Reserve Pension- Merged

[Rifleman62]

Off the top of my head, in answer to your question "Why Elect":
1. You will have access to a defined benefit pension plan which is the best you can get;
2. The pension plan is indexed annually;
3. You have a federal government pension, so no fear of an employer going broke and the pension plan disappears;
4. You do not have to worry about the ups and downs, especially the downs, of the stock market where your RRSP is invested;
5. You do not have to convert your RRSP's into RIF's at age 71;
6. As you withdraw RRSP/RIF funds for subsistence upon retirement, there is less capital to generate funds (if the market is up), therefor your RRSP/RIF is diminishing year by year;
7. With this pension you always know exactly how much you will get annually, unlike No. 6:
8. Access to retired medical and dental plan only if you are in the pension. Costs currently $55.30 per month (Tier 1, family); and
9. It is principal - as Federal government employee, Reservists were the only group without access to a pension. That's why I have been advocating for a pension, and redressed it years ago (it is on their web page).

As Geo said, this is great for all , especially pers with not a great amount of time in and new pers. You read all the time about how financial advisers say start saving for retirement early, mainly for the current income tax savings you will get every year. It is forced saving.
Me, I just do not like to be taken to the cleaners because DND was so incompetent, but it is still a good deal as stated. Sooner or later you will break even, and if you don't personally, your beneficiary gets half plus continued access to the medical/dental insurance.

 

[begbie]

Rifleman62,

Based on your numbers, do you have a sense of what your contribution rate is vice the employers rate?  I am interested in this.  Maybe the only way to figure out the contribution ratio is to know what the transfer value is.  This is what I keep coming back to when I wonder if it is worth electing.  If I am paying 90% of the buyback cost, then it is not that great of a return on the investment especially compared to the benefit new members are entitled to.

Like you, my suspicion is that the use of the 7% compound interest is a means to limit the employers liability with respect to the buyback.  If that is the case, then those of us with long service to buyback are getting a raw deal when compared to new members joining the plan.

 

[geo]

Begbie....
because we are working with a defined benefit, with cost of living adjustments included, till death of you AND yous spouse, the employer's obligation is pert much open ended.

 

[begbie]

Begbie....
because we are working with a defined benefit, with cost of living adjustments included, till death of you AND yous spouse, the employer's obligation is pert much open ended.

I am not disputing yours or Rifleman62's points in this regard.  What I am trying to ascertain is what is the government's obligation to the plan.  For the Public Service plan, it's a 60/40 split with goverment's obligation being 60% on average.

http://www.tbs-sct.gc.ca/pubs_pol/hrpubs/Pensions/ypp2_e.asp#_Toc497204694

I can't find this type of information for the CF pension plan and I won't assume it's the same.  So when I am told they confirm buyback will cost x dollars and my annual annuity is y dollars, I would like to know if the respective obligations are.

Edited for poor grammar and clarity.

 

[Gunner]

Q5. You mention a more balanced sharing of pension plan costs between plan members and the taxpayers. What do you mean?

It is a common misconception that the costs of the pension plan are shared 50/50 between members and the government. In fact, right now, the government is paying about 78% of current service costs under the CF plan, and CF members about 22%. What this means is that for every dollar a member contributes, the government contributes over three. Once the phase-in of the change in rates is complete, Public Service employees will be paying about 40% of the current service costs of their plan; CF members will be paying about 34% of the costs of the CF plan.

http://www.forces.gc.ca/dgcb/dpsp/engraph/faq_e.asp

The military has a sweet deal when it comes to paying into their pension fund (as compared to other defined pension plans).  By 2014 we will be paying 34% from the 22% mentioned in the article above.  The contribution rates are reflected below:

YEAR  RATE OF CONTRIBUTION IF  SALARY IS UP TO/AT  YMPE  RATE OF  CONTRIBUTION IF  SALARY IS OVER YMPE 
2006  4.3%  7.8% 
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% 

http://www.forces.gc.ca/hr/cfpn/engraph/7_07/7_07_cfpn_cfsa-contributions_e.asp

As mentioned by Rifleman62, you are potentially making a huge mistake if you do not buy back all of the service that you are entitled to.

 

[Rifleman62]

Futher to Gunner's post, and one of the same references.

Note the court ruling, which may yet be appealed. The government's postion was that the superannuation surpluses are "not a real "surplus" of cash or assets, but rather an accounting device to record or monitor the government's liabilities", and the Judge "concluded that the pension accounts weren't "funded" with real assets". Now this is very interesting as one of the negotiating points DND/Treasury Board re the Reserve Pension was that TB's position was implementing the Reserve Pension would cause a very large liability to the government and to offset that liability 7% CI was agreed to by DND. This is a shell game. Do you ever, ever think that the Cdn gov't will be broke and not be able to pay pensions, let alone CPP/OAS benefits? Why do you think there was such a large surplus in the three superannuation accounts? People DIE. There is enough funding on paper to pay all the superannuation, but that liability is decreased as people die with or with out a beneficiary before collecting what is committed to that person based on mortality tables. Thus the surplus.

