Canadian Forces Superannuation Act (CFSA) - Pension benefits for members

Reference

Canadian Forces Superannuation Act

Purpose

The CFSA and associated regulations set out pension arrangements for Canadian Armed Forces (CAF) members and their dependants including the payment of benefits, indexing of annuities and supplementary death benefits.

Eligibility

All Regular Force members become Regular Force Pension Plan (CFSA Part I) contributors upon commencement of service. Reserve Force members must meet specific eligibility thresholds to either participate in the Reserve Force Pension Plan (CFSA Part I.1) or become a contributor under the Regular Force Pension Plan. Benefits are based on rules that depend on either years of pensionable service or CAF service, age, earnings/salary, and circumstance at release.

Details

The following provides a general overview of the pension arrangements for CAF members. In the event of any discrepancy or misunderstanding, pension obligations and entitlements will accrue in accordance with the CFSA and the regulations made under the Act.

  • Benefits  There are three basic pension benefit options available to a CAF member under the CFSA:
    • Immediate annuity
    • Deferred annuity
    • Return of contributions
  • Regular Force Pension Plan (CFSA Part I) - Pension Benefit Options
    • Immediate Annuity – Regular and Reserve Force contributors to the Regular Force Pension Plan (CFSA Part I) are entitled to an immediate annuity if they have two or more years of pensionable service and they:
      • have 25 years (9,131 days) of paid CAF service
      • have reached age 60
      • have reached age 55 with at least 30 years of pensionable service
      • have 10 years of pensionable service and are released due to disability, or
      • are released involuntarily as a result of a reduction in the CAF, and
      • have reached 55 years of age and have to their credit not less than 10 years of pensionable service, or
      • have to their credit not less than 20 years of pensionable service. Members who have been in the Regular Force continuously since February 28, 2007 and meet certain other conditions may opt to have their annuity determined under the CFSA rules that were in effect before March 1, 2007. The Director General Compensation and Benefits (DGCB) website provides further information on grandfathering options. For Reserve Force contributors, participation in the pension plan will cease after 12 consecutive months with no earnings which will generate an entitlement to a pension benefit.
    • Deferred annuity
      • If a contributor has two or more years of pensionable service but does not qualify for an immediate annuity, he/she is entitled to a deferred annuity payable at age 60. There are two alternatives to the deferred annuity: an annual allowance, or transfer value.
      • A contributor may start a pension anytime from age 50 on a reduced basis. This reduced annuity is called an annual allowance.
      • Alternatively, if a contributor is under age 50 on his/her release date and not entitled to an immediate annuity but to a deferred annuity, he/she may request that a lump sum equivalent of his/her benefit be transferred to a locked-in retirement savings vehicle. This must be requested within the first year of becoming entitled to a deferred annuity. This lump-sum payment is called a transfer value.
      • A deferred annuity or annual allowance is converted to an immediate annuity if the member becomes entitled to a Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) disability pension.
    • Annuity formula
      • If a contributor to the Regular Force Pension Plan meets the criteria for an immediate annuity identified above, the immediate annuity will be based on the sum of an annual lifetime pension and an annual bridge benefit payable until age 65 or receipt of a CPP or QPP benefit. The formulas are as follows:
        • Annual lifetime pension
          1.375% × total pensionable service × average earnings up to the average Year's Maximum Pensionable Earnings (YMPE) + 2.0% × total pensionable service × average earnings over the average YMPE
        • Annual bridge benefit paid until age 65 or eligible for a CPP or QPP disability pension
          0.625% × total pensionable service × average YMPE or average earnings (whichever is lower)
      • Adjustments to the above may be necessary if the member became a contributor after March 1, 2007 and elects part-time Reserve Force service or rolls over part-time service from the Reserve Force Pension Plan. For more information, refer to the DGCB website or the Canadian Forces Superannuation legislation.
    • Return of Contributions If a contributor releases with less than two years of pensionable service, they will be entitled to a return of contributions with interest. Reserve Force members with less than two years of pensionable service or who go 12 months without earnings, will also receive a return of contributions with applicable interest.
  • Reserve Force Pension Plan (CFSA Part I.1) - Pension Benefit Options
    • Immediate Annuity
      • Reserve Force Members who are contributors under the Reserve Force Pension Plan (CFSA Part I.1), who have 2 or more years of pensionable service when they release or go 12 months without earnings, will receive an immediate annuity if they:
        • have 25 years (9,131 days) of CAF service
        • have reached 60 years of age
        • have reached 55 years of age with 30 years of pensionable service
        • are disabled by reason of suffering from a physical or mental impairment that:
          • prevents them from engaging in any employment for which they are reasonably suited by virtue of education, training, or experience; and
          • can reasonably be expected to last for the remainder of their lifetime; or
          • are released involuntarily as a result of a reduction in the CF and
            • are 55 years of age with not less than 10 years of pensionable service, or
            • have not less than 20 years of pensionable service.
    • Deferred Annuity – Contributors to the Reserve Force Pension Plan who have 2 or more years of pensionable service and release but are not entitled to an immediate annuity are entitled to a deferred annuity commencing at age 60. They may opt to change the benefit from a deferred annuity to:
      • a transfer value if they decide within the first year of becoming entitled to the deferred annuity and are under age 50 at the time of their release date, or
      • an annual allowance (a reduced immediate annuity) which will commence when the member reaches age 50. A deferred annuity or annual allowance is converted to an immediate annuity if the contributor becomes entitled to a CPP or QPP disability pension.
    • Annuity Formula  Under the Reserve Force Pension Plan, an immediate annuity is calculated based on the following formulas:
      • Annual lifetime annuity 
        1.5% × total pensionable earnings (updated for wage growth)
      • Annual bridge benefit paid until age 65 or eligible for CPP or QPP disability pension
        0.5% × total pensionable earnings (updated for wage growth), up to the average YMPE For more information, refer to the DGCB website.
    • Return of Contributions – Participants under the Reserve Force Pension Plan who have less than 2 years of pensionable service when they release or go 12 months without earnings will receive a return of contributions with applicable interest.
    • Benefits in the case of death or disability  Benefits are also paid in the case of death or disability. More details are found on the DGCB web site. If a member releases as a result of disability or dies with less than two years of pensionable service, a return of contributions with interest is paid.
    • Annual increases for inflation  Pensions are indexed in relation to the increase in the Consumer Price Index (CPI).
    • Administration – The Director Canadian Forces Pensions Services (DCFPS) at National Defence Headquarters (NDHQ) administers benefits available under the CFSA and associated Regulations. This Directorate also administers:
      • Supplementary Benefits (SB)
      • Survivor Benefits (serving and retired members)
      • Pension Division upon marital breakdown under the Pension Benefits Division Act (PBDA)
      • Garnishment of a Pension for Spousal or Child Support under the Garnishment, Attachment and Pension Diversion Act (GAPDA)
      • Elections to buy back prior service for the Regular and Reserve Force
      • Calculation and payment of retirement benefits for members leaving the CF Regular and Reserve Forces, and
      • Supplementary Death Benefits.

Contact

For any matters concerning the CFSA, contact DCFPS at 1-800-267-0325 or 613-971-6012.

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