E for details.

 

[Fishbone Jones]

Thanks or the links

That is the best, understandable explanation so far, that even this finacial dinosaur can understand.

Tanks!

 

[bridges]

If you were out for good in '09 (not Supp Res) then AFAIK you've got no entitlement to severance.  If you went back to the Supp Res, the situation may be different - I'm not certain.


However: From your description of your situation - PRes, transfer to Supp Res and got RFRG, back to PRes, then release; your final period of P Res Service might have an entitlement to RFRG - you must have been back in for a minimum of three years.  See form 2454-E for details.

My last pd of PRes svc was < 3 yrs.  That had occurred to me at the time as well, about addl RFRG, but no.  Anyway I'll ask the OPI just to make sure and if I find anything different, I'll post it here.  Thanks again. 

 

[ARMY_101]

Have there been any insights as of yet on how to avoid the tax at the source, other than putting it in an RRSP (which is just delaying the taxes)?

 

[dapaterson]

The CF will withhold taxes at source unless you are making contributions to an RRSP, and have completed the necessary paperwork.

This will occur regardless of whether you take it immediately or on release.  It is considered as income in the year in which it is received.

That is no change; the old version of severance pay was also taxable in your hands on receipt.

Of course, if you take in on release, and you release early in the calendar year your income will be lower that year (pension will be less than pay) so taxes may be lower.

But RRSPs are the only way to defer taxes.  However, if you wait until release, you can shelter an additional $2000 per year in your RRSP for each year or part year of service prior to 1996; if you take the immediate pay-out you lose that ability.

 

[DAA]

Have there been any insights as of yet on how to avoid the tax at the source, other than putting it in an RRSP (which is just delaying the taxes)?

There is no way to avoid it due to the fact that if you elect to receive PIL, it is classed as a "lump sum payment" and posted on your payguide (ie; through CCPS or PRSR).  No way around it.  You can only "reduce tax at source" but other than that, your stuck.

As far as I can tell, this is probably the form you need to send to CRA --->  http://www.cra-arc.gc.ca/E/pbg/tf/t1213/  <-----if anyone knows any different, please feel free to chime in here....

CRA will respond back with a letter of authorization, which can then accompany your PIL Election Forms when you turn them into your supporting OR.  Mind you, the "election process" does not start until Dec 12 and runs until Mar 13, so the payment will not be made until "tax year 2013".

Don't even bother trying to do a "direct transfer" (ie; from DND/CF to your RSP Admin/Fin Advisor without you even seeing any of themoney) because PIL does not qualify.  This can only be done when you actually "retire"...  I had someone come to me today with "Direct Transfer" forms from the RSP Admin.  Apparently, as soon as they said "severance pay", that was the form they were given.  This is payment "IN LIEU OF" severance pay, so there is a huge difference....

 

[DAA]

However, if you wait until release, you can shelter an additional $2000 per year in your RRSP for each year or part year of service prior to 1996; if you take the immediate pay-out you lose that ability.

And what dapaterson has mentioned, is in "addition" to your current RRSP limits.  So if your RRSP contributions are maxed out, you still have the benefit above available to you...BUT ONLY IF YOU ARE RETIRING!!!  This benefit DOES NOT apply to PIL...

 

[Char1991]

No. Reserve service is calendar time, not time signed in / on a route letter. That is to say, the guy who works class B for two years has exactly the same calculated service as the guy who shows up twice a month for two years.

So I will get 4.29, did a quick calculation, instead of 1.48 years worth of PIL?

Awesome.

I wasn't really following this PiLCFSP thing, but was talking with someone who worked in Releases today and searched this thread to see if he was right. 

Hmm...now to consider if I want some now or later. Decisions, decisions...

 

[brihard]

So I will get 4.29, did a quick calculation, instead of 1.48 years worth of PIL?

Awesome.

I wasn't really following this PiLCFSP thing, but was talking with someone who worked in Releases today and searched this thread to see if he was right. 

Hmm...now to consider if I want some now or later. Decisions, decisions...

Not is pretty much a no brainer. even if you're stuck taking a tax hit, if you simply invest it all you'll likely see a far better return on investment than the marginal gain of taking it on release at a higher rate of pay and potentially at a higher tax bracket.

 

[Char1991]

Not is pretty much a no brainer. even if you're stuck taking a tax hit, if you simply invest it all you'll likely see a far better return on investment than the marginal gain of taking it on release at a higher rate of pay and potentially at a higher tax bracket.

While I agree with you for the most part.  I'd rather wait until the brief in Ottawa that is being held, so that I have the full details.

