Pension Transfer Value / Lump Sum Pymt [Merged]

[Flyingboy444]

Thank you! So someone who went to the RMC at 18 can retire at the age 43? Thank you a brunch. 

 

[mariomike]

So someone who went to the RMC at 18 can retire at the age 43? 

As in Reply #1:
"That 25 years includes any time in education or training."

16. (1) A contributor who ceases to be a member of the regular force and who has to their credit two or more years of pensionable service is entitled to an immediate annuity if

(a) they have completed not less than 25 years of Canadian Forces service as prescribed by regulations made under paragraph 50(1)(m);
http://laws-lois.justice.gc.ca/eng/acts/C-17/page-8.html#s-16.

"You will also have a good pension plan and your contributions will start right from the beginning of your studies."
http://www.cmrsj-rmcsj.forces.gc.ca/fe-fs/faq-faq/faq-faq-eng.asp#gen
Why choose Royal Military College Saint-Jean?
Question #2.

 

[Eye In The Sky]

Thank you! So someone who went to the RMC at 18 can retire at the age 43? Thank you a brunch.

It is possible; before the new Reg Force Terms of Service policy came out in 2005, it was possible to serve 20 years and receive a pension.  As mentioned, it is now 25 years (min) for an immediate annuity.

 

[PPCLI Guy]

And when you hit that magic 50% point a lot of your idle musings and reveries change......

 

[RyanC]

I am at my wits end and I am just wondering if releasing due to a major depression would be a medical release or an administrative burden

 

[PMedMoe]

Have you actaully been diagnosed with depression?  If you're thinking that might be a quick way out the door (I read your earlier posts), think again.

 

[Occam]

A 3(b) medical release is a result of an Administrative Review caused by permanent Medical Employment Limitations which are in violation of Universality of Service.  The MELs have to be assigned by a MO.

"Administrative burden" is a cause for a 5(d) release, and is the consequence of administrative measures.

If the MO is onboard for a diagnosis and permanent MELs, then it should be a medical release, I would think.

PMedMoe's advice is wise.

 

[NorthernOtter]

A quick question about pensions for DEOs. I've heard varying accounts on when the pension is receivable based on years served. And of course the charts online are pretty hard to decode for civs.

Basically, if I were to enter as a DEO for MARS, how many years would be needed to receive the pension? What are the levels for pension as well?

 

[dapaterson]

Short answer: Under the current regulations and legislation, assuming a normal retirement (that is, not being released for medical, disciplinary, or force-strucutre changes) you are required to serve a minimum of 25 years to receive a pension under the CFSA.

Until age 65, that pension would be based on the average of your five consecutive highest-paid years of service, with a credit of two per cent per year.  Thus, after 25 years you would receive 50%.  The maximum is 70%, paid for 35 years of service.

At age 65, your pension is reduced in accordance with a formula to reflect the fact that the CFSA benefits are designed to include CPP in their assumptions.  The amount of the reduction may or may not be the same as the amount of CPP you receive, as you may work before or after your military service, changing your CPP entitlement, and you may draw CPP early (from age 60), again impacting the amount of your CPP entitlement.

Military pensions are indexed once certain qualifying thresholds have been met (a combination of years of service and age).

Finally, there are no "levels" of pension; rather, it is based on the average of your best five consecutive years of pay, multiplied by the number of years of service, to a limit of 35 years.  Every day you serve increases your pension until you reach 35 years of service.

 

[ProPatria05]

One nuance, which is of importance for those who joined when they were 'older' (like myself), is that if you reach your compulsory retirement age (CRA) prior to serving 25 years, you can still draw an immediate pension based on 2% x number of years served x best 5 average.

For example, in my case I joined at age 31, so when I hit my CRA of 55 (did not sign CRA 60) I will only have 24 yrs of service, but because I will have served until CRA I can start drawing an immediate annuity when I retire at 55, based on 48% of the average of my best 5 years' salary.

And if you don't serve 25 yrs, or until CRA (e.g. you retire after 10 yrs), you are still entitled to a pension (20%), you just can't start drawing it until age 60 (to get the full 20%), OR you can start drawing a reduced pension as early as 55 (reduced by a certain % for each year from 60 to 55).

 

[mariomike]

To add to the above.

