Reserve Pension- Merged

[begbie]

Did anyone have a good look at their T4's this year to see if your RPP contributions and pension adjustment were reported correctly?  I've noticed that my RPP contribution, as it appears on my T4, is higher than my pension adjustment.  I am certain it shouldn't be this way.

Anyone else have this problem?

 

[dapaterson]

Were you buying back prior service last year?  That will skew your RPP contributions upwards while not immediately changing your pension adjustment.

 

[begbie]

Were you buying back prior service last year?  That will skew your RPP contributions upwards while not immediately changing your pension adjustment.

Not to my knowledge.  I have elected to buy back prior service but have not received confirmation that my estimate is correct.  I don't think that is the problem since I have elected to buy back the service in a lump sum payment anyway.

My RPP contributions are appropriate as I am a class A reservist and thus don't contribute much.  However, typically the pension adjustment should be substantially higher than my RPP contributions.  As reported on my 2007 T4, it is actually a lower amount than my RPP contributions.  I'm hoping that it's a mistake and/or I don't have all the information since the inference of that is that my RPP contributions are effectively a tax.

I was just wondering if there was an easy explanation for this and if the regular, knowledgable commentors on all things RFPP might know.

 

[dapaterson]

Even if you're only making a $5 per month contribution while you await confirmation of your lump-sum amount that should appear against your RPP contributions.

The detailed Revenue Canada guidance on calculating a Pension Adjustment is at:

http://www.cra-arc.gc.ca/E/pub/tg/t4084/t4084-e.html

Unfortunately, given the decision to implement a very complex system for part I.1 (part-time) reservists, I don't have the time to perform some detailed what-if ing to see how this works out in the real world.  I suspect that two factors may be at play:  the fact that the part I.1 plan is blended with CPP/QPP lowers the PA, as do some of the calcuations to determine "pension credits".


I suspect that somene with primarily class A service could see a PA lower than their RPP contributions, since there is a reduction factor applied to the calculations. 

 

[RLD]

Not to my knowledge.  I have elected to buy back prior service but have not received confirmation that my estimate is correct.  I don't think that is the problem since I have elected to buy back the service in a lump sum payment anyway.

My RPP contributions are appropriate as I am a class A reservist and thus don't contribute much.  However, typically the pension adjustment should be substantially higher than my RPP contributions.  As reported on my 2007 T4, it is actually a lower amount than my RPP contributions.  I'm hoping that it's a mistake and/or I don't have all the information since the inference of that is that my RPP contributions are effectively a tax.

I was just wondering if there was an easy explanation for this and if the regular, knowledgable commentors on all things RFPP might know.

Keep in mind that the Pension Adjustment (PA) is calculated based on the deemed benefit you are expected to receive in retirement not the contribution. Assuming you are under Part I.1 the benefit earned is 1.5% of earnings not the 4.3% contribution rate. For a defined benefit plan such as the RFPP the base formula is (9 x benefit earned) - the PA Offset. The PA offset is currently $600. There are other factors and limits that also come into play but as a Class A reserve they probably wouldn't apply to you. Also remember that only 10 months of 2006 are subject to the PA. So if your Mar-Dec earnings were around $6500-$6600 then the PA and contribution should be pretty close. If earnings were less the PA will be lower than the contribution and vice versa if earnings are higher. The further away from the break-even point the greater the difference between the two.

As DAPATTERSON pointed out a full explanation of the PA calculations can be found in the CRA tax guide T8084 although I wouldn't recommend it as light reading. For an extra strength headache you can also look at T4104 which deals with Past Service Pension Adjustment (PSPA).

Hope this helps.

 

[RLD]

Correction to my last. The CRA PA guide is T4084 not T8084.

 

[Spr.Earl]

SW
while I hate to contradict ya;
- there are fewer and fewer employers who offer pension plans
- there are fewer and fewer individuals represented by unions.
- more and more individuals are being screwed & the CF are no exception...
been there, done that & been screwed by the best  

Yes Geo but how many employee's out there are willing to give their life for their employer ,we don't have union and yes we Reservist's get screwed every day by Faulty Towers,whether it's on meal claims,medical etc.

 

[Spr.Earl]

Hired a pension specialist?
Are you daft & balmy?
If they did, they prolly were dealing with the lowest bidder....

To be fair, newbies sarting today will have a fair shake....
Us old timers will have to shake things ourselves to get fair treatment...

Or sue the buggers!!!!! 

 

[Spr.Earl]

"Make haste to reassure me, I beg you, and tell me that our fellow-citizens understand us, support us and protect us as we ourselves are protecting the glory of Rome.
If it should be otherwise, if we should have to leave our bleached bones on these desert sands in vain, then beware of the anger of the Legions!”

-Marcus Flavinius, Centurion of the 2nd Cohort of the Augusta Legion "

 

[Spr.Earl]

Now after a few min's of realising I let my anger get the better of me, is there a Fin Clerk out  there who knows and can take us step by step on applying for our buy back and whom we apply to?

