Topic: Reserve Pension- Merged

[Spr.Earl]

Any heard any more about it?

Last I heard the Privy Council told DND to make it happen but the bickering was how much credit for service and what credit to give long serving memeber's over 20 yrs + .

[NMPeters]

It is still scheduled for implementation in December of this year. From what I understand, Treasury Board has accepted that it go back as far as, I think, 1985 but the pension staff are going to ask that it go back further to include the 1322 members that the 1985 cut off year discludes. I also heard that if you want to buy back time, it will cost $3000 for 1 years worth of service. They are also looking at turning the gratuity into a severance package. That's all I know so far.

[Gunner]

See the Director of Pensions and Social Programs website at:

http://www.dnd.ca/dgcb/dpsp/engraph/modernization_e.asp?sidesection=5&sidecat=17

I believe the most up to date information is contained in CFPMP Powerpoint Presentation.

Last I heard this was good to go as it received Royal Ascent last year but the implementation has been delayed due to the difficulty in developing a system to take into account everyone.  Everyone is different as we all have various Class A, B, and C service possibly combined with Reg F time as well.

NMPeters - that was the first I had heard of a cut off in time you can buy back (1985).  The buy back of 1 year service for $3000 is a pretty sweet deal if it is true.  I was told we would be responsible for paying both the employee and employer premiums at your current rank level.  This was a large amount of money for those with many years of service and long term Cl B service.

Garett - When a Reservist joins the Reg F he can buy back his Reserve service at a rate of 1 for 1 for Cl B and Cl C time.  However, his/her Cl A time counts as 1/4 time (ie 4 class A days would make 1 pensionable day).  The obvious problem with this, is someone can be sitting in NDHQ for years getting 1 for 1 but CL A person in a Reserve unit deployed on field exercises is only recognized at 1/4 time.  Doesn't seem fair?  The same calculation is used for conversion to Cl C rates.

Cheers,

[Michael O'Leary]

I was under the impression that the 1/4 class a meant the period of time you've been class A, not the actuall class A days worked... though that may be hearsay...

You are correct, it is one-quarter of calendar time spent as a Class A Reservist, regardless of the number of days actually worked. So, a Reservist on Component Transfer could buy back 3 months of pensionable time after having worked the "average" 35 training days (or less) in that calendar year.

CFAO 212-3 -- PENSIONABLE SERVICE -CANADIAN FORCES SUPERANNUATION ACT
http://admfincs.mil.ca/admfincs/subjects/cfao/212-03_e.asp

One-fourth of any period of service in the Canadian Forces or in the naval, army, or air forces of Her Majesty raised by Canada, other than the Regular Force, during which he was liable to be called out for /periodic training or duty by the Governor in Council other wise than during an emergency (except any such service that may be counted under serial 3a, 3b or 3e above). CFSA 5(b)(ii)(H).

We are supposed to see the upated Superannuation Act some time this year. Changes are being made that affect both Regular and Reservists.

Depending on how far back Reservists may be allowed to buy pensionable time, it could be a while time before we see Reservists actually collecting a pension. (For example, if you need 20 years contributed time to be eligible to collect a pension, and you buy back your last 10 years, you will still have to serve ten more years to be eligible. Otherwise it would be a return of contributions.)

[Otto Fest]

I'm currently paying $20 per month to buy back 3.5 years of reserve time.  After 20 years Reg F it'll be great to have that time to top up my pension.  However, during that time I will have paid about five grand, so nothing's for free.  As a note, the RegF plan is a 'defined benefit' one based on the best five years earnings.  My wife is a civilian and has a defined contribution plan that is flexible, portable and pays a much better rate of return.  That is probably what will be introduced for the reserves.  Wait for the fertilizer to hit the rotary oscillator if it turns out more lucrative than the RegF plan.

[NMPeters]

Worn Out Grunt, the plans will be the same for both the Regular Force and Reserves. The difference being in the calculation of time between the "part time" time and the "full time" time...if you understand what I'm saying lol

[Horse_Soldier]

a defined contribution plan that is flexible, portable and pays a much better rate of return.  

Sorry to burst your bubble, but no defined contribution plan can top a defined benefit plan of the CF or Public Service kind.  The reason a lot of employers moved to DC plans in the last 20 years is because they are cheaper for the employer - the employee bears the investment return risk, not the employer as is the case in DB plans.  In a DC plan, the employer puts a fixed amount into the fund - if the fund's rate of return tanks, then the money available to retirees is less, i.e. you get a smaller pension.  In a DB plan, the employer has to put enough into the fund to ensure that the employee gets the promised amount on retirement.  In the case of the CFSA, for every dollar you put in, the Government puts in, IIRC, $3.10 these days.

