Will the army match RRSP contributions in the full time forces.

[Cote]

Hi,

I was starting a RRSP account and a couple people asked if the army would match contributions made. This got me thinking. Does anyone know if the army offers investment incentives for members, such as special army bonds, T bills ect... Also to answer their question and mine, will the army match RRSP contributions

 

[aesop081]

Hi,

I was starting a RRSP account and a couple people asked if the army would match contributions made. This got me thinking. Does anyone know if the army offers investment incentives for members, such as special army bonds, T bills ect... Also to answer their question and mine, will the army match RRSP contributions

The military does not match RRSP contributions as CF members have a structured pension plan.

 

[GO!!!]

recce pigeon,

We have a faaaaar better plan than merely matching contributions.

First of all, it is a defined benefit, vice a defined contribution plan. This is inherently more generous, as the amount of money you will be paid is calculated as an average of your best 5 years pay, regardless of what you put into the plan.

What you are talking about is a defined contribution plan, which means you know what you will put into it, you just have no idea what will come out.

We, as CF members pay 4.5% of our salary towards our pension. Our employer (DND) pays 17.5%. A merely matching RRSP would be a huge kick in the balls here, cutting our immediate benefit by 2/3, and the long term benefit by much more!

Finally, our pension is also indexed with the cost of inflation, as long as you are alive. That means that if (when) the cost of living rises say, 4% in a year, the value of your pension will also rise 4%, so the effect of inflation on you is, in effect, zero.

The CF,CCG,RCMP and a few police forces are the only ones who can claim a pension after 20-25 years, regardless of age. You cannot benefit from your RRSPs until you are 65, and most companies will not start paying you a pension before this time too.

There are no private sector pension plans like this any more, except as a part of executive pay/benefits packages, and the ones for our esteemed members of parliament. They are all being phased out.

 

[Cote]

But in order to be elligable for a CF pention one must be in for 20+? years. Anyway, if your not in for that long then you don't get the pension am I wrong?

 

[xo31@711ret]

Yes, 25 years now, if you pull the plug before hand, you (?used to) get return of contributions. Now, from what I've heard things have changed a bit (I retired last year with just over 24 years under the 'old' plan: pensioned of at 40% with 20 years). I'm ex-infantry and retired as a med tech; maybe there are some adm types on board who definitely know a hell of a lot more and are the prefessionals in reference to all the pension type changes, CANFORGENS etc that were happening just before I left.

-gerry

 

[Meridian]

When I left after a year, I got my contributions back in a lump sum.  But thats only my specific case, I'm sure there are tons of rules, as pensions always tend to have.

 

[aesop081]

If you get out before pension time, you get return of contribution

For those of us on the 20 year plan, you get out after 20...you get 40%

For those on the new 25 year plan...you get out after 25, you get 50%

But in order to be elligable for a CF pention one must be in for 20+? years. Anyway, if your not in for that long then you don't get the pension am I wrong?

You are correct.....Why would you get a pension when you didnt work for it ?

 

[midget-boyd91]

But for those who have been in for less than that amount of time and have been injured/wounded, along with what they recieve for being wounded, would they now be eligible for the pension?

90

 

[Wookilar]

As a couple of others have stated, the pension plans for members just getting in has changed. There are some differences now.

On the old 20-year plan (29 for most officers), you could draw a pension after 10-years. Less than that you got it back in a lump sum. 2%/year with penalties applying if you do not finish your contract.

Under the new contract (IE 25), you cannot draw on your pension until you are 55, no matter how many years you have. Still 2%/year, but potentially more years. For less years service, there are now a couple of options open, not just lump sum. I don't remember the details exactly. If no one else fills in the blanks tomorrow, I will on Monday once I get to work and get the right info.

 

[retiredgrunt45]

Here is the site that will tell you anything you need to know about the CFSA. I'd advise everyone to read it, especially if your coming up for release or retirement.

http://www.admfincs.forces.gc.ca/pension/intro_e.asp

Here is the SISIP site, it has information on what you will be eligable for if your injured in the line of duty. It also has links to the VAC and DND.

http://sisip.ca/en/index.asp

 

[George Wallace]

But for those who have been in for less than that amount of time and have been injured/wounded, along with what they recieve for being wounded, would they now be eligible for the pension?

No.  That is a different Pension.

They may get a Medical Pension, which is administered by DVA.  They may even get that Medical Pension and still be serving.

 

[dapaterson]

A Reg F member medically released with a minimum of 10 years (old plan) or 2 years (new plan) will be eligible for immediate benefits under the CFSA.

Under the new CFSA a release with less than 2 years of service will see a return of contributions; more than 2 years but less than the required length of time for an immediate annuity will see a transfer value calculated and put into a locked RRSP.

There are significant changes to the rules for everyone; the CF Pension Modernization Project seems to think that posting info to a website constitutes informing the CF as a whole.  I'd strongly recommend that all members, Regular Force and Reserve, check out their site at http://www.forces.gc.ca/dgcb/cfpmp/engraph/home_e.asp?sidesection=5 to learn more about the changes on the way.

 

[geo]

excellent point DAP!

+1

 

[GO!!!]

Pension Benefits and Options
Q9:    How will the changes affect the pension situation of serving Regular Force personnel?

