Reserve Pension- Merged

[Fishbone Jones]

I heard the other day that they will be clawing back your CPP & OAS from your pension, even if it is already going to be clawed back from another pension you may receive. I only heard this, all this still makes my head spin, but the guy that told me works for RevCan and was in contact with the Reserve Pension cell.

So, hypothetically, if your pension was $600 a month and you were using $300 of that as your buyback payment, once they claw back, you will be in the negative after making the mandatory payment.

You'll be getting $0 dollars while still having to make your mandatory monthly payment for however long you were scheduled to pay.

Your mileage may vary.

 

[AliG]

Only a portion of your total pension payment is equivalent to the CPP. Your payments are divided into a pension + a bridge amount. The bridge amount should be equivalent to the expected CPP for the period you paid into the pension plan and this is the amount that will ceased to be paid upon starting to draw the CPP.

It is not a claw-back as this behaviour (bridge - CPP) was part of the original setup of the pension. To have the bridge amount continue after drawing CPP would have necessitated larger deductions from income.

http://www.cmp-cpm.forces.gc.ca/pen/pp/res/welcome-bienvenu-eng.asp - Look under the value heading.

The only way this would change is if both the CFSA and CPP legislation were changed and there would be lots of notice.

(edit) - Please also note that the CPP is not a benefit, so it cannot be clawed back.

 

[Stoker]

I just got my emails for my buyback, not bad for 6 years waiting.  It appears I have a significant Retroactive Balance owing from 2007. The email states I can't do a RRSP transfer, or lump sum payment. It has to come from my bank account from what I assume is monthly payments at a high interest. Any other options than that?

 

[turretmonster]

Call the 1 800 number in the morning.  The folks there are very helpful.
TM

 

[Rifleman62]

Could not find  anything other than the Actuarial Report on the Pension Plan for the Canadian Forces Reserve Force dated 31 March 2010 was tabled in Parliament on 25 October 2011.

See attached Treasury Board reporting of the public service pensions. Note the admin costs for the CF Pension Fund Account (CFPFA) and the Reserve Force Pension Fund Account (RFPFA) are almost the same amount ($ 6 million) yet the CFPFA has $1 Billion in funds and the RFPFA has only $36 Million in funds to manage for the 2011/12 year.

Check out the contributions from personnel and from the government.

 

[dapaterson]

Could not find  anything other than the Actuarial Report on the Pension Plan for the Canadian Forces Reserve Force dated 31 March 2010 was tabled in Parliament on 25 October 2011.

See attached Treasury Board reporting of the public service pensions. Note the admin costs for the CF Pension Fund Account (CFPFA) and the Reserve Force Pension Fund Account (RFPFA) are almost the same amount ($ 6 million) yet the CFPFA has $1 Billion in funds and the RFPFA has only $36 Million in funds to manage for the 2011/12 year.

Check out the contributions from personnel and from the government.

Note that there is another  $14.7M in administration costs charged to the CF Superannuation Account, meaning the total RegF/Part I pension admin costs were nearly $21M last year.  (For most federal plans, there is both a supernnauation account (ledger on the GoC statement of accounts) and a fund (money that is invested in the markets that is actively managed).

To my understanding, the main driver behind the elevated cost of the RFPP admininstration is the ongoing cost of processing the buybacks; once steady-state is reached, those costs should be significantly reduced.

 

[Stoker]

Well I just did my RRSP transfer to pay for my buyback. Very painless process and my file manager was very helpful in answering my questions. Just waiting for the final audit which could take a while. I had a 9k shortfall in PPSA amount as well, CRA accepted the difference and I don't have to withdraw more RRSP's to make room. Looks like the end is in sight.
The bad part is now I don't have room to roll my PIL into a RRSP anymore, guess i'll have to be taxed

 

[dapaterson]

Well I just did my RRSP transfer to pay for my buyback. Very painless process and my file manager was very helpful in answering my questions. Just waiting for the final audit which could take a while. I had a 9k shortfall in PPSA amount as well, CRA accepted the difference and I don't have to withdraw more RRSP's to make room. Looks like the end is in sight.
The bad part is now I don't have room to roll my PIL into a RRSP anymore, guess i'll have to be taxed

If they are delayed in paying it out until next calendar year (post 01 January), you may be able to shelter some.

 

[Rifleman62]

Now I know why the government need to charge me 7% Compound Interest to the tune of a staggering $222,000 - a quarter of a million bucks of interest for 45 years of service.

http://epaper.nationalpost.com/epaper/viewer.aspx

Audit findings will haunt PM National Post 14 Aug 13

Wallin’s total travel bill is a staggering $532,508 — half a million bucks of travel in 45 months, or $11,833 a month.