DC plans have not seen anything like the good rates of return that caused the cattle run towards them in the 1980s for a number of years and the forecast is no better. In other words, before a DC plan gets better than the current CF sponsored DB plan, pigs will learn to fly, I will become the next CDS and my wife will agree to an open marriage.

[Otto Fest]

I'll cede that rates of return are doubtful, but typically employers co pay and then there is a qualification period.   I would be interested (honestly) in the figure of 3.1:1 contribution ratio.   I have come out with a different figure based on lifetime contributions/payout (my own scenario).   My main point is that if we are to merge resf/regf TOS and benefits (which we need to do), we need a common benefits package.

I respect your observation on the benefits of the RegF pension, but believe it needs to be more transparant and portable.   We have a society now that expects people to have several careers over their life time and the CF need to move with that.

[recceguy]

Let's not get hung on different scenarios. The average Joe wants to know that if he joins as a Private, spends 20 years on Class A, rises to the rank of SGT or WO, what will he get? If you've got lots of B and C you can get a clerk to sort it.

Without all the legalize and accountant crap, what does the average Reserve soldier have to look forward to after 20 years?

Let's see if that can be answered without hiring a lawyer to translate it.

Play with this. I'm a WO with 20 years, Cl A, on retirement. Last best five at that rank. No tours. What's my pension, under the NEW system.

I don't want someones best guess or "I think". If you don't know what the real outcome is, don't post or say anything.

[George Wallace]

All this talk of 'Time Served' and how it is counted towards a Pension, is a complicated and confusing matter.  I have gone through the process of buying back Reserve Time when I went Reg Force and feel that I got ripped off somewhere along the line.  I think that perhaps we are looking at this all wrong, when it comes to drawing up how the calculations should be done.  Instead of 'Time Served' being the factor that the calculations are done, we should rather look at 'Wages earned'.  It may simplify the calculations in a major way.  I wouldn't have to worry about the times I was on Class A, B, or C callouts, just that I earned a fixed amount and that amount would be the basis of how my Pension would be calculated. 

As an extreme example; why would a Reservist of 20 years, who only paraded occasionally, be entitled to a similar Pension amount as a Reservist who served the same amount of time, but had an exemplary attendance record and participated in numerous Field Training Exercises? 

GW

[DBA]

All this talk of 'Time Served' and how it is counted towards a Pension, is a complicated and confusing matter.  I have gone through the process of buying back Reserve Time when I went Reg Force and feel that I got ripped off somewhere along the line.  I think that perhaps we are looking at this all wrong, when it comes to drawing up how the calculations should be done.  Instead of 'Time Served' being the factor that the calculations are done, we should rather look at 'Wages earned'.  It may simplify the calculations in a major way.  I wouldn't have to worry about the times I was on Class A, B, or C callouts, just that I earned a fixed amount and that amount would be the basis of how my Pension would be calculated. 

As an extreme example; why would a Reservist of 20 years, who only paraded occasionally, be entitled to a similar Pension amount as a Reservist who served the same amount of time, but had an exemplary attendance record and participated in numerous Field Training Exercises? 

GW

Reservists don't currently pay into a pension plan besides CPP. Buyback lets you convert service in the reserves into years in the RF pension plan. You pay the example part of the pension contribution for the years of service they let you buy back. They in effect then contribute the employer part and your pension is improved. The 1for4 for class A is because accounting day by day would be administratively far too costly. A bit unfair maybe but in general those with poor attendance aren't that way for 10+ years, more likely they quit within a year or two tops or start showing up on a regular basis.

[George Wallace]

Reservists don't currently pay into a pension plan besides CPP. Buyback lets you convert service in the reserves into years in the RF pension plan. You pay the example part of the pension contribution for the years of service they let you buy back. They in effect then contribute the employer part and your pension is improved. The 1for4 for class A is because accounting day by day would be administratively far too costly. A bit unfair maybe but in general those with poor attendance aren't that way for 10+ years, more likely they quit within a year or two tops or start showing up on a regular basis.

You've missed the point.   We all get paid.   It doesn't matter that the Reserves don't pay into a Pension currently - that is a mote point.   I am suggesting that the calculations be done on "Earnings" not time or type of 'Callout".   As was mentioned in a couple of previous posts, there are many who have done more time on regular service and earned more, than those on a Callout, yet they are 'penalized' when it comes to converting that towards a Pension when they go Regular Force.   I had over six years as a Reservist, but lost most of it due to the type of Class of Service I was given.   Full-time Service while on Crse each of those years (Six 3 month periods in six summers) was only counted as 1/4 time due to the Class of Service it was credited as.   Had my repayment of Reserve Time been calculated on 'Earnings' instead of the convoluted formula for "Class of Service" method, I may have faired better.

