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Reserve Pension- Merged

bridges

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Exactly, Greymatters.  It just shouldn't be necessary.  It's not right to take money from retired members' bank accounts with no warning or explanation. 

I wouldn't leave the old account with zero funds, because they'll just continue to post debits, which will put you in a negative balance and cost you service fees for NSF - and good luck getting those reimbursed.  Just close it altogether, and in the meantime consider extra overdraft protection. 

I maintain a healthy cynicism where "trusting the system" is concerned, but even now they still surprise me sometimes with tricks like this.  Protect yourself. 

 

Rifleman62

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The ongoing battle. A reply to my MP after he sent me DND's response.


A short answer for now which I would request that you immediately send back to the department for comment.

I find it incredible that the official department response clearly indicates that DND, without batting an eye, justifies charging Reserve soldiers, and Reserve soldiers only, buyback interest at a ratio of over 2.5 to 1 of the principal amount AFTER increasing earnings by 410% on which the compound interest is charged.

Would you purchase a house or a car and pay 2.5 times more interest than the cost?

The government is loan sharking.

The following statement in the reply is incorrect:

"The 4% interest is charged on the outstanding balance while the member payoffs the buyback amount calculated."

The correct amount is 4% Compound Interest:

http://laws.justice.gc.ca/eng/regulations/SOR-2007-32/index.html


18. (1) The instalments shall be payable in equal amounts that may not be less than $5.00, except the last one, and be calculated using the mortality rates set out in the Complete life table, Canada, 1995-97, published by Statistics Canada, and interest at four per cent compounded annually.


I have encountered many instances when dealing with DND, Treasury Board and Public Works, of receiving a quote of 4% interest instead of the correct amount of 4% Compound Interest. This is due to the fact only Reserve soldiers pay that rate, as well as the 7% Compound Interest on the buyback. Every other government employee pays 4% Simple Interest on a buyback and on installments. Why? Justify the discrimination.



 

RLD

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Rifleman: The member cost difference between the RFPP and other government sponsored is indefensible which is why officials either refuse to address the issue or, as has happened in your case, try to spin irrelevant or misleading statements to camouflage the fact that Reservists are paying a lot more. The clearest indication of the cost difference is in the actuarial reports for the plans.

The estimated 2010 current service cost ratio for the Reg. Force pension plan is 2.58 to 1. In other words the member pays 28% and the government pays 72%. (This doesn't include the Special Retirement Arrangements that I believe only affects General and the most Senior of Senior Officers and which has a higher ratio but also has different tax implications.)

The estimated 2010 current service cost ratio for the RFPP is 1.74 to 1 or 36.5% from the member and  63.5% from the government.

When it comes to past service costs the gap is even bigger. For the Reg Force it is about 2 to 1 or 33.3% paid by the member and 66.7 % paid by the government. For the RFPP it is 1 to 1 or 50% paid by each.

The RCMP and Public Service plans both have a lower ratio than the Reg Force plan but exceed the RFPP by a wide margin. Officials address this by saying that the cost ratio for all plans are expected to fall in the next couple of years. This is true as far as it goes but they don't want to talk about the fact that the RFPP is set up to ensure Reserves will continue to pay a significantly larger portion than members in the other plans for the foreseeable future.

And then of course you have the plan Parliamentarians have set up for themselves. The current cost ration is about 5.9 to 1 and the past service cost ratio is about 5.7 to 1. So our elected leaders pay about 17% of their plan cost or less than half of what Reservists are required to pay.

All numbers are based on 2010 estimates contained in the latest actuarial reports for the plans. Actuarial reports can be found at :
http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?ArticleID=497
 

Nfld Sapper

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Finally got an answer on my buyback.... not bad only took about 2 years to get....

Seems I still owe them money on it..... go figure....

Election Date: 28-oct-09
Election Cost: $6,001.84
Lump Sum Payment: $4,553.08
Balance of Arrears: $1,448.76
Monthly Payment Required ( 20 years 0 months): $8.85


Provisional Payments Made: $5.00x24mths (Nov. 2009-Oct. 2011) = $120.00
Payments Required to Date: $8.85(Nov. 2009-Oct. 2011) = $212.40



Amount : $92.40

 

RCA

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Friend of mine requested an update on his file. The answer was -

"Your file is not longer with my team.  It is currently waiting for calculation of the election which will be done by one of our Calculation teams.  I cannot say how long this may take as presently a 3-4 year backlog in the calculation of past service elections.  Once the final calculation of your file has been completed, you will be contacted by Pension Services personnel.  If you plan to release from the forces soon, please advise us and we will put your file on a priority listing."