When the Personnel Newsletter states "For every dollar CF personnel contribute, the government contributes more than three", this is a paper transaction by the government. Additionally the gov't established the Public Sector Pension Investment Board to manage the investment of the funds of the three plans in the markets, as is also now done with CPP.

Personnel Newsletter Sep 07 - Extracts

http://www.forces.gc.ca/hr/cfpn/engraph/7_07/7_07_cfpn_cfsa-contributions_e.asp

For every dollar CF personnel contribute, the government contributes more than three. By 2013, when the phase-in of the change in rates is complete, CF personnel will be paying about 34% of the costs of the CF plan. PS employees will be paying about 40% of the service costs of their plan, and members of the RCMP about 35% of theirs.

The CF Pension Plan is a defined benefit plan. This means that the benefit a plan member receives is established by a formula that is specified in the pension legislation. If there is a deficit, the government is responsible for the shortfall.

http://www.veteranvoice.info/bulletinboard.htm

Judge rules public service workers aren't entitled to $30-billion pension surplus - Extracts

KATHRYN MAY, Ottawa Citizen
Published: Tuesday, November 20, 2007

An Ontario Supreme Court judge ruled Tuesday that 700,000 public servants, military and RCMP personnel aren't entitled to any of the $30-billion surplus in their pension plans that has been at the centre of a historic legal battle for more than a decade.

Justice de Lobe Panet dealt a devastating blow to the 18 unions and pensioners' groups that had accused the government of "stealing" their pension surplus and turned to the courts to force it to put it back into their accounts.

In a 102-page ruling, the judge rejected their claims and largely accepted the government's argument that the $30 billion at the centre of the dispute is not a real "surplus" of cash or assets, but rather an accounting device to record or monitor the government's liabilities. The years the surplus exploded showed the government had over-recorded the liabilities it would have to pay in future pensions.

Judge Panet concluded that the pension accounts weren't "funded" with real assets and the unions failed to prove the accounts had the key characteristics of a trust fund. With no trust fund, the government couldn't have breached its "fiduciary" obligations, as the unions argued, when it amortized the surplus and used it to offset the deficit between 1990 and 2000.

The ruling also dismissed the unions' claims that the provisions of the bill that allowed the government to take the surplus violated the Charter. The unions and pensioners had long argued they were entitled to at least a portion of the surplus, which was partly built out of their contributions and the interest paid on those premiums.

The government had countered that the pension accounts were simply "ledger sheets" and that the contributions and interest that went into them were merely bookkeeping entries to keep Parliament informed of the cost of providing pensions to workers. It argued there were no investments, bonds, real estate or other assets in the accounts and all the government owed was its "promise" to pay pensions to all retirees. © Ottawa Citizen 2007

Read the Judge’s decision here:

http://www.fsna.com/PDFdocs/C-78/Reasons-Panet.pdf

 

[Rifleman62]

Spoke to the Director Canadian Forces Pension Services yesterday AM. She finally returned my repeated phone calls. Do not think she was a happy camper. She could not state when the problems will be resolved, and stated that they are dealing with additional 60,000. I countered that is not correct as most Reservists had not elected as they did not have a clue about the pension. Silence. Also asked her about any possibility of reversing the 7% CI: "absolutely not". Her answer could be due to secrecy, but I highly doubt it. So endth the rumor!

My point to her was that DND has a substantial amount of my money, and I am not getting it back. At the end of Nov, I did receive, after much persistence, an advance on the amount due, but that advance is (I THINK)  75% of 90%. Why hold back 25% when the government has received approx 75% of what I THINK  is the total buy back.

Did someone state this before: if you phoned up a financial company and said you had a 1/4 of a million dollars to invest, they would pick you up in a limo and have your investment plan executed in a week.

 

[geo]

Did someone state this before: if you phoned up a financial company and said you had a 1/4 of a million dollars to invest, they would pick you up in a limo and have your investment plan executed in a week.

Ahhh... but "those" people work in industry and only get paid - so long as they bring home the bacon.

 

[begbie]

http://www.forces.gc.ca/dgcb/dpsp/engraph/faq_e.asp

The military has a sweet deal when it comes to paying into their pension fund (as compared to other defined pension plans).  By 2014 we will be paying 34% from the 22% mentioned in the article above.  The contribution rates are reflected below:

YEAR   RATE OF CONTRIBUTION IF  SALARY IS UP TO/AT  YMPE   RATE OF  CONTRIBUTION IF  SALARY IS OVER YMPE 
2006   4.3%   7.8% 
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% 

http://www.forces.gc.ca/hr/cfpn/engraph/7_07/7_07_cfpn_cfsa-contributions_e.asp

As mentioned by Rifleman62, you are potentially making a huge mistake if you do not buy back all of the service that you are entitled to.