Who else gets charged 7% Compound Interest , or CI for anything by the government besides RFPP members/members to be?

Interest rates for the third calendar quarter  http://www.cra-arc.gc.ca/nwsrm/rlss/2013/m06/nr130613-eng.html

Treasury Bills  http://www.bankofcanada.ca/rates/interest-rates/t-bill-yields/

Bonds  http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/

 

[Rifleman62]

Eighteen months ago or so, received a letter saying I owed over $25 K and will I pay immediately or it will be deducted at source.

Peeved factor big time. Then, it was an error. Forget it.

Yesterday, nice direct deposit. Phoned for explanation. Three audits refunded $23 K, of which $17 K non taxable.

Today get a cheque stub, repayments have gone up $160 and net up $150. No explanation.

I have been waiting since 1 Dec 2012 for a statement stating how much interest and principal paid.

 

[Rifleman62]

Got SOME answers.

I elected to buyback some 1979-84 Public Service time on my 14 Apr 07 Election. Then told I could not buy it back.

Roll on Sep 13. Someone notices my PS election was not actioned. CF Pension Services redo my file. My PS election is $16.7 K .

From the benefit not previously paid (see above post), $9.3 K was deducted leaving $12.5 K still owing @ $120 per month for 14 years (age 80) = $ 20.2 K. So a approx $5 K return of contributions becomes a $16.7 election and a $29.5 debt. No explanation as to the calculation: Start amt, interest rate etc. I bet they charged the Wage Index and 7% Compound Interest on my PS buyback.

Plus, my Superannuation arrears was not deducted from the time of election for a period of 7 months, so I owed another $5 K. Then for some reason I owed for the RFPP, $40 a month from time of election to age 80 = $9.6 K. No explanation for this at all.

Additionally, a letter received from CF Pension Services(which DID NOT provide any of the above info), which did not answer any of my questions, did state the amount of RFPP buyback ( really the wrong amount), the amount I paid from RRSP's (wrong),the amount owing now (wrong again) and the amount of the monthly repayment (the new amount).

CF Pension Services are searching my file for two further payments totaling $55 K which I made !!

I bet all this these addition charges are interest, which will add approx $40 K more interest to the $222.1 interest already charged.

I am a bit worried what the end result will be. It is a five ring circus in CF Pension Services. One ring does this, one does that, one does ............ and don't coord or talk.

If my buyback is ****ed up, it won't be the only one

Wrote my MP with the case laid out in detail, and spoke to him. Quote:"What do you want me to do?"

Waiting for another letter from CF Pension Services.

 

[411_Rocket]

I heard the other day that they will be clawing back your CPP & OAS from your pension, even if it is already going to be clawed back from another pension you may receive. I only heard this, all this still makes my head spin, but the guy that told me works for RevCan and was in contact with the Reserve Pension cell.

I have known of the clawback for over 10 years (know a few CF Retirees). I had done, the rough buyback calculations in 2007, only Class B & C time & decided I was not going to do it. As it would have been over $80,000 for a $17 difference per month, between buyback pension Vs payments & non buyback pension. I had decided to go with the TFSA, when it came out & maxed it every year. So here I am with over 31 years in & about a 5 year Pres pension.

But the interesting part is, I was given a 3B Med Release, last Nov & they had tried to use CPP disabled provisions, after attempting a Deffered Annuity. Even though that wording is different from the wording, in the Pres Plan in sect 43 (1) (d) (i) & I am in reciept of a monthly VAC Pension since 2001. I did indicate, that I am willing to wait until age 55, to receive the IA (less screwing around with the SISIP LTD) , I turn 55 about 6 weeks, after the SISIP LTD ends.

 

[Rifleman62]

Further to my post above, Update:

The Public Service buyback not actioned at Election Apr 07:

From the benefit not previously paid (see above post), $9.3 K was deducted leaving $12.5 K still owing @ $120 per month for 14 years (age 80) = $ 20.2 K. So a approx $5 K return of contributions becomes a $16.7 election and a $29.5 debt. No explanation as to the calculation: Start amt, interest rate etc. I bet they charged the Wage Index and 7% Compound Interest on my PS buyback.

4% Simple interest charged to Dec 13.

RFPP:

Plus, my Superannuation arrears was not deducted from the time of election for a period of 7 months, so I owed another $5 K. Then for some reason I owed for the RFPP, $40 a month from time of election to age 80 = $9.6 K. No explanation for this at all.