My guess priority is only a 1-2 year wait.

I know this is not exactly new news, but there doesn't seem to be any movement, even after the Auditor General's report.  It seems to be impossible to gain any traction on this issue, nobody wants to touch it a or even acknowledge it

Official  answer - Yes we screwed up, its a priority, we working to fix -  fade to black...........

 

justmyalias

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I come back to this thread every so often, but of late it seems things are just as worse as ever.

"Up to 7 years"
"Loan sharking rates"
"making double payments" "I may just have to close my account so they can't take anymore money from me".

Is our government really treating Reservists this pitifully?

I wonder if there's even a point to my question that I had (why I came online here tonight) :(.  It's such a scam this whole Pension.  It seems the intention was so great, but as the review indicates, there was some gross underestimation of what would be involved to crystallize this :(.  So sad.

On to my question:
I tried searching, but the keyword search engine in this old database is quite lacking, so it failed.

My question is.  How detrimental is a break in service?  Two types of breaks (to make it interesting).

I don't know if I should have started a new thread, but this does deal with the pension so I opted to put it in here.

A)  Reservist, works 5yrs full-time, is now eligible to top up to a reg force pension (in principle of course, I am nowhere near knowing exactly how much loan-sharked interest I owe, NOR what my actual buy-back is).  All I know is that I'm past 5yrs, and am eligible to top-up.  So you're past the 5yr mark, then you have a break, grow your beard out, have fun ED&T-it-up., then start working again (or CT).  What's the negative outcome?  Do you just lose all that build-up & upon return are back to reserve payment levels, and done deal?  Seemingly, not such a big deal right?  You miss out on a couple months worth of top-up difference in payments, which you can make up quickly.  Seems easy enough.

B)  Reservist, releases entirely.  Reapplies thru recruiting centre.  Worst case scenario (1yr out of the system? Optimistically 3-5months)  What would this mean in terms of ones Terms for Offer, Maintenance of Seniority in Rank-but mainly for ones Pension?  If you're wondering why the scenario (a tangent).  Twofold
i_come to find out Reserve CTs are no longer entitled to any HHT benefits/Movement of f&e, NADDA.  Apparently it's on the grievance board, and already shot down.  So, the Military wants to reward fresh recruits MORE, than their own Reservists who are now ready to make the leap and go Regs???  But instead screw them (yet again) out of some benefits?
ii_how poorly the experience with D Mil C is, I'm wondering if a CFRC would be better.  At least then, you know you can walk down and talk to someone in person if need be.  Given a contact person for when a simple question needs answering, or whatnot.  Assuming said mbr has 5yrs Pensionable time (same for qualifying yrs and pensionable...Although, admittedly-I always forget what the difference is between the two anyway), what would it mean to release entirely and come back in?
 

RLD

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justmyalias said:
....
My question is.  How detrimental is a break in service?  Two types of breaks (to make it interesting).
....

JustMyAlias: There are a number of issues in your questions and a lot of missing information making it impossible to give a simple answer. I won't get into any other issues (e.g. HHT, Rank/Seniority on enrollment etc) but will try to help out with the pension questions.

Re the RRFP as a scam.  I wouldn't agree with the word scam. It has been incredibly badly implemented and managed by DND to the point I personally believe that DND and Treasury Board designed it to be as onerous, frustrating and expensive as possible on members to discourage participation in the buyback IOT save the Government money. However once you get through the BS most members (certainly not all) can benefit from the plan.

If you were a member at Coming Into Force (CIF-01 Mar 2007) of the Regulations and met the vesting requirements then you should have received a letter indicating you were eligible to buyback under Part I.1 (the Reserve Plan) and if you were eligible for Part I (Reg Force Plan) or subsequently became eligible under Part I then you should also have received a letter to so indicate. Both of these letters should have indicated you had the later of 1 year from the date of the letter or 3 years from CIF (1 Mar 2010) to elect buyback. This deadline was subsequently extended to 1 Mar 2011 but if you have not yet filed an election you are likely out of luck unless you only became eligible within the last year which does not sound the case from your comments.

I assume that the break in service you refer to in Part A of your question refers to the effect on being a part I participant of a break in continuous service (i.e. returning to class A or going Supp Reserve) and not a release since part B seems to refer to the latter. Once you are in Part I you are always in Part I regardless of what, if any, continuous service you have thereafter. So if you became a Part I member early in your career and then did class A and limited class B/C for the next 30 years you would still be in Part I when you retire. The benefits are based on your CF Qualifying time (actual days of service) so if, for example, you had 5 years of continuous service followed by 8 years of accumulated time over the next 30 years your pension would be based on 13 years of qualifying service.