Perfect, that's all I wanted to know. 

 

[54/102 CEF]

Ahhh... but "those" people work in industry and only get paid - so long as they bring home the bacon.

Why do you give DND a pass on non-compliance to the direction of Parliament?

 

[dapaterson]

For those seeking their pay records through the DND's Access to Information and Privacy staff, some interesting information from the director of that group:

Following your e-mail to (a Director General), my office has investigated the situation in-depth. In addressing your request,  we have identified that where documentation is available, it is actually dispersed throughout the department and this situation came to light in out efforts to respond to your request.

A meeting with Director Canadian Forces Pensions Services (DCFPS)  has indicated that their records management for the period between 1994 and 1999 is problematic as the maintenance and storage of these documents has been inconsistent.  During this period, there was no centralized approach to the maintenance of  pay records.  As well, some records between 1974 and 1994 cannot be provided due to the inability to review and print the information as it is stored on media which has deteriorated .

Let me assure you that the Director General of Finance Operations (DG Fin Ops) is investing all available resources in the situation in order to gather all the information possible in one location and make the documents available to the public.

Note that until I escalated my request to a Director General, the Director ignored my request (after her staff was unable to provide the required information, I had escalated my request to her).  Note also that until I asked earlier this year, the folks responsible for disclosing personal information to individuals did not know that the RDS data existed.  Despite Royal Assent in 1999, DND made little or no preparations to determine what data holdings were present and would be required to implement the pension plan.  Every time I think I have plumbed the depths of corporate incompetence in this file, there's more to be discovered.


And in an added bit of "How else can they f**k things up?", I just submitted a question to the pension office.  Rather than hit "reply", some bright child attempted to type in my email address; got it wrong, and forwarded my question, along with their standard "We'll reply when we reply" reply to another person.  So be careful not to send anything too personal via email - they aren't even bright enough to press "reply" and may redirect whatever you sent to another person.

 

[54/102 CEF]

We have to get these birds in front of the Senate Committee on Defence - see if they can try this crap on elected officials.

 

[Haggis]

And in an added bit of "How else can they f**k things up?", I just submitted a question to the pension office.  Rather than hit "reply", some bright child attempted to type in my email address; got it wrong, and forwarded my question, along with their standard "We'll reply when we reply" reply to another person. 

And you found this out how?

If the recipient still has a copy of this e-mail from the pension office with your misdirected personal information in it, you may want to invite your ISSO out for a coffee and an informal chat.

 

[dapaterson]

Haggis:  The other individual was kind enough to forward the email to me.  It is not the first time misdirected emails ahve goen to the wrong recipient (our email addresses differ by a single letter).

I have sent the forwarded email back to the pension folk, along with the following:

In the future please enter my email address properly when replying to my queries, or use the "reply" function.  I would prefer that my queries do not get routed to other people.

The have been oddly silent so far...

 

[COBRA-6]

Well as of Nov I made the jump from the reserve pension to the reg force pension (CFSA part 1) as I reached the 1674 days out of 60 months requirement, so now I have to buy back/top up my previous service/reserve pension contributions.

Just waiting on that letter....

 

[Long in the tooth]

"The military has a sweet deal when it comes to paying into their pension fund (as compared to other defined pension plans).  By 2014 we will be paying 34% from the 22% mentioned in the article above. "

The MP pension plan is pretty sweet and probably is similiar to the 22% quoted above.  But I would like to know where these numbers are from.  From my calculations regarding my circumstance the number is pretty darned close to 50%, and does not include any advantages of compound interest had my share been invested in the market.  I know this as well as I've put pretty close to the same amount of pension contributions into RRSPs and it comes out to 50% what the paid up value of a pension would be.

 

[Rifleman62]

Well, the ongoing battle to actually receive a pension continues. It is being calculated manually. Some buy back surprises: five revised buy back totals over the period Jun 07 to Jan 08, for a total increase of 21.5% owing.

The current interest costs represents 54% of the total buy back. What do you think of that? The 7% compound interest really is a smack down.

 

[geo]

Ouch!  I feel for ya Rifleman62!
54% interest cost?.... Yowza!
Sooo... Is that their final answer OR is still a rough guesstimate?

 

[Rifleman62]

I think it is close, but not final. I had some Public Service time I was buying back @ 4 % SI. approved in Jun 07. Disallowed yesterday, with a corresponding decrease in annual pension, plus huge increased costs of buying back part time reserve service for that period. I guess raising a whole lot of hell at the top about the delay and incompetence really pays back.

 

[geo]

Am certain that us old farts will have many stories to tell by the time all this has been resolved.
I still have a couple of good years to go....
In my case, my current contribution of 1% (over the 35 yrs of service) made the buyback a no brainer but, it's still a kick in the nuts for those of us in our glory years.