Entitlement to Immediate Annuity on Completion of a Long Term Period of Service

Topic

Entitlement to Immediate Annuity on Completion of a Long Term Period of Service

Case number

• 2015-125 (F&R Date: 2015–12–30)

Description

On 1 March 2007, major amendments to the Canadian Forces Superannuation Act (CFSA) and the Canadian Forces Superannuation Regulations (CFSR) came into force, which changed the conditions that must be met to gain entitlement to an immediate annuity.  The Terms of Service (TOS) policy and the pension policy were “de-linked” so that instead of using the completion of a TOS to determine pension eligibility, the new policy requires a member to have 9,131 days of “Canadian Forces service” to receive an immediate annuity.  “Canadian Forces service” is defined as paid service and includes maternity or parental leave.  However, “Canadian Forces service” does not include periods of Limitations of Payments (LOP) nor Leave Without Pay (LWOP).

Given that the required 9,131 days is exactly 25 years to the day, and considering that the 25 year Intermediate Engagement (IE25) TOS commences on every member’s enrolment day, any CAF member who has one or more days of Leave Without Pay (LWOP) after enrolment will fall short of qualifying for an immediate annuity upon completion of their IE25 unless the LWOP was for maternity/parental leave. 

Staff at the Canadian Forces Recruiting Group (CFRG) confirmed that, with few exceptions, all CAF members who enroll have a period of LWOP to account for the delay between their enrolment and the time they report for training.  Thus the Committee was able to conclude that, in all likelihood, a large number of CAF members will have one or more days of LWOP and so, fail to qualify for an immediate annuity upon completion of their IE25 TOS.  The Committee also noted that the great majority of CAF members are currently unaware of this issue.

The Committee observed that serving the Crown requires a unilateral and unique commitment from the member, and that giving 25 years, or perhaps even one’s life, to one’s country is a very high level of commitment.  The reciprocal compensation on the part of the CAF has previously included a valuable pension on completion of service and no doubt today’s members continue to believe this is still true.  However, the manner in which CAF members are currently being administered by the Directorate of Military Careers Administration vis-à-vis their IE25 TOS offers will result in the majority being a few days short of the amount of service needed to qualify for an immediate annuity. 

The Committee does not believe that the Minister of National Defence or the Chief of the Defence Staff (CDS) would knowingly support such an outcome.

Given the importance of the matter, and considering the widespread impact on a significant proportion of serving CAF members, the Committee found that the situation requires:

•    the immediate and personal intervention of the CDS; and
•    the implementation of timely and effective corrective action by the Chief of Military Personnel.

Recommendation

On the issue of long term service offers, such as those currently administered through IE25 TOS, the Committee recommended an immediate review and revision of the ADM (HR-Mil) Instruction 05/05 to properly reflect the 1 March 2007 changes to the CFSA and CFSR affecting how an entitlement to an immediate annuity is calculated.

The Committee also recommended that the ADM (HR-Mil) Instruction 05/05 be amended such that all TOS conversion offers involving a EI25 which terminate upon completion of 25 years of paid CAF service [i.e. 9,131 paid days of CAF service].

Finally, the Committee recommended that all existing IE25 TOS be reviewed and, if necessary, revised to allow for the completion of 9,131 days of paid CAF service.

Final Authority Decision

Pending