Reserve Pension- Merged

[Long in the tooth]

WOG,
Reservists who went reg force were given an oportunity to buy back their time at 4 to 1 for class A service.  1 for 1 for class B & C..... nothing to adjust... I think... and I don't think the CF is expecting claims from that avenue - and they got to buy back their time at 4% simple interest.

Good response GEO, and technically correct.  But it does not address those of us who have not attained the potential rank we would have had if we had remained in the reserves.  I'll leave the details at that, but for all intents this program is outside the federal pension act... I say again, I was promised a defined benefit plan, but I am only eligible for a defined contribution plan.  Thank God for RRSPs.

 

[nushcg]

Two points

1. Revenue Canada will not provide them with the information.  As an employee of Revenue Canada, I can almost guarantee that they will not get involved.  There are many privacy rules involved here.  We would not be allowed to provide this information to the Forces.  But even if we could, our system only holds so much information, and it would not be possible to go back far enough to gather this information.  As well, Revenue Canada would not be willing to foot the bill to provide this info to the Armed Forces, as they should have kept it.

2.  The cost of buying back.  This is not at all a simple calculation.  As those who have bought back time for the Regular Force can attest.  Suffice it to say that a lump sum is the cheapest way to go.  Not only are there interest costs etc, there are also "insurance costs".  Lets say you decide to buy back 10 years of service.  You cannot afford a lump sum, so you pay monthly.  The pension plan needs to take out an "insurance policy" for the amount in case you die before you have bought back all the service.  This is very expensive and only increases with the length of time you make your monthly payments.  As an example, a women I worked with wanted to buy back 3 years of service.  She is over 40.  It would have cost her about $6,500 in a lump sum payment, or she could pay $35 per paycheck for the next 15 years.  Using the second method, she will pay out over $13,000.

 

[Rifleman62]

I agree. From my calculation, the difference in my case between 4% simple and 7% compound interest is over $100,000. Financing this over the maximun 240 months adds over $80,000 to the cost of buy back. Within the $80k is interest, and a mortality charge. Only the principal amount paid every year will eligible for a tax deduction as a contribution to a RPP. The interest and mortality charge will not. For example if the total "financed" buyback over 240 months was $100,000, monthly payments would be $417. Add the $80,000 on a monthly basis costs an additional $333 equalling $750 monthly, or $9000 a year. So you have paid off $5004 of principal ($417 x 12), so you should have a RPP contribution for that amount. Not so fast. Most of the monthly payments will go to interest, so your RPP contribution for tax purposes may only be a couple of thousand (if you are lucky). I sent a email last week, and yesterday asking for all details on how the installment plan works. I have been told (but cannot believe it), that all interest charges will be paid up front (in other word all installments will go to paying off ALL interest charges), and that interest charges will be calculated on the original amount. So if you make lump sum installments several times, the lump sum will go to paying off any interest charges, before being applied to the principal. That way "they" get all the interest charges paid on the original amount. That's loan sharking. Their silence condemns them. This is not rocket science. There has been a policy in place for buy back for decades, so has it changed for the Reserves, or is it the same. If it is what it was before 1 Mar 07, then an answer should have been received quickly. It has not.
With regard to the buy back, you must buy back all your time to a maximum of 35 years of pensionable service (that is 35 calender years). For us old folks who have that much time, the earlier years are the most expensive due to the wage index and the interest rate. So if you cannot afford to buy back all your time, you can buy back a portion, say 50%. Your buy back and pension are reduced to 50%. BUT you have to buy back  ALL your time, including those expensive years, the divide by 50%. That way they get blood out of a stone.

So it is a double whamy. They charge me an extra $100k +to buy back, then charge me an additional $80 + to finance this extra charge. Sock it to me baby.

 

[Ed]

It appears to me that what is really going on is that we are paying the employer's contribution as well.  If you pay 7% coumpound interest and it has to be paid up front would that not be equivalant to the employer's share over the duration of the payback.  They just can't do enough for us.

 

[Juvat]

just got the letter this past week notifying me of a 4.3% deduction from all subsequent pays.  The letters were slow in coming though.

