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Pension Transfer Value / Lump Sum Pymt [Merged]

recceguy said:
Just be thankful you're not waiting on a Reserve pension ::)

Well, there are two types of Reserve pensions, aren't there? Pure Reserve Force pensions, and reservists who have sufficient service to qualify for the Reg Force pension. Plus there are Regulars with prior Reserve service who didn't opt for the severance buyout and whose files still need to be audited for severance on release.

Are there are backlogs for all three of these types of pensions? Or is the problem isolated to one area?
 
and unless things changed recently which I doubt the severance issue has to be completed before your file goes over for pension action.  I do have a co-worker that was a straight up regular force retirement and he recieved his first pension payment in two and a half months.  Mine is not so straight so am sure it wil take longer.

They do need more workers for both sections, they sure didn't have many there when I was in Ottawa.  Perhaps some of those sections suffering bloat can send some people over that way although I have to say I didn't personally see any that had a bloat issue.  Certainly none of the places I worked did.
 
What I don't understand is why everything has to wait for the audit to be completed.  It should be relatively simple to determine whether the member is entitled to an annuity (i.e. served more than X years - most likely).  There is no reason I can see that basic payments cannot start immediately.  The results of the audit can be paid out or recovered later.  After all, the annuity is for the rest of the member's life - the system always has the means to recover overpayments or a place to send additional payments.
 
Pusser said:
What I don't understand is why everything has to wait for the audit to be completed.  It should be relatively simple to determine whether the member is entitled to an annuity (i.e. served more than X years - most likely).  There is no reason I can see that basic payments cannot start immediately.  The results of the audit can be paid out or recovered later.  After all, the annuity is for the rest of the member's life - the system always has the means to recover overpayments or a place to send additional payments.

Exactly.  Some chaps I know who retired said that for the following year or so they would get some surprise money deposited every now and then as a result of the various audits coming up with some entitlements here and there.  That the system is broken and more or less a great dissapointment isn't a surprise to me at all.
 
Pusser said:
What I don't understand is why everything has to wait for the audit to be completed.  It should be relatively simple to determine whether the member is entitled to an annuity (i.e. served more than X years - most likely).  There is no reason I can see that basic payments cannot start immediately.  The results of the audit can be paid out or recovered later.  After all, the annuity is for the rest of the member's life - the system always has the means to recover overpayments or a place to send additional payments.

This.  My retirement date was 5 Oct. I submitted my intent to release in Mar 2015. I haven't received pension or severance pay yet.  Speaking of which, are we covered by the public health plan immediately or do we need to be in receipt of pension payments? My thought was, if I'm not getting money, neither are they....hence no coverage...
 
Don't know about the RegF, but when I retired had to wait to get a pension (number) to apply for retired Med and Den. That was 5 Aug 07.
 
Rifleman62 said:
Don't know about the RegF, but when I retired had to wait to get a pension (number) to apply for retired Med and Den. That was 5 Aug 07.

All my applications went in with the pension paperwork. But that makes sense...
 
Agree with Pusser.  basic payments could be done with adjustments made once the audit is complete.  It's not like there would end up being a large difference in the pension amounts if it was found mbr had 27 years and 10 months vice 28 years.
 
I retired 1 Oct and just received my pension mid December. I haven't heard anything about my severance pay yet (I didn't take anything before). My service was pretty simple 23 years reg force and maybe a year reserves, many many years ago. My only hiccup was I filled out all the forms the pension office sent me in September then mid November I received a form from them asking if I was entitled to and wanted my pension immediately, if I wanted to roll it over to another pension or delay it till I was 55 (I think). My release was a 30 day notice as well.

As far as the public health insurance, as far as I know from the paperwork. They say you are not covered until the first check when it comes from your pension. However you can keep all receipts and submit everything once you were "a paying member", their words.
 
This article from a law firm is a good reminder to some here re Severance:

http://www.mondaq.com/article.asp?articleid=457478&email_access=on

Canada: How To Keep The CRA Away From Your Severance Payment

Last Updated: January 12 2016 - Article by Samantha Prasad - Minden Gross LLP

If you've been lucky enough to exit your job with a couple of extra bucks in your pocket from severance or other payments, the Canada Revenue Agency (CRA) stands ready to kick you when you're down by taxing that extra cash when you need it most. Fortunately there are a few strategies you can use to fend off the taxman's assault on your dwindling bank account.

Under the tax rules, any money you get from an employer (or ex-employer) as a so-called "retiring allowance" (that's tax talk for severance or other types of payments made on leaving a job) will be taxable as income to you. However, the CRA does offer a tax break if the funds received as a retiring allowance are transferred to a Registered Retirement Savings Plan (RRSP) or Registered Pension Plan (RPP) for certain years of employment. In both cases, contributions of qualifying retiring allowances will enable you to make additional contributions to the plan, over and above the standard annual limits for certain years (see more about this below); however, the additional contributions cannot be made to a spousal RRSP.

If a direct transfer is not made by your employer to your RRSP or RPP, sadly, the employer paying the retiring allowance must report the amount paid on Form T4A Supplementary and must deduct tax at source. So it might be beneficial to instruct your employer to make the payment directly to your deferred plan to avoid that source deduction.

