Glossary for Regular and Reserve Force members who are in the Regular Force (full-time) Pension Plan

Topic beginning with the letter A

Annual allowance

See reduced pension.

Annuity

A form of regular retirement income. Also known as pension.

Average earnings

Your total pensionable earnings for the five highest-paid consecutive years of pensionable service, divided by five or – if you have contributed for fewer than five years – the annual average of your pensionable earnings.

Average Year's Maximum Pensionable Earnings

The average of the Year's Maximum Pensionable Earnings (YMPE) for the year in which you stop participating in the pension plan and the four years before that.

Topic beginning with the letter B

Bridge benefit

The bridge benefit is an additional pension paid to ensure a stable retirement income and is paid from the day of retirement until age 65, when replaced by a Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) retirement pension.

The bridge benefit is paid to Canadian Armed Forces (CAF) members and is indexed at the same rate as the lifetime pension. When the payment of the bridge benefit ends, the indexing that has been applied to the bridge benefit also ends.

If you begin to receive a CPP or QPP disability pension before age 65, you are no longer eligible for the bridge benefit and must inform the Government of Canada Pension Centre, so they can discontinue the bridge benefit. Any overpayment that has been made will be recovered.

Topic beginning with the letter C

Canadian Forces (CF) service

CF service is used:

  • to determine if you are eligible for an unreduced pension at release and
  • to determine when reservists qualify to join the Regular Force Pension Plan

CF service includes:

  • days of service in the Regular Force for which you are paid
  • days of service in the Reserve Force for which you are paid:
    • days of training or duty of fewer than six hours count for 0.5 days
    • days of Class “A” service count for 1.4 days and
    • periods before 1 April 1999, when the length of the period can be verified but not the number of days, each day of the period counts as 0.25 of a day and
  • service without pay for maternity or parental reasons, whether or not you contributed for that period or bought back that service (service in the Reserve Force is calculated based on your service in the 12-month period before your leave)
Child allowance

See child pension.

Child pension

The monthly pension payable to your eligible child or children at your death. Under the Regular Force Pension Plan, a pension is payable to your eligible child if you have two or more years of pensionable service at your death.

Also known as child allowance.

Child(ren)

Your child(ren) include an adopted child(ren) or stepchild(ren), born before you reached age 60 or stopped being a member of the plan, whichever happens later, and who is/are:

  • younger than age 18 or
  • between ages 18 and 25, and in full-time attendance at a school, college, university or other educational institution that provides training or instruction of an educational, professional, vocational or technical nature
Compounded interest

Compounded interest is interest paid on the principal balance owing, as well as the accumulated interest.

Topic beginning with the letter D

Deferred annuity

See deferred pension.

Deferred pension

A deferred pension is a pension that you start receiving at a future date, rather than at release. Under the Regular Force Pension Plan, if you release before age 50 with at least two years of pensionable service and you do not meet the criteria for an unreduced pension, you are eligible for a deferred pension.

The deferred pension:

  • is the amount of pension you have earned at release, calculated according to the pension formula
  • is indexed for inflation from the time you release
  • includes an immediate pension to your eligible spouse or children in the event of your death
  • includes a lifetime pension and a bridge benefit; the bridge benefit is paid from the time you begin receiving your pension payments until age 65 and
  • is paid unreduced at age 60, or with a reduction any time at or after age 50. The longer you wait to start receiving the deferred pension, the smaller the reduction will be, but you will receive the payments over a shorter period of time

If you choose a deferred pension, you will be eligible for benefits under the Public Service Health Care Plan and under the Pensioners' Dental Services Plan when you start your pension.

Also known as deferred annuity.

Example:

In 2009, Jean releases at age 46 with 15 years of full-time pensionable service and average earnings of $52,000. Jean is eligible for a deferred pension, paid unreduced at age 60. Or, Jean can choose to receive a reduced pension anytime at or after age 50. The average Year's Maximum Pensionable Earnings in 2009 is $43,620. Here's what Jean's monthly pension would be at different ages:

At age… 52 55 58 60
Jean's monthly lifetime pension would be… $439 $634 $829 $959
Jean's monthly bridge benefit would be… $341 $341 $341 $341
Disabled/disability

For the purposes of the Regular Force Pension Plan, you are considered disabled during your active service if you suffer from a mental or physical condition that renders you unfit to perform your duties.

Topic beginning with the letter E

Election
Refers to the choice to buy back previous service.

Topic beginning with the letter G

Grandfathered

If you were a Regular Force member during the period from 28 February 2007 until your release and you meet certain criteria, you may be eligible to have your pension determined under the old, rather than the new rules. Under the old rules, your eligibility to a pension was linked to your Terms of Service. If you meet the criteria, you may be eligible for an unreduced or a reduced annuity earlier than you would be under the new rules.

If, at your release, you are entitled to grandfathered benefits, the Government of Canada Pension Centre will provide you with a letter outlining your benefits under the new provisions and under the grandfathering provisions. You choose what benefit you receive.

Are you grandfathered?

