Reserve Pension- Merged

[Rifleman62]

Ed, yes thanks.  It has been busy buying and selling residences, etc and moving to BC (Bring Cash). Will be back at old location for the 125th, which he is attending.Will see him next week and hand deliver all the evidence.

 

[Monsoon]

Total interest for my buy back was $148K + $74 K = $222,000. Is that not loan sharking???

It's a bit of a burn, but it's still cheaper than borrowing the total amount from a bank at 8% interest to make a lump-sum buyback.

 

[Rifleman62]

On my outstanding buy back that 4% Compound Interest translates to 6.36 % from the TD Canada Trust Mortage calculator. I took the amount I owe, repayable over 20 years and it comes out to almost the nickle of what I pay monthly. The rate includes a mortaliy charge.

But you are missing the point, why 7% CI for Reserves ONLY? Everyone else 4% SI. If it was 4% SI probably everyone could make one lump sum to buy back without a "loan".

 

[FoldedWings]

Hi Rifleman,
I agree 100 % with what you're saying.  It's that 7%CI that's killing us, along with the "updated earnings" bit.  Which is just interest piled upon interest.  That why your best 5 years were not your last as it would normally be with raises and promotions throughout your career.  It's because they have artificially inflated your yearly income and thern added more interest on top of that.
  I asked the pension people why I was paying so much to buy back only 22 months of Reg Force pension and I was told,"the difference in the final pension benefit amounts is due to the time (1969-1970) in which your Regular Force Service took place and the compounded interest which needs to be applied to it."  But they didn't answer my real question which was,"Why am I buying back REG FORCE time at 7% CI?"  I emailed them back and asked the question again...no answer!
  My question about interest accumulation AFTER election to pay buy lump sum was to basically find out if I would have to pay extra interest because of THEIR delay in getting the final approval done.  It appears that I will not.
Your cost for buyback is astronomical and you are right...most individuals...including me.... would never be able to pay it in a lump sum.  I had a large break in service so less time to buy back.  But kind of like paying interest for "dead" time too.  I just hope to God their online calculator is close to correct because if my cost ends up being much higher I am Sc***ed!

 

[ChuckT9881]

I was a reservist back in the late 80s and early 90s.  I now work as a civil servant for Environment Canada.  I know it is possible for a reg force member to make an election on their reserve time, and it is possible for a civil servant to make an election on any reg force time.  But nobody can tell me if a civil servant can buy reserve time.  It seems a logical conclusion to me!

I figure all told I might have 2 years I could make an election on and would like to start paying for it sooner rather than later!

I have been in contact with my own HR people, but frankly I don't believe they even looked into it.  I have also contacted DCFPS by email a number of times but have never had a reply.

Has anyone else tried to do this?

 

[George Wallace]

I don't have an answer, but I can make a suggestion that you make sure to check what the rate would be to buy back that time.  You will not be buying it back at a Pte's pay, but at the current level of pay you receive now.

 

[The Bread Guy]

I'm waiting for my record of service (question:  better to request from old OR, or NDHQ?), because I believe that you can only buy back full-time (Class B or C) time (happy to be corrected by someone who knows more about this).

Also, my understanding is the same as George's - you buy back your time at the rate you're making now.

 

[George Wallace]

Class A is Quarter-time.

Class B and C are Full-time

 

[dapaterson]

Under the Public Service Superannuation Act (PSSA) and its related regulations you may buy back periods of full-time Reserve service of six months or more (see s6(1)(b)(iii)(C)).  You will pay both the employee and employer share of the contribution, along with interest (calculated at 4% simple interest annually).

If you had no periods of full-time service (class B or C) that were six months or more you are not able to buy it back.

If you rejoined the Reserves, once you become eligible under the Canadian Forces Superannuation Act (CFSA) part I.1 you would be able to buy back all prior service, including service not eligible under the PSSA.  Eligibility under CFSA part I.1 requries at least two years of earnings of 10% or more of the Yearly Maximum Pensionable Earnings (YMPE).


EDIT to add:

For 45 pages of discussion on the Reserve Pension, see this thread:

http://forums.army.ca/forums/threads/28418.0.html

 

[The Bread Guy]

DP - If I read your summary correctly, since I have no Class B or C service of 6 months or more, I can't "buy back" any of my Reserve time for my federal civil service pension, then?

Will check out link and PSSA as well - thanks much!

 

[dapaterson]

Unless you are currently serving with the reserves, in which case you'd buy-back through the CFSA part I.1 (per the Reserve Force Pension Plan Regulations), the lack of any periods of 6+ months would preclude any buy-back under the PSSA.

Somewhere on the TBS website is a pension calculator that includes some information on buying back Reserve Service.

 

[The Bread Guy]

Just downloaded PSSA and will check out TBS - thanks again!

 

[ChuckT9881]

Guess that answers my question!  I spent 3 summers in Gagetown, but they were all 4 month terms.  So I guess I can't buy any of it back.

Thanks for your help!

 

[dapaterson]

Yo ucould re-join the Reserves, then two years later, once you're in the Reserve Pension Plan, could buy it back - though the earnings would be inflated, charged current contribution rates, and 7% compound interest charged from when you earned it...

 

[Rifleman62]

I hope all those who plan on using their RRSP's (in many cases this will be a must do otherwise CRA will not allow buy back due to over contribution) as a lump sum have their portfolio in low risk investments.

 

[Gunner]

Sadly, not as much as I should have...

 

[begbie]

I hope all those who plan on using their RRSP's (in many cases this will be a must do otherwise CRA will not allow buy back due to over contribution) as a lump sum have their portfolio in low risk investments.

True enough... I could see this coming as early as last August ('07).  What I didn't know was when it would happen and how painful it would be.  The TSX is down almost 25% from it's high during this business cycle.

Luckily I got out before the market took a big dump.

 

[geo]

My guy has been building up cash holdings for a while..... waiting for deals to present themselves - gonna start looking. 
Not in a hurry to buy yet but, a good deal is always a good deal IMHO

 

[Gunner]

Solid companies are solid in good times and bad.  I'm not concerned and, as are many, waiting to take advantage of the firesale prices. 

 

[FoldedWings]

Time to break out the champagne!!!  I just got a phone call from Pension Services this morning with the final figure on the cost of my pension buyback.  It is slightly less that I calculated but within 5% of my calculation.  I am supposed to get the final figure on the exact pension benefit within a week.  If I understand it correctly, all the required approvals and hurdles have been passed and the official letter should be coming soon.  Hopefully, the end is in sight......in 3 weeks I will have been retired for 1 year.  I will keep you all posted.