Part B of your question refers to release and subsequent re-enrollment. As stated above if you were an eligible member at CIF then you had to have made your election within the applicable time frame even if you released. Assuming you did then when you re-enrolled the pension withholdings from you paycheck would be made based on a percentage of your actual pay the same as anyone else. If you were in Part I when you released then you would continue to be in Part I when you re-enroll.  Lump Sum and/or monthly instalment payments for your buyback would be based on your election when DCFPS finally resolves it.

If you released prior to CIF and then re-enrolled afterwards the situation is not as clear. I believe you had to be a member on CIF in order to be eligible to do a buyback of prior service however there are a number of provisions in the CFSA, CFS Regulations and RFPP Regulations that really have to be reviewed quite carefully to confirm this. If this is the situation you are referring to then the recruiters should be able to provide a definitive answer through DCFPS.
 

dapaterson

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The last report of the OSFI suggests that for buybacks under part I.1 (the part-time plan) the cost is split evenly between  the member and the Government- that is, for every dollar you put in, the government puts in a dollar.  On the other hand, for current service under part I, the ful-time plan, the split is $1 to $2.70 - that is, the government pays $2.70 per dollar contributed by members.

Also of note is that there is a significant actuarial surplus in the part-time plan; in other words, more money than is needed to meet plan obligations.


 

Rifleman62

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Does the OSFI report include the interest amount, or just contributions of earned updated earnings at 410%?
 

dapaterson

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As I recall, the OSFI report includes all member contributions.  Page 16 indicates that prior service contributions are estiamted to be equal.


Res F Report:  http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/reports/oca/CFSA_Res_2010_e.pdf

Reg F Report:  http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/reports/oca/CFR10_e.pdf
 

Rifleman62

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David, had a quick look through the reference. Seems like there are only 600 or so pensioners. No reference anywhere about interest charged, interest income from contributions. Revenue is listed as contributions. I would think the OSFI would break down revenue sources. Looks like avoidance.

In my conspiracy world, the interest has been ripped out into, lets say, general revenue. Something stinks, and it will take a very long time to get a response to a query.
 

CountDC

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dapaterson said:
Also of note is that there is a significant actuarial surplus in the part-time plan; in other words, more money than is needed to meet plan obligations.

now where have I heard that before ................  ::)
 

justmyalias

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RLD said:
....If you were a member at Coming Into Force (CIF-01 Mar 2007) of the Regulations and met the vesting requirements then you should have received a letter indicating you were eligible to buyback under Part I.1 (the Reserve Plan) and if you were eligible for Part I (Reg Force Plan) or subsequently became eligible under Part I then you should also have received a letter to so indicate. Both of these letters should have indicated you had the later of 1 year from the date of the letter or 3 years from CIF (1 Mar 2010) to elect buyback. This deadline was subsequently extended to 1 Mar 2011 but if you have not yet filed an election you are likely out of luck unless you only became eligible within the last year which does not sound the case from your comments.

Full time as of late 2004 Till present.  ~2010 is when I would've in theory been eligible to for the Regforce Top-Up.  I haven't received any paperwork to echo my interest in topping up.  Heck I'm still trying to figure out where to put my lump-sum

I assume that the break in service you refer to in Part A of your question refers to the effect on being a part I participant of a break in continuous service (i.e. returning to class A or going Supp Reserve) and not a release since part B seems to refer to the latter.
Correct.

Work full-time.  Decide to stop working and go back to A Days. lol.

Once you are in Part I you are always in Part I regardless of what, if any, continuous service you have thereafter. So if you became a Part I member early in your career and then did class A and limited class B/C for the next 30 years you would still be in Part I when you retire. The benefits are based on your CF Qualifying time (actual days of service) so if, for example, you had 5 years of continuous service followed by 8 years of accumulated time over the next 30 years your pension would be based on 13 years of qualifying service.
I was under the impression that After 5yrs continuous B's., one could TOP-UP premiums to a RegForcePension plan, VICE the Reserve Pension.  I was under the impression that you would only be ELIGIBLE so long as you remained full-time from that point forward?  Are you saying that if you stop working, you can still top-up to a RegForcePension?

Part B of your question refers to release and subsequent re-enrollment...
Didn't really discuss how detrimentlal that would be, but I thank you for at least trying :).