As for it being administratively more costly to do so....that is a crock.  You have a Pay Acct.  The calculations would come from that, NOT from the poor RECORD KEEPING as to what CLASS one has served, for what period of time......talk about expensive and confusing and complicated to administer.

[turretmonster]

I just have to ask what pay record of what pay system do you think has all this data given the fragmented pay systems the P Res have had over the last 25 odd years.

Using IRRPS data ( if it even still exists ) wouldn't give you much trustworthy data given how screwed up that application was at the end.

RPSR would be great for info since about 1997? But before that.....crystal balls and mediums?

I'm confused as to what you are using as your variables for calculations. Would you look at a percentage of earnings made serving as a reservist compared to total earnings of that year to calculate what time you should have been credited?

If so, 100% of my income during 4 years of university would be calculated as being attributable to the P Res, ergo, I should get 4 years credit?

Time served and class of service is on the P Res MPRR. Its up to mbrs to make sure it's correct. I'm pretty sure thats whats going to be used to determine 1/4 or 1 for 1 service.

TM

[a23trucker]

I just have to ask what pay record of what pay system do you think has all this data given the fragmented pay systems the P Res have had over the last 25 odd years.

The word I got from the plan administrator:
"We realize the reserve pay is/was a mess so we'll probably get our data from Revenue Canada"

Cheers
AM

[Gunnerlove]

When you buy back time treat it like taking out a loan. If you pay off the "debt" at a faster rate you save yourself interest paid and thus pay less in total.

[George Wallace]

I just have to ask what pay record of what pay system do you think has all this data given the fragmented pay systems the P Res have had over the last 25 odd years.

You recieved a T-4 for all your earnings did you not?

Time served and class of service is on the P Res MPRR. Its up to mbrs to make sure it's correct. I'm pretty sure thats whats going to be used to determine 1/4 or 1 for 1 service.

How does the Gov't calculate your EI benifits?   Remember, the Gov't sends you out a Canada Pension statement, which lists your total contributions right back to when you were first entered into the system.   It has your records of employment.     It could compile this info and then could do the same type of calculations for your Reserve benifits.

GW

[DBA]

Not sure how the various allowances show up on T4's both currently and in the past. I do remember Field Pay being taxed so unless it was broken out it would skew the numbers.

[turretmonster]

 Regardless of how time served is calculated, I'm pretty sure those 1322 P Res soliders would like all   their pre 1985 service ccounted if this pension thing ever flies.

 It's hard enough to recruit, train, and retain a soldier as it is now in the P Res. I hope someone stops to think what will happen if all those 1322 soldiers who should be Sn NCOs and Sn Offrs by now and form the nucleus of the reserves, get told that all the time before 85 doesn't count.

 It may cost some grandfathering bucks to make it work for those old guys and gals to have all their time count, but what's the alternative unless you really want a P Res with no one higher in rank than a WO or a Capt?

 Hopefully the pension staff can indeed convince TB that excluding roughly the top 10% of the P Res from being able to fully participate in a pension play is NOT a retention tactic.

TM

[Michael O'Leary]

turretmonster, I don't follow your logic.

I suspect the 1985 limit allows those with 20+ years Reserve service to buy back enough time served to be eligible for a pension based on thier most recent 20 years of service. How then, would this "exclude" them from the program? Also, how would this measure cause Reservists to limit their service to the ranks of Warrant Officer or Captain?

[George Wallace]

Another factor that comes into play is the buying back of that time is done at your current rank, so you are not paying what you would as a Pte, Cpl, and whatever as you progressed, you are paying back at the rank you currently hold.  Confused?  You would not pay for two years as a Pte at a Ptes rate, and then a couple of years as a Cple, and so on, but as the rate that corresponds to your current rank.  It could prove to be too expensive for some to buy back the time before 1985 to get the Pension.  They would still be paying for it long after their grandchildren were dead.  All that for how much of a Pension.  It may not be worth it.

[George Wallace]

Not being a Fin Clerk/RMS Clerk or any real financial wizard I would say that your big mistake was probably recieving the bad advice that some in Cornwalis gave to the new Recruits, to pay off their Previous Service at such a low rate, and not mentioning the fact that it was like a "Loan Payment".  If you calculate what your $6 payment has been over all these years, and had it in your pocket, it would be like winning the million.  As you raise in rank, your amount due increases.  I paid back my years (for over Six years Res and 1 and a half years Reg Previous Service) at $100/ month at a Ptes Rate and had it paid off in a couple of years.  Now years later, it is time to collect. 

If you still have payments due on buying back your time, try to increase them and get them over with.  I have recommended to all my guys in similar instances to bite the bullet for a while and pay off that time ASAP and get it over with.  It truly is like a Loan Payment and can become quite expensive in the end.

[George Wallace]

After my 20 , how will that effect my pension?

More time added, more $$

I will tell them to take it off my pay raise and end this nonsense.