Better safe, then sorry.  :nod:

 

[DAA]

SISIP has information posted to their website on the Severance cashout:

Presentation:

https://public.cfpsa.com/en/AboutUs/SISIPFS/Documents/Severance%20options_Final_SEPT7_2012ENG.pdf

I like how they slip the cost of "personalized" financial planning into the mix at slide # 30.  Nevertheless, the cost ($72 @ yr for Jr NCMs/Offrs and $144 @ yr for everyone else) seems to be reasonable.  So I guess it is safe to assume, that SISIP briefings are only generalized in nature.  If you want anything beyond that (ie; pertaining to your personal circumstances), you have to pay for it (ie; fee for service).

This is NOT uncommon and something you should consider based on your RRSP/Investment holdings.  IMHO, you only get, what you pay for...

http://www.moneysense.ca/2009/11/01/where-to-find-a-fee-only-financial-planner/

 

[Harris]

I was told by a SISIP rep recently that those cost tables only apply to Reg Force.  If your a reservist you pay $12/month regardless of rank.

 

[DAA]

I was told by a SISIP rep recently that those cost table only apply to Reg Force.  If your a reservist you pay $12/month regardless of rank.

Is there anyone out there paying these fees that can provide more information?  Specifically, how much access you get to your "planner"  and what they can actually sell you? (ie; Mutual Funds only or can they do Stocks?)

SISIP provides a great service and  is supported by the CF but here is a quick read for anyone interested....

http://www.moneysense.ca/2012/02/29/finding-a-financial-adviser/

 

[Occam]

I've paid for the SISIP financial planning services for a few years now.  They only offer GICs and mutual funds (thru FUNDEX).  Their full list of services is here - https://public.cfpsa.com/en/AboutUs/SISIPFS/FinancialPlanning/Pages/Services.aspx.

I've been very impressed with the service.  The planner (who I believe is the manager of the Ottawa office) has a fair bit of history in the mortgage and banking business, and his advice has been outstanding.

The fees include one income tax return, and a reasonable rate for a spousal return (I think we paid $25?).  For me, dealing with issues like investing/tax sheltering my severance pay, pension splitting, and working in QC while living in ON were all made immensely easier with advice from the SISIP guy.  Whenever I've had a financial planning or investing question, I've sent it in by e-mail and always gotten a quick response.  Well worth the money in my opinion.

 

[aahenry]

Hi Everyone

I joined the res force in May 1995 and transferred to reg force in May 2001 with no break in service. I bought back my eligible reserve time for my pension, 2yrs 165 days. I just received my severance calculation and it is 10.7 years. This calculation is just my reg force time, do I not get a calculation for my 6+ years reserve time?

Thanks

 

[MJP]

Hi Everyone

I joined the res force in May 1995 and transferred to reg force in May 2001 with no break in service. I bought back my eligible reserve time for my pension, 2yrs 165 days. I just received my severance calculation and it is 10.7 years. This calculation is just my reg force time, do I not get a calculation for my 6+ years reserve time?

Thanks

Yes you do.  Don't be overly concerned right now as almost everybody I know that had previous Res time wasn't credited properly.  I suspect there will be lots of changes coming once people are trained up on how to administer it properly.

 

[armyvern]

Hi Everyone

I joined the res force in May 1995 and transferred to reg force in May 2001 with no break in service. I bought back my eligible reserve time for my pension, 2yrs 165 days. I just received my severance calculation and it is 10.7 years. This calculation is just my reg force time, do I not get a calculation for my 6+ years reserve time?

Thanks

It seems that many of the calculations are inaccurate. We've got quite a few pers who are not A/  whose rank is reflected incorrectly. One has been a fully qualified WO for 4 years, yet his official calculation paperwork deems he is a Cpl.

I know they are going to bring up some of the LWOP categories at the conference as well ... MATA pers, for example, had to pay back pension for their periods of MATA and could not go get jobs elsewhere during their MATA as they were deemed to be still-serving members. It is considered as eligible time towards CD, promotion, pay incentives and is also pensionable time yet it has been totally deducted from the severance calculations.

I'm pretty certain more will come out on this based on the umpteen observations of incorrect "official statements" received just within our Unit. Our CC has stated that numerous locations are reporting same errors, oversights and based on her comms with outside, it will be a very hot topic in Ottawa next month.

 

[George Wallace]

Why am I not surprised.  I just had a look at my MPRR and someone back in March, unbenounced to me, made the "clerical error" of entering the location of my Spouse as being in Fredericton NB, two provinces away. 

I think we have a very serious problem with the RMS Trade and blame the stupid act of amalgamating two Trades into one.  Now our Clerks are neither masters of the Fin side, nor masters of the Admin side.  They are just confused and often found pawning their work off on ' substitutes' brought in to help them with their 'work load'.

/rant