Modernization of the Canadian Forces Pension Plan Regular Force under Part 1

1. Department of National Defence Modernization of theCanadian Forces Pension PlanRegular Force under Part 1 February 2007

2. Outline • Eligibility, contributions, and definitions • Benefits • Grandfathering rules • Pension formula • Annuitant employment policy • Coming into force

3. On-line www.admfincs.forces.gc.ca/pension/intro_e.asp Email pensioninquiries@forces.gc.ca Toll-free 1-800-267-0325 For more information • Presentation focuses on pension policies not administration • Consult the CFPMP website www.forces.gc.ca/hr/dgcb/cfpmp • For questions on “how do I” and “what happens when”, contact DAPP/Pension services

4. About CFSA Part I • Provides a benefit based on set formulas (defined benefit) • Uses best 5-year average (full-time)

5. Eligibility rules • Regular Force members join Part I when they join the Regular Force • “Once in, always in” rule • Contributions to Part I will continue until retirement

6. Contributions • A fixed percentage of pensionable earnings • Reduces to 1% of pensionable earnings when member has 35 years of pensionable service • Pensionable earnings include basic pay and pensionable allowance YMPE—Year’s Maximum Pensionable EarningsCanada Pension Plan earnings ceiling(2007 = $43,700)

7. CF service Definitions • Days of service in the Regular Force for which pay was authorized and authorized maternity and parental leaves • Days of service in the Reserve Force for which pay was authorized and authorized maternity and parental leaves • Days of training or duty of less than 6 hours = half-day • Days of Class “A” service = 1.4 days After 25 years of CF service, a member is entitled to an immediate annuity. Officers may have to meet different requirements.

8. Pensionable service Definitions • Any period during which the member is a contributor • Any period for which the member has elected to pay

9. Vesting Definitions • Vesting is the right of a plan member to receive a benefit from the pension plan other than a return of contributions • An immediate annuity, or • A deferred annuity that may be converted to an annual allowance or transfer value • Vesting occurs after 2 years of pensionable service

10. Transfer value Definitions • A lump-sum amount, expressed in today’s dollars, of your future pension benefits payable at age 60 • Received if... • Vested, • Not entitled to an immediate annuity, and • Younger than age 50 • Must be transferred to... • Locked-in RRSP, • New employer’s plan (if accepted), or • Insurance company, to buy an annuity

11. Current retirement benefits

12. Retirement benefits at CIF * Officers may have to meet different requirements (see slide 14) • CF service (actual paid time) • Regular Force • Reserve Force • Pensionable service (elapsed time) • CF service • Public/RCMP service • Miscellaneous service

13. Benefits at retirement or release

14. Benefits at retirement or release

15. Benefits at retirement or release

16. Grandfathering rules • At CIF, all members entitled to benefits under new rules • Regular Force contributors who are on track for certain benefits at CIF may opt to have benefits calculated under “old” rules • Grandfathering rules apply only to members who serve continuously from February 28, 2007 to release

17. Grandfathering rules • Members may opt for an immediate annuity if they meet any of these conditions at release… • Reached retirement age, with at least 10 years of Regular Force pensionable service • Have completed an IE 20 that started before CIF, but are not on an Indefinite Period of Service • Have between 19 and 20 years of Regular Force pensionable service—at least 10 of it at CIF—and: • Were never offered an IE 25 years • Are not serving an IE or Indefinite Period of Service • Did not refuse an offer to re‑engage (if a Non Commissioned Member) • Did not refuse an offer to serve on an Indefinite Period of Service (if an officer) • Have not reached retirement age, and: • Have at least 20 years of Regular Force pensionable service—at least 10 of it at CIF • Do not meet any of the conditions to opt for a reduced annuity

18. Grandfathering rules • Members may opt for an annual allowance (immediate reduced annuity) if they meet either of these conditions at release… • Are NOT serving on an Indefinite Period of Service and: • Have not reached retirement age • Have at least 20 years of Regular Force pensionable service—10 or more of it at CIF • Never served on an Intermediate Engagement of 25 years • Release without 25 years of Regular Force pensionable service OR did not accept an offered Intermediate Engagement of 25 years (other than while on, or after completing an IE 20) • Are serving on an Indefinite Period of Service and: • Have not reached retirement age • Have at least 20 years of Regular Force pensionable service—10 or more of it at CIF

19. Benefits in case of death • At death of vested member or pensioner, his or her… • Spouse receives a survivor lifetime pension • 1% X pensionable service X best average earnings • Dependent children receive a child annual allowance • Payable to age 18 or age 25 during periods of full-time school attendance

20. Benefits in case of disability • If participants have 10 or more years of pensionable service and have not ceased participation, they are entitled to… • An immediate annuity • After participation ceases and eligible for a deferred pension or annual allowance and become eligible for C/QPP disability pension, they are entitled to… • An immediate annuity • Once eligible for C/QPP disability pension, the bridge pension ends You are considered disabled if you suffer from a mental or physical impairment that prevents you from performing your duties.

21. Other features • Annual increases for inflation—indexing for CPI • For annuity and annual allowance, indexing begins at... • Age 60, or • Age 55 or older, if age plus full years of pensionable service total 85 or more • For survivor and child annual allowance and disability pension, indexing is... • Immediate • At death, minimum guarantee of 5 years of annuity payments

22. 2 %X pensionable serviceXbest average earnings Pension formula Temporary bridge pension payable to age 65, included in the annuity Annuity 0.7 % X pensionable service X best average earningsup to the average YMPE Note: Percentage will gradually decrease from 0.7% in 2007 to 0.625% in 2013

23. Annuitant employment policy • Members are not permitted to continue to receive their "Regular Force" pension AND contribute under the CFSA • A CFSA annuitant has the option of: • Serving up to a maximum of 330 days of Reserve Force service within any one-year period while continuing to receive an annuity • Ceasing to be an annuitant at any time and contributing to Part 1 of the CFSA on a voluntary basis • Serving more than 330 days, and at least 365 days, at which time the member automatically: • Ceases to be an annuitant, and • Again becomes a contributor under Part I of the CFSA • If re-enrolled, the member will be allowed to elect past service, but, if the election is for time when the member received an annuity, the member will have to return the annuity for the days during which he/she worked and for which he/she wants to elect

24. Coming into force

25. Questions? This presentation provides an overview of the some of the provisions under the Canadian Forces Superannuation Act.If there is a discrepancy between this presentation and the Act, the Act prevails.