Finances Release

[jAKE1982]

Hi I am releasing shortly 5B after 6 and a half years of service I am 26 and well I am offered a couple of options in regards to my Return of Contributions.
1. I can take the full amount $16765 taxable that is and walk away with around the neighbourhood of $12000 or so which is fine and great.

2. Defferred Annuity, not a chance in hell

3. Transfer value.  My $16765 becomes becomes a lot more in the neighbourhood of $38000 or so.

May not seem like a hard choice I bet you are thinking but there is a catch the Transfer value must go into a LOCKED IN RRSP. This is the millitary's way of buying out your pension I assume. Question can I take option 1. and still receive a pension in my latter years???
Thanks.

 

[George Wallace]

Hi I am releasing shortly 5B after 6 and a half years of service I am 26 and well I am offered a couple of options in regards to my Return of Contributions.
1. I can take the full amount $16765 taxable that is and walk away with around the neighbourhood of $12000 or so which is fine and great.

2. Defferred Annuity, not a chance in hell

3. Transfer value.  My $16765 becomes becomes a lot more in the neighbourhood of $38000 or so.

May not seem like a hard choice I bet you are thinking but there is a catch the Transfer value must go into a LOCKED IN RRSP. This is the millitary's way of buying out your pension I assume. Question can I take option 1. and still receive a pension in my latter years???
Thanks.

 

I'm not sure any of us understand your question.  Option 1 gives you about about 45% of what you are getting (the rest being taxed) (I'm not a Finacial Guru, but I have BTDT and was not impressed with how little I got.) and that is it.  You are not entitled to a Military Pension after six years, unless they have just changed that recently.  If you are talking about Canada Pension; then that is a different thing altogether, and every Canadian is entitled to that.  If you are walking into a Civil Service Job, then you can transfer your Pension over.

My advice is to take the RSP option (if you are not going into a Civil Service Job). 

 

[jAKE1982]

OK so not entitled to any sort of pension for a little over 6 years someone giving me bad info I guess. 10 years is the minimum then to receive a pension? If that case number 3 is looking a whole lot better.

 

[aesop081]

OK so not entitled to any sort of pension for a little over 6 years someone giving me bad info I guess. 10 years is the minimum then to receive a pension? If that case number 3 is looking a whole lot better.

http://www.dnd.ca/dgcb/cfpmp/engraph/regforce_changes_e.asp?sidesection=5

Read this.........you should have already.

 

[Gunner]

Jake,

To answer your question will take more information than you have provided in your post.  Do you plan to go to school and need the money to finance your living expenses?  Do you have enough RRSP room to cover the transfer?  When can you collect your defered annuity?  At 55, what will you get?  Are you planning on working in a public sector (and potentially the private sector) job that you may be able to transfer the contributions into the new pension plan.  There are lots of options but it really depends on what your future holds.

It may seem like alot of money now but if you leave it in the deferred annuity or in the LIRA, you will definitely be much farther ahead.

Good Luck.

 

[BinRat55]

OK so not entitled to any sort of pension for a little over 6 years someone giving me bad info I guess. 10 years is the minimum then to receive a pension? If that case number 3 is looking a whole lot better.

Do you not have a release clerk working with you? Are they being helpful? It doesn't seem so - if you choose your "Option 1" you forfit your deferred annuity (any CF pension payable to you at 55) because you took it already. If you choose "Option 3" you are saying to the CF - show me the money and i'll leave you alone - no pension now or ever, no SISIP, SDB, Blue Cross. Is that worth it? I wouldn't take a million to back out of my pension plan. Good luck and remember - make VERY sure you are aware of the all outcomes of all decisions you can make regarding your release - especially if you have a family or are planning to have one in the future!!

 

[geo]

Question can I take option 1. and still receive a pension in my latter years???

So you want your money back now AND receive a pension in later years ???
How do you propose that the CF build equity for you  - given that you've pulled your contributions out ?

 

[jAKE1982]

No I just want to make the best available choice after weighing all the available options. Which is why I came to this board. I now know what to do.

 

[aesop081]

Question can I take option 1. and still receive a pension in my latter years???

No I just want to make the best available choice after weighing all the available options. Which is why I came to this board. I now know what to do.

You have to admit, if you think about the question you asked above, you would have known the answer right away. Hope everything works out for you. Releasing is a stressful time for alot of people. I know that i'm looking at my options these days.

 

[Vaino]

Here is the answer your looking for from someone not 'tied tothe system' like what seems to be happening in my thread asking about a paid move after release...

You wanna know can you get a pension later in life if you cash out your pension now? I assume your all well and healthy as you quoted a 'planned reduction in strength' as your reason for leaving...so generally no you can not, but that is okay, you will have a lifetime of work and hopefully pensions building up: and dont forget savings!

that is where my advise comes in:

If you take the 12grande cash after tax version: what do you have from that in just ten years time? nothing, maybe ten year old furniture and appliances...or you might have some earnings on investing it.

Now lets pretend you take the locked in LIRA version: which is WAYYYYYY more money, but you can't touch it untill your 55. With todays depressed market conditions, and the massive in most cases 20% losses on mutual funds now is the perfect time to invest long term with that windfall being offered. I say money in the hand is fine, but you cant pay for your retirement with it. the LIRA investment account you can!

Go pad your retirement years with your almost 40k worth of transfer value: you will only blow the 12 grande over the next ten years on nothing you will remember when your 55 anyways.
(just for fun your in your mid 20s with 40k invested, 80k by 40years, 150k by 50 years, 300k by 60 years and quite possibly half a million when your 70: that is a good start to your retirement fund, although it assumes 10% growth a year which is unlikely..but neat to see for fun sake)

 

[jAKE1982]

Yea I decided to take the Transfer value worked out to around 41K and put it into a LIRA locked in rrsp. Luckily for me it went in at the right time just need stock markets to start going up now.

 

[Vaino]

sweet good job! you wont regret it when your sick and tired of working for a living. Mine went in at 80grande in january: bad timeing, lmao...got about 60k of that now...but thinking long long term its allright...will recoup.

 

[Long in the tooth]

I'm taking a straw poll and have gotten some good answers from others.  Here goes.

My TV is almost exactly a third of a million bucks.  I would have to put it away for 11 years in a LIRA.  The alternative is $2100/month taxed etc.  I have $80 grand in RRSPs already, so could last almost 5 years at 2 grand per month (give or take).

Logically I should stash the third of a million away from the government and let compound interest do its magic.  I would further have the advantage of not having half my CPP clawed back from my military pension.

Any thoughts?