A9:    Basically, the changes will improve the pension situation of all CF members. Once modernization is fully implemented:

Under Part 1, the vesting criteria, that is, the period required for a contributor to qualify for a pension-type benefit will be reduced to two years of pensionable service;
eligibility for pension benefits will no longer be linked to terms of service; subject to the next point below, pension eligibility will be based on pensionable service and the member's situation on release (for example, age, disabled or Force reduction) as in most other defined benefit pension plans;
contributors will be entitled to an immediate unreduced pension after 25 years of paid CF service; and
there will be the possibility of transferring the full value of the earned pension benefits to another retirement savings vehicles.
The pension modernization initiative also laid the foundation for making regulations to establish pension arrangements for Reserve Force members.

Finally, there will also be authority to make regulations allowing Regular Force members, on track for certain benefits and in specific circumstances, to choose to have their pension entitlement determined under current rules. This is called "grandfathering."

The underlined quote was what I was most concerned about! Still on track to retire in 2024!

 

[284_226]

The underlined quote was what I was most concerned about! Still on track to retire in 2024!

If you've got 7 years service, would you not already have been on your IE when the changes came about - meaning that you signed an IE20, not an IE25?

 

[GO!!!]

If you've got 7 years service, would you not already have been on your IE when the changes came about - meaning that you signed an IE20, not an IE25?

Nope. The contract that was offered to me was the IE25.

I'm not too concerned about it, according to the last few questions in the Q+A portion of the website, and the pension "expert" who came to the Bn, those of us who were signed to a 25 yr as opposed to a 20 yr will likely be able to get out at the 20 yr mark anyway, because the 25 yr IE was not yet in force when we signed them, meaning that for a few people with about as much seniority as me, we literally can choose which contract we will have.

 

[284_226]

Nope. The contract that was offered to me was the IE25.

I'm not too concerned about it, according to the last few questions in the Q+A portion of the website, and the pension "expert" who came to the Bn, those of us who were signed to a 25 yr as opposed to a 20 yr will likely be able to get out at the 20 yr mark anyway, because the 25 yr IE was not yet in force when we signed them, meaning that for a few people with about as much seniority as me, we literally can choose which contract we will have.

Ah, gotcha.  I found a reference on the DND website that says the rules changed on 1 May 05, so if you joined in Jan-Apr 99, you should have been offered the IE20, and anyone who joined later than 1 May 99 and hadn't yet already signed an IE20 would have automatically been offered the IE25.

About you being able to choose between IE20 and IE25, that makes perfect sense.  It'd be hard for the CF to enforce a contract under terms that didn't yet exist as of the date of signing! 

 

[x-zipperhead]

Another thing to keep in mind that hasn't been brought up yet; if you are "grandfathered" on the old IE 20 and you choose to accept IPS or a CE, then your new TOS automatically puts you on the new plan.  So if you hit the 20 year mark and you are still relatively young (say 40ish) you can a) take the immediate 40% or b) sign your new TOS thereby accepting the new plan and will not receive a penny until you are 55.

So, if you sign a new TOS and a couple of years later you decide to get out, you have just screwed yourself out of 10-15 years of receiving benefits.  This wouldn't have been the case on the old plan.    I thought by being "grandfathered" I was on the old plan for the rest of my career.  Not so I have learned.  We are only "grandfathered" to the end of our current TOS (IE 20 in my case).  Not so much of a complaint as just something to keep in the back of the brain housing group, for planning that retirement.

If I have this wrong I would be delighted to be corrected.

 

[dapaterson]

So if you hit the 20 year mark and you are still relatively young (say 40ish) you can a) take the immediate 40% or b) sign your new TOS thereby accepting the new plan and will not receive a penny until you are 55.

If I have this wrong I would be delighted to be corrected.

Delighted to correct you

See example 4 at:

http://hr3.ottawa-hull.mil.ca/dgcb/cfpmp/engraph/faq_examples_e.asp?sidesection=5

Or, from the FAQ,

A member will be entitled to an immediate annuity under the following conditions:
25+ years of paid CF service,
age 55+ with 30 or more years of pensionable service,
age 60+ with 2 or more years of pensionable service,
disabled with at least 10 years of pensionable service,
involuntarily released due to reductions in the size of the CF or otherwise, provided they are age 55 or older with at least 10 years of pensionable service, or have at least 20 years of pensionable service.
A member who does not meet any of these conditions will be entitled to a deferred annuity, that is, their earned annuity which will begin to be paid at age sixty. The member will be able to decide not to wait till age sixty for their pension to begin to be paid and instead choose to have their deferred annuity paid as either:
An annual allowance (a reduced annuity) that starts to be paid at any time after age 50 and before age sixty, or
If the member is under age fifty, a lump-sum transfer value. (Note: A member entitled to an immediate annuity will not be eligible for a transfer value).

Note that "paid service" should really read "paid full-time service"; "pensionable service" includes part-time years.


And please also note that my comment above is in error; a member released as disabled requries a minimum of 10 years pensionable service to receive an immediate annuity.

 

[George Wallace]

Another thing to keep in mind that hasn't been brought up yet; if you are "grandfathered" on the old IE 20 and you choose to accept IPS or a CE, then your new TOS automatically puts you on the new plan.  So if you hit the 20 year mark and you are still relatively young (say 40ish) you can a) take the immediate 40% or b) sign your new TOS thereby accepting the new plan and will not receive a penny until you are 55.

Now REMEMBER, under to 'old plan' it WAS NOT simply 20 years of Service.  It was the 20/40 plan.  You did 20 years of Service, or served until you were 40, whichever came last.  If you joined when you were 18, you would have had the option to serve 22 years under that old plan.