Upcoming changes to the CAF’s Pension Contribution Rates

December 17, 2020 - Defence Stories

Pension contribution rates for Regular and Reserve Force Canadian Armed Forces (CAF) members who contribute to the full-time pension plan (Part I of the Canadian Forces Superannuation Act (CFSA)) will increase on January 1, 2021.

Treasury Board, which establishes the contribution rates for the Federal Public Service, the CAF, and the Royal Canadian Mounted Police pension plans, announced the coming year’s rate increases. As a defined benefit pension plan that is funded by the Government of Canada and CAF members participating in the plan, and, assisted by interest yielded from the investment of the plan in the market, these pension contribution rate increases are in response to a low interest rate environment stemming from the COVID-19 pandemic and will ensure that these public sector pension plans remain properly funded. The new contribution rates will come into effect on January 1, 2021 and be applied on January 15, 2021 pay statements.

This increase will be very similar to previous contribution rate levels paid in 2018. Regular and Reserve Force members who contribute under Part I of the CFSA will pay 9.83 percent on earnings up to the year’s maximum pensionable earnings (YMPE), for an increase of 0.30 percentage points from last year. The YMPE for 2020 is $61,600 and is set by Canada Revenue Agency for the Canada Pension Plan / Québec Pension Plan. On earnings over the YMPE, the rate will be 12.26 percent, up 0.54 percentage points from last year.

For example, a CAF member earning $80,000 dollars will on average contribute an additional $18.55 per month when compared to their average contributions in 2020. Broken down, this member will contribute 9.83 per cent towards their pension on the first $61,600 of salary (the YMPE for 2021) and 12.26 per on the remaining $18,400.

To detail it further: a Corporal at Pay Increment level 1 will see an average monthly increase of $10.40, and a Captain at Pay Increment level 1 will see an average monthly increase of $19.52.

CAF Pension plans play an important and significant role in helping members achieve financial security in retirement and represent a key component of their overall compensation package. The CAF Pension programs remain among the most advantageous in the country.

For more information on what the CAF pension plans, please visit the links below:

• CANFORGEN 172/20 – Pension contribution rates for members of the Part 1 CAF Pension Plan (full time) for calendar year 2021 (Accessible only on the National Defence network.)
• Canadian Armed Forces Pensions website
• Canadian Forces Superannuation Act