Thanks by the way!

As Michael O"Leary posted, except you'll be paying back less dollars for it.

As the Amount of Pension that is in discussion for the Reserves is a complicated matter, there must be a simpler way.  That is why I am wondering why the calculations can't be done from the wages earned as stated on T-4 Slips for Revenue Canada.  That would also have a commonality with buying back time when one joins the Regular Force, in that the calculations for what one pays to buy back that time would be taken also form T-4 Slips of ones Previous Service.  Get rid of two seperate Fin Systems and make them both more common, and equal.

GW

[turretmonster]

"turretmonster, I don't follow your logic.

I suspect the 1985 limit allows those with 20+ years Reserve service to buy back enough time served to be eligible for a pension based on thier most recent 20 years of service. How then, would this "exclude" them from the program? Also, how would this measure cause Reservists to limit their service to the ranks of Warrant Officer or Captain?"

When you joined the Regs, and some policy person drew a line in the sand for a date and said no P Res time before this date counts, and you had 12 years PRes time prior to that date, would it be fair? No.

My favorite WO joined in 1973. If they allow him to go back 20 years to 85, they have discounted his time by 12 years, which may not make him too happy. Now if 1322 pers are in that boat, you have a large percenatge of the P Res getting the short end of the stick. If a mbr served 32 years, they should be able to elect for those 32 years.

If we assume that these 1322 pers are now the upper strata of the P Res and even 30% of them leave due to dissatisfaction with this pension, who is left and how does the Reserves absorb a hit of 400 Sn ppl leaving?


George, give us an example of your plan plse.


TM

[George Wallace]

Not being in the Pay Field, I may be taking an overly simplistic view at this, or but perhaps not.  I look at it this way.  Many of us have served long periods on different Classes of Callout.  I spent over six summers in Wainwright, Dundurn, Shilo, Aldershot, and Gagetown on Class A and only one summer in Aldershot on Class B.  My Class B was considered Full Time, while all those other summers on Class A was only 1/4 Time.  Do I feel ripped off?  YES, I do!

To simplify this confusing and sometimes unequal formula of calculating Time Served towards a Pension, I propose that the current system, mentioned here, be scrapped completely.  I would do away with that Twenty Year Clause (setting 1985 as the cut off date) and instead allow all Reserve Time to be claimed off of the Pay as indicated on one's T-4 slip.  Treasury Board and Revenue Canada issue serving members T-4 Slips for wages earned in Reserves as well as Regs.  Create a formula, similar to what they have to calculate your UI (EI) benefits, to create a reasonable payment system by which members can 'buy their Time' towards a Pension Plan.

That way if you wanted to claim 35 years you could, but you must remember that it could become very expensive, and for some not worthwhile, as they would have to pay more into the system than what they will be drawing out in the end.  There are exceptions to every rule, for instance, a very well off Snr NCO or Offr may be able to pay a humongous lump sum to buy back their time towards a pension and reek all the benefits.  Most others will buy back their time, towards a Pension, through Payroll Deductions.  The advice there is to consider it like a loan payment and pay it in as large an amount as you can, in as short a period as you can.  (This may be the reason that there was a 20 year cut off date - due to the expense on the member)  Remember, a Pte will not be paying as much as a MWO.  Your payments will be adjusted to your current rank, so if you are a MWO when you decide to buy back your Time, you will pay back all your time at the level of MWO.  That is why it is best to pay it back as quickly and as soon as you can at a lower rank.  Your end Pension is calculated on your last/best five years of service at whatever rank/Pay Scale you have in that five years.

The advice to buy back your Prev Service, towards your Pension, applies to the Regs just as much as to the Reserves.  Buy it back as soon as you can, and pay it off as fast as you can.  If you wait until you reach a higher rank, you are paying higher rates, in the end loosing a lot of cash, as you will receive the same Pension in the end as the guy who paid his time off as a Pte and retires after the same period of service and rank as you. 

I hopefully have provided something in these ramblings that makes some sense.

[turretmonster]

Merci George

I'm in the same boat but with many summers on A's in the 70's.

I think that using earnings could be a bit complex as most P Res will have multiple income streams amounting to that one figure on the CPP printout and breaking it down could be a nightmare. However, even if it was one income source, if I made 1200 dollars in 1977 as a trooper peeling spuds in TWP, does that mean I could buy back that whole year?

I think the payback of a baseline of 3 K per year is a way to not require mbrs to go through massive calculations. If I want to buy back 5 years of full time service, I guess I have to pony up 15K. If I want to buy back 20 its 60K. Paying back at current rank level would be impossible for anyone unless they won the lottery.

Now that opens the other pandoras box of severance packages vice gratuity.

Don't you wish someone actually knew what was going on and posted it?

TM