 

[Rifleman62]

Re reply # 402. Received an answer back from Ottawa on Monday. Sent it back, as they did not answer the question: how are the monthly payments applied, e.g. as a mortgage (principle & interest), or is it all applied to interest/mortality charge. This is easy to answer. They are using the same method that has been in effect for decades aren't they???
Also a Reg F Release Clerk sent me the "pop-up" notice from the CCPS (Reg F Pay System). The notice states that due to the change in the pension, the first pension cheques will be 8 to 12 weeks after retirement, payable end month for anyone who retires. It was 4 to 6 weeks. What this means, if you are a Reservists buying back, and retired, you will have a buy back debt to your bank account possible/probably three times before you get your first pension cheque. It used to be that the buy back was deducted from your pension cheque. Not anymore. It is now an automatic withdrawl from your bank account. So, if you owe a large buy back, and transferred all your liquid assets, including your RRSP, to a lump sum payment, to reduce the cost of the buy back, you will be sans cash. You will be sans cash for probably 3 months waiting for your first pension cheque. Meanwhile Ottawa is automatically withdrawing e.g. $1000 (more or less due to the huge costs of buy back) monthly from your bank account.
Well you could use your RFRG, but there is a new system of getting that now also. Before in our LFA it took approx three months. Under the new system, who knows. I am sure a lot of folks will want to use it for a lump sum payment on the pension. The rule is that you must first roll it over to a RRSP, THEN roll the RRSP into a lump sum payment. The RFRG cannot be rolled over directly as a RPP lump sum payment. Meanwhile you are paying interest on the amount owing on the buy back while waiting for the RFRG.
This is all predicated on everyones individual situation.
You should note that CRA will withold the minimum income tax on your RFRG, so do not count on getting all of it. The following tax year, depending on your financial situation, you may get some of it back. You can write to the Fairness Committee of your local CRA office requesting that tax not be witheld.  I am - 120 days , so I am looking at this whole situation closely.

PS: Not related to subject, but funny, and took me by surprise, if you look closely at the recent uploaded pictures, Brigade Commander's Inspection, you might spot Rifleman62. No not the four ringer.

 

[Rifleman62]

IAW the new proceedure, it will take 14 to 18 weeks to receive the RFRG on release. Reference: PPT to clerks in Feb re the pension, RRFG etc.

 

[Rifleman62]

As stated by others here, you cannot Redress nor complain to the CF Ombudsman re the pension as it was enacted by the Governor in Council in regulations. Confirmed by the following, and verification with both organizations.

NDA Section 29
GRIEVANCES
Right to grieve

29. (1) An officer or non-commissioned member who has been aggrieved by any decision, act or omission in the administration of the affairs of the Canadian Forces for which no other process for redress is provided under this Act is entitled to submit a grievance.

Exceptions
(2) There is no right to grieve in respect of
(a) a decision of a court martial or the Court Martial Appeal Court;
(b) a decision of a board, commission, court or tribunal established other than under this Act; or
(c) a matter or case prescribed by the Governor in Council in regulations.

The Ombudsman’s Office does not have jurisdiction over issues relating to the Pension Benefits Division Act or the Canadian Forces Superannuation Act. These are pieces of federal legislation, which are amended through Parliament.

 

[geo]

While we cannot grieve the Pension plan itself, we should be able to submit a grievance WRT the delay the CF submitted us to endure.

 

[dapaterson]

Having sent in my paperwork to the pension office about three weeks ago, I was pleased to receive a call from the pension office today.

It seems that they can't take a lump sum payment from me until they have the Canada Revenue Agency (CRA) confirm my past service pension adjustment (PSPA) (not applicable in my case by my understanding of the rules, since I'm doing an RRSP transfer, but they have their process to follow...); while they are awaiting that from CRA they will also do a more detailed review of my pay records to determine more precisely what I owe.  (It's actually two lump sums in my case, as I have sufficient full-time service that I'm in the full-time plan and thus have to elect to buy back my service in the part-time plan and then elect for the top-up contribution on entry into the full-time plan.  You'd have thought that they'd have a simplified system at the coming into force to handle the several thousand people all in the same situation, but no such luck).

My election date will be protected - that is, I won't owe additional interest after July 1st rolls around this year.  However, to open my pension account, they require that I submit authority for them to begin withdrawing monthly payments of $5 (the lowest amount permitted) until they receive the PSPA certification and calculate the exact amount I owe.  The cumulative payments I make (the $5 monthly) will be subtracted from the amount I owe.  My suspicion is that this is primarily a way to buy them time.