Pension (merged)
http://army.ca/forums/threads/106617.0/nowap.html

 

[NorthernOtter]

And if you don't serve 25 yrs, or until CRA (e.g. you retire after 10 yrs), you are still entitled to a pension (20%), you just can't start drawing it until age 60 (to get the full 20%), OR you can start drawing a reduced pension as early as 55 (reduced by a certain % for each year from 60 to 55).

So would that mean that, if I entered at 25 years old, and left at 35 years (after 10 yrs) I would get a 20% pension but couldn't withdraw until I'm 60?

Also, to clarify on the percentages, would it be 50% of what I earned each year? To make the math easier, if I was earning $50,000 avg over 5 years, I would be receiving $25,000 per year after 25 years of service?

 

[GreenWood]

If you take a look at the thread mariomike provided, I think you will find most if not all your answers.

Cheers

 

[dapaterson]

So would that mean that, if I entered at 25 years old, and left at 35 years (after 10 yrs) I would get a 20% pension but couldn't withdraw until I'm 60?

If you leave under the age of 50 you also have the option to receive a buyout - a combination of a locked in RRSP and cash taxable in your hands.

Also, to clarify on the percentages, would it be 50% of what I earned each year? To make the math easier, if I was earning $50,000 avg over 5 years, I would be receiving $25,000 per year after 25 years of service?

Yes, if your best 5 years averaged $50K, after 25 years you would receive $25K/year until age 65, at which point it would be reduced to $17817.50. (See CFSA 15 (2.1))

Pensions are complex.  It is to your advantage to inform yourself and understand your entitlements early.  Retirement planning should start when you start working.  Starting to think about it 6 months before you retire is a recipe for disaster.

 

[NorthernOtter]

If you take a look at the thread mariomike provided, I think you will find most if not all your answers.

Cheers

Indeed, after reading over that post I found all the answers I needed. I suppose I was just confused from what some of my friends in the Forces are saying about banking it every 5 years, requiring 10 years service, etc.

 

[ModlrMike]

The pension will take care of itself. You should put more concentration into TFSA and RRSP. Start early and take the long view.

 

[PENSPEC]

Short answer: Under the current regulations and legislation, assuming a normal retirement (that is, not being released for medical, disciplinary, or force-strucutre changes) you are required to serve a minimum of 25 years to receive a pension under the CFSA.

Until age 65, that pension would be based on the average of your five consecutive highest-paid years of service, with a credit of two per cent per year.  Thus, after 25 years you would receive 50%.  The maximum is 70%, paid for 35 years of service.

At age 65, your pension is reduced in accordance with a formula to reflect the fact that the CFSA benefits are designed to include CPP in their assumptions.  The amount of the reduction may or may not be the same as the amount of CPP you receive, as you may work before or after your military service, changing your CPP entitlement, and you may draw CPP early (from age 60), again impacting the amount of your CPP entitlement.

Military pensions are indexed once certain qualifying thresholds have been met (a combination of years of service and age).

Finally, there are no "levels" of pension; rather, it is based on the average of your best five consecutive years of pay, multiplied by the number of years of service, to a limit of 35 years.  Every day you serve increases your pension until you reach 35 years of service.

To clarify the above with regard to 35 years of service and your best 5.  It is well known that there is some confusion on this issue.  When we calculate your best 5 years, we use exactly that your best 5 years.  This is regardless if you have reached 35 years of service, if you are still serving after the 35 years this time qualifies towards the best 5 utilized when calculating your benefit.

 

[dapaterson]

To clarify the above with regard to 35 years of service and your best 5.  It is well known that there is some confusion on this issue.  When we calculate your best 5 years, we use exactly that your best 5 years.  This is regardless if you have reached 35 years of service, if you are still serving after the 35 years this time qualifies towards the best 5 utilized when calculating your benefit.

For those who are members of the Reserve Force who are in the part I pension plan (often referred to as the Regular Force plan) it's even more complex; the best five may include years of service where rates were imputed for the purposes of buyback, and may also include pro-rated amounts for partial years.

If you want to confuse pension folks, be a part-time Reserve member in Part I of the CFSA...

 

[navygirl770]

I did 10 years in the Reg force and released.  When I did I took a transfer value on my pension.  I have since re-enrolled and want to buy back my time with the money that I recieved( I didnt spend it).  And I was told by pension services that I cannot buy back my time because I took a transfer value.  Has anyone heard of this.  I wasn't told this at the release center when I opted to take the transfer value and it doesnt seem right.

Any info would be greatly appreciated. 

 

[mariomike]

The huge delay in pension payments don't help either.

Are delays typical?