Ex:  If I go on EI., and work but ONE day, it screws up EI entirely for the month.  Hence., it's better to not work/parade a single day if you're going on EI.  That's pretty detrimental.  Contrast, say if you work a day or two, but you only get deducted that days pay.  That wouldn't be that bad at all.  That's the kind of impression I'm trying to develop on my B scenario.  Fully release. & re-enrollment, all of this keep-in-mind, to occur before I even RECEIVE any finalization from the reserve pension office about what or WHERE my whole file is sitting at these days.

Would you suggest I start a new thread ref the remainder, if you feel it is missing a lot of info?

Appreciate your time, and if you prefer to respond over pm, I'd be happy to switch over.
 

Fishbone Jones

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After the better part of four years. I got an answer.

I need a lawyer to decifer the friggin' thing. I got a five page letter that makes no sense and sounds like a Supreme Court decision.

All I want to know is what I owe and what I will get.

I think what they are saying, is that I owe them a lot of money. About $135,000, to buy in.

I'm almost 60. If I had $135,000 to give them, I don't need their fucking pension.

I think they're saying is I have about 10 more years to pay this off, while I collect. That's $13,500.00 per year! People live on less than that!

I'll be 70, have given them $135,000.00, maybe die at 85 and let them keep the windfall?

I think this means I can collect about $500\ month pension. The math doesn't work.

They must have looked at my armoured profile and thought I was some sort of retard. That may be, but I used their useless calculator to try figure my stats. Another joke.

I can't talk to anyone there that can tell me about what is going on.

Hell, I can't talk to anyone there period. They don't answer email, phone or registered letters.

Fuck 'em. Think I'll just keep my money and stay happy til I die.

They can't use my cash to pay for someone else's pension.

I hate useless, self licking ice cream cones.

How many people are they employing to fuck Reservists around on this pension crap?
 

Rifleman62

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You have a max of 20 years to payback the buyback @ 4% compound interest.

18 (2) (a) the end of the period chosen by the participant ending before the later of 20 years and the participant’s 65th birthda
y

Ah, the indifference of Senior Management at DND. Leadership!

justmyalias, you are never in the Reg F plan. You are always in the RFPP. You get pension based on the Part1.1 (basically the Cl A plan), then pay extra to top up your pension. Your pension is only subject to the RFPP regulations, not the CFSA regulations. Calculations, interest rate, mortality tables, installments when you cannot pay the full amount, are different.
 

AC 011

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recceguy said:
After the better part of four years. I got an answer.
...

Figures.

But at least you have an answer from the RFPP monkeys.  I'm still waiting. 

Maybe they're waiting until I'm close to 60 too.  ::)
 

Fishbone Jones

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Andy011 said:
Figures.

But at least you have an answer from the RFPP monkeys.  I'm still waiting. 

Maybe they're waiting until I'm close to 60 too.  ::)

Problem is, the answer is not an answer.

It makes no sense, but requires a response.

Do I question it, wait another four years and be told I should have responded in two, only to perpetuate the fuckery?

I think the only real recourse is to forget it.

Which has been the goal of the Reserve Pension Board all along.

If we make it so difficult to apply, we won't have to administer it.

I would love to pay a civilian auditor to take my information, try make sense of it and fight these goofs for my couple of bucks a month.

Call me when I have a cheque on the way.
 

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recceguy said:
I think what they are saying, is that I owe them a lot of money. About $135,000, to buy in.
...
I think this means I can collect about $500\ month pension. The math doesn't work.

RECCEGUY: Agree with you that the numbers don't make any sense. $135K to buy a $500/month pension is quite simply a losing proposition that you would have to be crazy to take. $135K could buy a 60 year old male a life annuity through an Insurance Company that would pay about $675/month and that is without the employers share in the pension plan. $500/month just does not make sense. Either someone screwed up the calculation or there is a problem with the communication.

As Rifleman pointed out, in your situation the instalment payments should be over 20 years (from the date of your election). The only way the time period would be shorter is if you requested a shorter period or if you indicated a payment amount on your election that was higher than the minimum required thereby reducing the time frame. In my experience though they do confirm the instalment amount when the file is being finalized.
 

RLD

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From the 2010 Actuarial Report of the RFPP (available at http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?DetailID=502 )

RFPP Fund Liabilities = $155,700,000
RFPP Fund Assets = $233,300,000 (149.8% of liability)
RFPP Fund Surplus = $77,600,000

So what created this surplus of nearly 50%?

There are five sources of "income" for the fund
1. Member current year contributions;
2. Employer Current Year contributions (between $1.71 and $1.74 for each member $1 for 2007-2010 IAW the 2008 Actuarial Report);
3. Member Past Service contributions;
4. Employer Past Service contributions (approx $1 to each member $1); and
5. Investment Returns.