I find this all somewhat frustrating.  I dislike granting any pre-authorised debits on my accounts; there are too many potential problems that can leave me chasing after my money after someone has made a mistake.  I do not see why they cannot take an initial lump sum and then adjust as is necessary.  The representative at the other end of the phone said it was intended to protect my money, and not have them take it while I could still be earning interest, but I suspect that's boilerplate script they've been given to read.

However, at least it is a sign of progress.  I am glad that I have submitted my paperwork early; I shudder to think of what the delays will be like over the next few months as more and more files begin swamping their offices...

 

[Rifleman62]

I am in the same boat. So far I have received four letters WRT the pension entitlement, including two yesterday - part time and top up for full time. My wife and I meet with our Financial Advisor on Monday to determine the best course of action. I will then send in all my records, calculation, and paperwork with a coverpage in HUGH FONT - 4 Aug 07!!. Re reply #405, I hope they only take $5 from my account until Nov/Dec (07), when I expect to get my first pension cheque, followed 1/2 months later by the RFRG which will be rolled twice into a lump sum buy back. Lean time ahead this fall until this gets settled. Have not finished a letter to the heads of state for reconsideration of the current regulations. Too frustrating. Nice way to finish 45 years, but for new/newer members this is a good benefit, and too long overdue.

 

[Rifleman62]

DAP states: You'd have thought that they'd have a simplified system at the coming into force to handle the several thousand people all in the same situation, but no such luck.

Same comment as my Financial adviser and the Actuary. They were not impressed with the on line calculator ( I gave them the password etc so that they could review my entries). The Actuary said we are also paying for the employers contribution on buyback.  The rate of interest to finance the buyback is 4% simple interest plus the mortality charge (life insurance). According to the Actuary, combining the interest and the mortality charge, that works out to 5.63% compound interest over 10 years, or 6.27% compound interest over 20 years. At my age, that is a good rate e.g. I can get a term insurance policy for 20 years that would equate to 1.26% compound interest. So I would have to get a 20 year fixed mortgage (remortgage my residence to pay for the 7% compound interest) for under 5.0 %  compound interest to match the government rate. ( maybe I should not post this, as the pension people might jack the rate up!!)
Still no answer from Ottawa re my questions above, although I have sent several reminders. Surely they will not apply monthly payments to the interest and mortality charges first, then apply your monthly buyback payments to the principal. As I said before, that's loan sharking. Easy for them to answer, but no answer.
When is the benefit calculator going to be on line? Yes you can do a fairly accurate calculation yourself, but signing on the dotted line, and committing yourself to $100k, $200k, $300k, or whatever without
having some confirmation, is not ethical.

 

[kratz]

The dates for pension briefs have been posted by various means for Halifax. Job depending, I plan on attending one of them to be able to ask more questions on the Reserve Pension Plan.

 

[54/102 CEF]

As I said before, that's loan sharking. Easy for them to answer, but no answer.
When is the benefit calculator going to be on line? Yes you can do a fairly accurate calculation yourself, but signing on the dotted line, and committing yourself to $100k, $200k, $300k, or whatever without
having some confirmation, is not ethical.

Pretty sad commentary - you`d think they'd do the calculations automatically. But when it comes to reserve benefits its takes how many years to get this through? Right. 1 Army? I don't think so.

 

[Rifleman62]

I do not think they were ready to implement the Reserve Pension. As stated in the thread, rumor has it the CFPMP wanted another delay, and the CDS told them to get on with it. Sent my election in. A very helpful lady at DAPPP answered some of my questions, but did not know all the answers. I was promiced a reply by email to several questions yesterday, but no answer received.  Sure would like to know how monthly payments are applied. Just so you know, interested is still accumulating on buy back. It stops when you make your election. Nice of them to tell us to make your election quickly to save interest.

 

[Harris]

Many of you in the above postings mention a letter you have received.  Should we all be receiving a letter of some sort?  To date nothing has shown up.

 

[Nfld Sapper]

Many of you in the above postings mention a letter you have received.  Should we all be receiving a letter of some sort?  To date nothing has shown up.

Same here  ???

 

[dapaterson]

There are in fact three letters:

(1) A welcome to the pension plan for anyone who is now a member;

(2) A letter to anyone with prior earnings, telling them they can elect to buy back that service; and

(3) A letter to anyone who falls into the full-time plan, telling them they can elect to top-up their part time contributions (per letter #2) to get greater full-time plan benefits.