Nick

 

[dapaterson]

Step 1:  Gather all your old pay records.

Step 2:  Calculate your earnings (pay and PILL only) for each calendar year

Step 3:  Complete the online calculator with the data from above

Step 4:  Determine how much you can afford to buy back

Step 5:  Fill out the forms to elect the buyback

Step 6:  Fill out the forms to authorise monthly payments to start the buyback

Step 7:  Wait for the pension office to reply with the final amount you will owe.


I'm currently at Step 7 and have been for over 13 months.  SInce I'm pressed for time right now, I can't go into more detail... but over the next week or so I'll try to fill out the framework above...

 

[Long in the tooth]

Twenty two years ago I transferred to the Regs after 10 yrs res service.  When I retire soon I will have contributed over $124,000 into my pension which means I will be funding well over 60% of my pension.  In other words, a defined contribution plan (like the reserve one) would have been far better than the defined benefit plan I'm under.

I'm glad I've got my own RRSPs.  Just a note to the reservists who think they're the only ones getting screwed over.

Cheers.

 

[geo]

Otto
As a member of the Reg force you participate in a defined benefit plan
All in all, your contribution of 124000$ represents what?  +/- 2 years of salary.
You will start receiving umm how much of a % of your regular salary? 50 or 60%... for how many years.... indexed?
Somehow, I don't think that's too shabby.

 

[Spr.Earl]

Max you can collect is 70% of your salary which is = to 35 yrs service and you can not collect any more than that.
There again after your 35 your pension is based on your best 5 yrs and then the average of those 5 is your pension.
I have the same pension scheme under the B.C. Superanuation as I work for the B.C. Ferries and ours is the same as the Fed.Pension Plan.

 

[Spr.Earl]

Step 1:  Gather all your old pay records.

Step 2:  Calculate your earnings (pay and PILL only) for each calendar year

Step 3:  Complete the online calculator with the data from above

Step 4:  Determine how much you can afford to buy back

Step 5:  Fill out the forms to elect the buyback

Step 6:  Fill out the forms to authorise monthly payments to start the buyback

Step 7:  Wait for the pension office to reply with the final amount you will owe.


I'm currently at Step 7 and have been for over 13 months.  SInce I'm pressed for time right now, I can't go into more detail... but over the next week or so I'll try to fill out the framework above...

Thank's data 

 

[Long in the tooth]

Otto
As a member of the Reg force you participate in a defined benefit plan
All in all, your contribution of 124000$ represents what?  +/- 2 years of salary.
You will start receiving umm how much of a % of your regular salary? 50 or 60%... for how many years.... indexed?
Somehow, I don't think that's too shabby.

The DB plan has always advertised itself to be more generour; in my case it is not.  You've extrapolated completely inaccurate figures.
Amount paid will be 2.5 years +, % Reg earnings hopefully 46%, <$1900/month not indexed, shabby for 31+ yrs total svc.
I would have done much better with a DC plan, thanks very much - over 25% better.
I realize this may sound illogical, but it is TBs logic, not mine.

These are my numbers.  I know the figures because it's my money.  Let's face it, even the boffins in NDHQ won't give anyone a straight answer... 

Cheers

 

[Nfld Sapper]

Step 1:  Gather all your old pay records.

Step 2:  Calculate your earnings (pay and PILL only) for each calendar year

Step 3:  Complete the online calculator with the data from above

Step 4:  Determine how much you can afford to buy back

Step 5:  Fill out the forms to elect the buyback

Step 6:  Fill out the forms to authorise monthly payments to start the buyback

Step 7:  Wait for the pension office to reply with the final amount you will owe.


I'm currently at Step 7 and have been for over 13 months.  SInce I'm pressed for time right now, I can't go into more detail... but over the next week or so I'll try to fill out the framework above...

Spent 3 hrs with guys from Ottawa on this to be told same thing  :-\

 

[Fishbone Jones]

So what happens if you do your election, submit your paperwork and take your release before they sort it out? Say, for argument sake 18 years A, B, C Reserve & 13 years Reg with return of contributions. Are you still entitled to the pension, and how will they process the paperwork?

 

[geo]

if you did your reserve service followed by reg force service
Logic would suggest that you were given your oportunity to buy back your reserve time - and because you're raising the point, you chose not to.  Also, If you then got your Reg pension plan contributions returned then you cashed out ... and you should not expect nada... for the paperwork.

But then... that's just my logic working here & on a weekend morning, left most of my sense at the office ;D

 

[engineergonemet]

ok so it was clarified about 12 pages back that pill is 9% of our earnings. can anyone verify if it's been that percentage the whole time? I'm trying to figure out my buy back starting in 2003 and while i have my pay rates and days worked i have no info on my pill leaving me to calculate it myself. it's just one set back after another with this system.  :
Thanks.