Still checking on this as it there should have been an adjustment cheque for the first pension payment of Feb 08 paying this amt. Have I been double charged? Retired 5 Aug 07 to first pension cheque 28 Feb 08.

RFPP:

Additionally, a letter received from CF Pension Services(which DID NOT provide any of the above info), which did not answer any of my questions, did state the amount of RFPP buyback ( really the wrong amount), the amount I paid from RRSP's (wrong),the amount owing now (wrong again) and the amount of the monthly repayment (the new amount).

The RFPP buyback is the correct amount, except they have not give me credit for approx 100 plus days, CF Pension Services are verifying.

RFPP:

CF Pension Services are searching my file for two further payments totaling $55 K which I made !!

Incredibly two cheques, Sep and Dec 07, totaling $55,057, where paid as I have verified and CF Pension Services today confirms.
Therefore the government had $55 K of my funds lost from Sep/Dec 07 to Jan 14!

My pension is now gone back to be completely recalculated. It is very fortunate that I was pounding CF Pension Services for info, which as it verbally dribbled out, sounded fishy.

None of this would have come to light. if it wasn't for my inquiries. Losing $55,000. Incredible.

Dealing with a very, very good guy a CF Pension Services.

Maybe I won't be paying till age 80.

 

[Rifleman62]

Can anyone get me the name and phone number of the head of CF Pension Services please.

Does CF Pension Services still have a Colonel as the civilian counterpart? If so, that info also please.

 

[Rifleman62]

Still going back and forth with CF Pension Services. An eye opener, really an eye opener.

Fragmented info is all you get, which raises more questions. They are very reluctant to write anything down, much less communicate in any way. Since Oct 13 I have been at them for explanations.

After two letters to the Director, I get the feeling he could not be bothered with a peon like me. The A/Director and a Manager falls in there also.

My fav,"people like you"


This is interesting for those still paying superannuation arrears.

A Comptrollers section representative stated CF Pension Services uses 0.45872 monthly to calculate interest on the outstanding reducing balance of superannuation arrears. This is supposed to represent the 4% Compound Interest plus the mortality charge (supposedly 1.5 % in my case) thus equaling 5.5% Compound Interest on arrears.

This is incorrect. It is the mortality charge and interest, not the interest rate and the mortality charge rate compounded.

The regulations state:

http://laws-lois.justice.gc.ca/eng/regulations/SOR-2007-32/page-5.html#docCont

Instalments
• 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.



CF Pension Services have been over charging us. In my case 5.5 % Compound Interest, vice a mortality charge and 4% Compound Interest.

 

[penta5]

Just a quick question. If I remember the buyback deadline for reserve service was in 2011. Has this changed in any way? Can those who had some Class A training prior to 2007 still somehow buyback the years?

Thanks,

 

[dapaterson]

Deadline has passed.  As far as I know there is no mechanism to elect if you miss the deadline.

 

[Crispy Bacon]

Is there any public link with more information on the reserve pension (e.g. entitlement amount, eligibility age, etc).  Is the reserve pension carried over to the Reg Force pension for someone who goes Reg Force, or is it cashed on on the member's "release"?

 

[dapaterson]

Yes, it is portable to the regular force plan.  No, there is no cash out when transferring to the reg force.  There is a top up required when transferring to obtain the full benefit under the reg force plan.

The benefit is an updated career average plan.  You need two consecutive years of earnings above 10% of YMPE to qualify.

Google Reserve Force Pension Plan, and look for results on forces.gc.ca for more info.

 

[a_majoor]

Looking at Rifleman62's predicament (and hearing other horror stories) I'm glad that I decided to stick with my RRSP. No way I could pay well over $100K to buy back.

Of course in 1999, when we first were briefed on the Pension, I sent a memo through the CoC to the directorate responsible, suggesting a group RRSP would be much more applicable for the Reserve, especially since:

a. Financial institutions typically eat the cost of administration. For an account the size of the PRes they wold jump through hoops of fire
b. Group plans are inherently flexible. The member can choose the investment vehicle to meet their own needs
c. The plan is flexible for the troop, since contributions are based on the amount of days paraded (up to the RRSP limit)
d. RRSPs have an immediate benefit (tax reduction for the year of contribution) plus the long term savings benefit
e. The plan could be implemented almost immediately once a financial institution had won the contract

Surprisingly, I received a letter from the directorate acknowledging the memo and telling me the points were "added to the (round) data base".

So we went to a complex, confusing and expensive system and lost potentially 7 years contribution and growth by not choosing the group RRSP option.