Review the information at the RFPP website (http://www.admfincs.forces.gc.ca/rfpp/RFPPHome_e.html) to keep yourself informed.  And an important point:  Even if you haven't received your letter, you can still fill out and submit your forms... or, in good military, terms, take the initiative.

 

[Harris]

Thank you for the info.  Unfortunately my Unit seems to be doing the wait and see attitude.  No one seems to be too concerned that we haven't gotten letters, and we also haven't been given our former service list yet either.  I've asked and been told to wait out.  Since the cross country brief is this Thur in Aldershot, I'll go to that and then insist from the OR that the info be passed.

 

[geo]

Military Pension Support Services (MiPS) SOP

Important Points:

1. When you log into the Calculator for the first time, please write down the temporary password so that you can change it once you are in the program.  Once you are in the Calculator, enter your temporary password under Current, then enter your own password, enter your own password again to Confirm.  Click on “Change” and your will see a pop up message stating that your password is now changed. 

2. All dates should be entered in the format 'DDMMYYYY' 

3. Below is an example of a Navigator that is used throughout the system.
                                                                                                                                                       4. Each time you enter a line of information into the Buyback Calculator, you MUST save your work for the data to be kept.

5. Always exit the system by pressing Logout. Avoid the   in the browser.

6. There is no BACK button in the system. If you want to go somewhere, use the buttons provided.

Step 1 - Locate/logon to Calculator

· The calculator can be found on the CF Pension Home Page
http://www.admfincs.forces.gc.ca/pension/intro_e.asp

· Click on link RFPP Home
· Click tools
· Click on Reserve buyback calculator
· Choose language
· Read disclaimer
· Click on accept
· If already a USER enter your email address and password and select login
· If you are a new user, follow the instructions on the screen to “create an account”

· Note:  If you are a new USER, it is strongly recommended that you change your Password immediately
· Once logged on, select “Personal Data” 

Step 2 - Maintain my personal data
· On the home page, select option 1 - Personal Data.   

· Select Edit  , and fill in the data.
· Date of birth:  input DOB-DDMMMYYYY
· Sex:  male or female
· Enrolment date:  enter your most recent enrolment date-DDMMMYYYY
· Component:  select current component - Regular or Reservist
· Rank:  select current rank 
· Plans:
o RFPP - Reservists who qualifies for the Reserve Force Pension Plan by earning 10% of the Yearly Maximum Pensionable Earnings (YMPE) for two consecutive 12 month periods over a rolling 24 month period are required to make pension contributions from their pay.

o CFSA Part I - Regular Force Pension Plan also known as the Canadian Forces Superannuation Act (CFSA) Part I  – CF members belong to this plan immediately upon enrolment in the Regular Force.  As of 1 Mar 2007, Reserve Force members who qualify by working full time for 1674 days out of a 60 month period will also become contributors to this pension plan.

· Election date:  Members can use today’s date however once the Buyback Report is ready to be printed, the election date should be entered as the same date the election forms were signed.  Note:  Members must have their documentation in the mail to Pension Services within 7 days of the date they signed the election form(s).

· Contribution date:  Only to be completed by CFSA Part I Contributors.  Enter the first of the month you started to pay contributions to the Regular Force Pension Plan (CFSA Part I).  If you are a Reserve Force Pension Plan Participant, the Contribution Date will automatically default to 31DEC1899 (this is correct for the program).   

· Participation date:  To be completed by both Reserve Force Pension Plan Participants and CFSA Part I Contributors.  Enter the first of the month where you started to pay into the Reserve Force Pension Plan. For those members who are Contributors to the CFSA Part I on 01 Mar 07, the Participant date and the Contribution date will both be 01 Mar 07.
· When you have entered all your data - press save  . Return to the MiPS Home Page


STEP 3 - Capture my earnings for a Buyback

· From the MIPS Home page select #2 “Capture earnings” 
· Select Buyback as the Earnings Type (Buyback is Earnings type for all CF members at this stage in the program)
· In order to enter the Data, select   
· Year:  input year of buyback, the date should be 01JANYYYY, including your start year and the year 2007
· Pill:  Pay in lieu of leave – must input the dollar amount of Pill for that given year
· Qualifying days:  total paid days for the specific Calendar Year

o Class A:  If the Class A time is under 6 hours, it is considered .5 of a day.  So two .5 days equals 1 full day.  If the Class A time was over 6 hours, it is considered one full day.  Take your total of Class A days for the Calendar Year and multiply by 1.4

o Class B and C:  Each day of Class B and C is considered one full day.  Add up all your Class B and C days for the Calendar Year.

o Add up the totals for your Class A, B and C service for each Calendar Year and insert the figure under Qualifying Days 

· Then enter all your prior service and earnings on a year-by-year basis line by line. 
· Ensure to press save   after entering the data for each Calendar Year. 