On the other hand, if your retiring allowance was received as a result of duking it out with your past employer, any legal fees incurred are deductible to the extent that the retiring allowance itself is not sheltered by transfers to a deferred income plan – that is, the deduction is limited to the amount on which tax is paid.

So in order to get a full deduction in this case, it may be a good idea to "pass up" transferring some payments into an RRSP or pension plan for that year because even if these payments are "rolled in" to these plans, you will eventually have to pay tax on them when they are received from the plan (although they will earn tax-sheltered income in the meantime). Note: If the legal fees are reimbursed to you, there is a corresponding inclusion in income.

Transfers to RRSPs or RPPs

If you worked with your employer before 1995, any amounts you receive on termination as a retiring allowance will allow you to enlarge your normal RRSP or RPP contribution limit and thus enhance your tax deferral.

For years of service before 1989, the maximum deferral available for a retiring allowance through a contribution to an RRSP or RPP is limited to $3,500 multiplied by the number of years during which you were employed. However, the annual deferral is decreased by $1,500 – that is, to $2,000 – for years when your employer made contributions to a pension fund or plan, or to one of their deferred profit-sharing plans, and those funds have vested with you at the time you receive the retiring allowance. Note: For years of service between 1989 and 1995, the tax-deferred ceiling is limited to $2,000 in all instances.

In order to be eligible for the offsetting deduction, the contribution to the RRSP or RPP must be made within 60 days after the end of the year in which you include the retiring allowance as income.

Note: The February 1995 Federal Budget eliminated the opportunity to enlarge RRSP and RPP contributions for retiring allowances for years of service after 1995. However, the opportunity to make contributions for retiring allowances for years of service before 1996 was not affected.

Next time: The many definitions of a "retiring allowance."

Previously published in  The Fund Library  T​hursday, ​​December 7, 2015.​

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Do you have a Question or Comment? Click here to email the Author (at link)

© Mondaq® Ltd 1994 - 2016
All Rights Reserved

 
I posted this in a different thread, I'll repost here in case someone missed it and would find it interesting.

"Was chatting with a Chief I sailed with who retired last month and started with the PS straight afterwards.  His last day was 3 Dec 15, he received his first pension payment on 11 Jan 15. 

One thing he did with his documents was he included a hand written note asking the auditors to telephone him to let him know if all was in order or not.  They called him on 21 Dec and gave him the thumbs up.  He said it's a good idea to give them that option as if you leave it otherwise they will contact you via mail, which is slow and inefficient.  Also, he said it doesn't matter how much lead time you give them on your expected date, they won't check jack until you're out.

This gives me some hope that things are not totally fubar."
 
When filling out the forms I provided my phone number, email, address and banking info (both for direct deposit and RRSP).  If they can't use that info to contact me (and they haven't), then they really are fucked up.  ::)
 
PMedMoe said:
When filling out the forms I provided my phone number, email, address and banking info (both for direct deposit and RRSP).  If they can't use that info to contact me (and they haven't), then they really are fucked up.  ::)

It makes one wonder where the actual disconnect is being made between the Release Section and the Issuing Authority.  What step in the process is the "Weakest Link"?
 
George Wallace said:
It makes one wonder where the actual disconnect is being made between the Release Section and the Issuing Authority.  What step in the process is the "Weakest Link"?

I'd have to say the Issuing Authority. Once the Release Section hands up the files, they have no further part (as far as I know).
 
The milage seems to vary greatly in the stories I'm hearing, for myself it was ~3 months for pension and 8 months for severance; nothing unusual about my case for audit purposes either.
There is no interest paid for these delays, the 1st pension payment is just a lump sum for the ones missed during the wait
Long delays in getting your severance payment can also potentially affect you if you intend stow it in an RRSP, it the delay crosses over into the next reporting period.

Filling out the pension package, which you should not rely on your release section to request for you, is vital, but even then it's no guarantee it'll reduce the wait time

One really does need to be prepared for longer delays than the optimum.
 
PMedMoe said:
I'd have to say the Issuing Authority. Once the Release Section hands up the files, they have no further part (as far as I know).

That is saying the Release Section was doing due diligence....... [:D
 
George Wallace said:
It makes one wonder where the actual disconnect is being made between the Release Section and the Issuing Authority.  What step in the process is the "Weakest Link"?

It would seem that DND (not the Release Sect but RPPO or DMPAP) is the weakest link. I just called the pension office and they just received my paperwork yesterday. They have up to 30 days to process it....  >:(
 
For those of us that are in the NCR area or shooting distance, I understand it's also beneficial if you hand carry your docs to these folks as well.  Speeds things up as well.
 
jollyjacktar said:
For those of us that are in the NCR area or shooting distance, I understand it's also beneficial if you hand carry your docs to these folks as well.  Speeds things up as well.

Hand carrying vs. mail doesn't speed up the auditing process...but yeah, maybe not a bad idea. Mine went registered mail so I knew it arrived in Ottawa a few days after I sent it back in September.
 
PMedMoe said:
Hand carrying vs. mail doesn't speed up the auditing process...but yeah, maybe not a bad idea. Mine went registered mail so I knew it arrived in Ottawa a few days after I sent it back in September.

Somewhere along the line, it is always in "DND Mail" hands.
 
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