Investment returns: Total investment return from CIF to 31 Mar 10 is about $6,000,000. The report expects long term real returns at a rate of about 4.2%. It is difficult to calculate the actual annual rate of return since CIF without more detailed information but I would estimate it at 1.75%-2%, well below the projected rate of return but not surprising given two years of negative returns and only one positive year in major financial markets. It is clear however, that great investment returns did not create this surplus. If anything the weak returns should result in a deficit of $6-10 million.

So the surplus is clearly a result of over contribution by members and the employer.

Current Year contributions for members are at about the same rate as for other federal plans and the employer contribution rate for the RFPP is significantly lower than for other plans so if this was causing the surplus the other federal plans would be in a worse (better?) surplus situation since they have a higher rate of employer contribution. This is not the case. There is nothing to indicate current year contributions had a significant impact on the surplus

This leaves prior service contributions as the main culprit in creating this large surplus. More specifically the seven percent compound interest has generated far more money than is needed to actually fund the prior service benefits being bought back.

Regardless of how much of the surplus came from current service and how much from prior service it is clear that members' over contributions account for a significant part of the surplus. I estimate that at least $21,200,000 and perhaps as much as $38,800,000 of this surplus came directly out of the pockets of Reservists. I suspect it is closer to the higher number since the prior service ratio is about one employer dollar to each member dollar.

So what happens to this surplus?

By law anything greater than 20% above liabilities is considered a non-permitted surplus. The government can take this money, including the portion contributed by members, and either throw it back into general government revenue or use it to offset future employer contributions to the plan. The actuarial report assumes that the government will do the latter starting in 2013. The net effect is an indirect tax on members.

So what can be done?

Redress is not an option since the prior service election interest rate is set in regulations and is beyond the capability of any authority in the CF to change.

Complaints to the CF Ombudsman are a possibility but the 2010 report of the Ombudsman indicates it's investigation of the RFPP ( http://www.ombudsman.forces.gc.ca/rep-rap/ar-ra/2010-2011/report-rapport-eng.asp#ic-sp ) was set aside until they reviewed the Auditor General's report. The AG report basically said the plan was so screwed up that it couldn't offer an opinion on it. I doubt any action will be coming on the Ombudsman front before the government takes the surplus and even if they do continue their investigation the ombudsman report does not appear to include anything on prior service interest rate. (Note: The Ombudsman is restricted in dealing with individual pension matters but he can look into systemic issues which this should qualify as since it affects all who elect prior service.)

Direct Appeal to Parliamentarians:  I believe this is the best recourse remaining if there is any hope of getting this fixed. The Governor in Council has the power to amend the regulations and make it retroactive. Up until now we had only opinion that we were being overcharged on prior service elections in regards to the sustainability of the plan (as opposed to overcharged in comparison with other plans which was blatantly obvious). The 50% surplus in the actuarial report is the smoking gun that shows members (and taxpayers for that matter since employer contributions are based on member contributions) are being massively overcharged on prior service elections. The remedy should be to reduce the interest rate retroactive to CIF.  I don't think this necessarily means the four percent rate stated in the CFSA but a rate that produces assets that more closely matches the liabilities and is sustainable. TB/DCFPS would have to look at the numbers but my guess is it would come out closer to the four percent in the CFSA than the seven percent in regulations. Personally I am starting with the President of Treasury Board (who owns the regulations), the MND and my local MP. If I don't hear anything in a reasonable time I will move on to the opposition TB/Defence critics, the Senate Committee on National Security and Defence and anyone else I can think of. Hopefully others who read this forum will also raise the issue with the Ministers and their local MPs and raise the visibility of the issue.

Will it work? I am not holding my breathe but nobody at DND has shown any interest in standing up for Reservists on the issue so the only hope is to do it ourselves. No action guarantees failure.

 

Rifleman62

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I posted this previously.
No reference anywhere about interest charged, interest income from contributions. Revenue is listed as contributions. I would think the OSFI would break down revenue sources.

In my conspiracy world, the interest has been ripped out into, lets say, to general revenue.

My buy back Excel spreadsheet shows contributions. Then interest is added. For the Part I.1, the interest added is 63% of the total.

RLD do you have your buy back spreadsheet with headings A to W? I think DND paid William Mericer a million dollars to develop a formula to make Reservists pay.

I had the Treasury Board President sitting at my dinning room table. He was incredulous. He passed it on the McKay. I got the usual letter.
 
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