· Note:  If at any time you want to delete or edit your data, click on the appropriate line and select either the edit icon   or the delete  , note that the delete icon will delete ALL the entered information.
· Once you have entered all required Data, select the   icon located at the bottom panel under total cost.  This action will calculate the total cost of your buyback.

· Amount to buy:  you must decide how much you want to pay toward your buyback and enter the figure.  If the Buyback election amount is $500.00 or less, the election must be paid for in lump sum, not by monthly payments.  Monthly payments are calculated by taking the amount you want to buy, adding interest for the number of months you want, and then dividing by the number of months.  This combination may result in a monthly payment less than $5.  To resolve this, adjust the amount to buy, or decrease the number of months.

· Lump sum:  If you want to apply a lump sum payment towards the total cost, enter amount.

· Months:  Enter the desired re-payment period in months

o The maximum repayment period allowed is either 20 years or until age 65 - whichever is later

o Example:  If you are 49 years old at time of election, you have until age 69 to pay back your prior service.

· Select   to calculate your monthly payment.
· Note:  You can make changes to the values and re-calculate your total cost.  This can be repeated as many times as you wish.
· At this time, the report option is not functioning therefore you must print screen all the appropriate pages to attach to the Election form that you’ll provide Pension Services.  See WEB site for more details.

http://www.admfincs.forces.gc.ca/rfpp/RFPPHome_e.html


Step 4 -Top up/Roll Over Election

· If you have become a Contributor of the CFSA Part I Plan you have the option to complete a Roll over/Top up election.

o Top-Up Election/Roll over  – Once the eligibility requirements are met, the Top-Up Election allows a Regular Force Pension Plan (CFSA Part I) Contributor to contribute an additional amount in order to count his/her Reserve Force Pension Plan past earnings purchase as if it had been originally bought under the Regular Force Pension Plan (CFSA Part I).  The member may choose to Top-Up all his/her past earnings or just a portion of them. 
· After having entered all the applicable data as a Reserve Force Pension Plan Participant, click on the Roll Over icon.   
· Select CFSA Part I as the Earnings Type
· Click on   icon to calculate your Top-Up election
· This action will calculate the total cost of your Top-Up Election.
· Amount to buy:  you must decide how much you want to pay toward your Top-Up Election and enter the figure.  If the Top Up election amount is $500.00 or less, the election must be paid for in lump sum, not by monthly payments.  Monthly payments are calculated by taking the amount you want to buy, adding interest for the number of months you want, and then dividing by the number of months.  This combination may result in a monthly payment less than $5.  To resolve this, adjust the amount to buy, or decrease the number of months.

· Lump sum:  If you want to apply a lump sum payment towards the total cost, enter amount.
· Months:  Enter the desired re-payment period in months

o The maximum repayment period allowed is either 20 years or until age 65 - whichever is later

o Example:  If you are 49 years old at time of election, you have until age 69 to pay back your prior service.

· Select   to calculate your monthly payment.

· Note:  You can make changes to the values and re-calculate your total cost.  This can be repeated as many times as you wish.

· At this time, the report option is not functioning therefore you must print screen all the appropriate pages to attach to the Election form that you’ll provide Pension Services.  See WEB site for more details.

http://www.admfincs.forces.gc.ca/rfpp/RFPPHome_e.html


Warnings and Messages


“Cannot buy more than 35 years of service.”

· While on the Capture Earnings page, subtract 35 from the Election Year. This is the MINIMUM year you can enter data into the calculator. For example, 2007 - 35 = 1972.  Ensure that your election date appears correctly in all panels.

“Monthly payments cannot be less than $5.00”

· Monthly payments are calculated by taking the amount you want to buy, adding interest for the number of months you want, and then dividing by the number of months. This combination may result in a monthly payment less than $5. To resolve this, adjust the amount to buy, or decrease the number of months.

“Buyback or Rollover amount cannot be < $500.00”

· If the Buyback or Rollover election amount is $500.00 or less, the election must be paid for in lump sum, not by monthly payments.