The following table illustrates what happens with your pension benefits if you die while serving:

You are entitled to a… If, at release…
unreduced annuity unreduced annuity
  • you have reached compulsory retirement age, with at least 10 years of Regular Force pensionable service or
  • you have completed an Intermediate Engagement of 20 years that started before 1 March 2007, but are not on an Indefinite Period of Service or
  • you have between 19 and 20 years of Regular Force pensionable service – at least 10 of it at 1 March 2007, and
    • were never offered an Intermediate Engagement of 25 years
    • are not serving an Intermediate Engagement or an Indefinite Period of Service
    • did not refuse an offer to re-engage (if a Non-Commissioned Member) and
    • did not refuse an offer to serve on an Indefinite Period of Service (if an officer) or
  • you have not reached compulsory retirement age or the retirement threshold and have at least 20 years of Regular Force pensionable service – at least 10 of it at 1 March 2007 – and you have not met the criteria for a reduced annuity (see below)
reduced annuity reduced annuity
  • you are not serving on an Indefinite Period of Service and:
    • have not reached compulsory retirement age or the retirement threshold
    • have at least 20 years of Regular Force pensionable service – at least 10 of it at 1 March 2007
    • served on an Intermediate Engagement of 25 years and 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 Intermediate Engagement of 20 years) or
  • you are serving on an Indefinite Period of Service and:
    • have not reached compulsory retirement age or the retirement threshold and
    • have at least 20 years of Regular Force, pensionable service – at least 10 of it at 1 March 2007

Check out the Scenarios to see examples of pensions determined under the grandfathered rules.

If you release as a result of workforce reduction, grandfathering benefits may apply. Contact the Government of Canada Pension Centre for more information.

What is the compulsory retirement age and retirement threshold?

The compulsory retirement age is age 55 or 60 depending on the one-time choice you made.

The retirement threshold depends on your rank:

Rank Threshold
Non-commissioned member 25 years of Regular Force pensionable service
Lieutenant Colonel and below 28 years of full-time paid service
Colonel and above 30 years of full-time paid service

What is the reduction if I release with a reduced annuity?

Your reduction is whichever calculation provides the lower reduction:

  • 5% × number of full years before you reach the retirement threshold or
  • 5% × number of full years before you will reach compulsory retirement age

Topic beginning with the letter H

Her Majesty's Forces
The naval, army or air forces of the various Commonwealth countries under the sovereignty of Her Majesty, including countries such as Canada, the United Kingdom, Australia, and New Zealand.

Topic beginning with the letter I

Immediate Annuity

Also known as unreduced pension.

Under grandfathered rules (which only apply if you were a Regular Force member during the period from 28 February 2007 until your release), an immediate annuity may also refer to an annuity that is reduced. If you are grandfathered, you may be eligible to release earlier with an annuity.

Topic beginning with the letter L

Life-insured instalments

The payments you make to buy back prior service, the cost of which includes:

  • the amount required to purchase the service
  • the cost of life insurance and
  • interest on the unpaid balance

In the event of your death, your buy-back is considered fully paid and your spouse or estate have no more payments to make.

Locked-in retirement plan

A registered plan in which funds remain sheltered from tax until they are withdrawn as retirement income.

You can unlock a portion of the money in your locked-in account, if you are:

  • age 55 and older or
  • facing financial hardship because of
    • low income (less than 75% of the Year's Maximum Pensionable Earnings) or
    • medical or disability-related costs that exceed 20% of your annual income

If you are considering transferring the value of your pension, consult a financial advisor for more information on the unlocking provisions.

Topic beginning with the letter M

Minimum death benefits

Under the pension plan, there is a minimum benefit guaranteed when no eligible spouse or children exist. If you have two or more years of pensionable service, your beneficiary or estate cannot receive less than:

  • the greater of
    • your contributions with interest and
    • five times the annual amount of your lifetime and bridge benefits accumulated at your death
  • less the sum of any pensions that have been paid to you, your spouse and children

Topic beginning with the letter O

Optional Survivor Benefits

Under the Regular Force Pension Plan, if you marry after age 60, you can provide a survivor pension to your new spouse only if you

  • apply for survivor benefits within one year of your marriage and
  • agree to reduce your current level of pension, in exchange for providing a survivor pension to your new spouse at your death

Here is how it works.

If you choose to provide this survivor pension, you choose between providing a survivor pension of 30%, 40% or 50% of your own pension. Your pension would then be reduced depending on the survivor benefit you choose: the greater the survivor benefit, the greater the reduction to your pension.

The Canadian Forces Superannuation Act was amended so that a member living in a common-law relationship can provide a survivor pension if the relationship begins after age 60. However, the regulations must be amended to specify the details.

Topic beginning with the letter P

Part I
Refers to that part of the Canadian Forces Superannuation Act that deals with pension benefits for members of the Regular Force and members of the Reserve Force who meet certain eligibility requirements. Also referred to as the Regular Force Pension Plan in this website.
Part I.1
Refers to that part of the Canadian Forces Superannuation Act that deals with pension benefits for members of the Reserve Force. Also referred to as the Reserve Force Pension Plan in this website.
Past service pension adjustment

A Past Service Pension Adjustment (PSPA) is the sum of all the pension adjustments for the years you are buying back past service. A PSPA will affect your registered retirement savings plan (RRSP) room in the year it is issued. If you have sufficient RRSP room, the Canada Revenue Agency (CRA) will certify your PSPA and you will be permitted to buy back past service.

If you do not have enough room, you can make room by:

  • transferring funds from your RRSP to the pension fund to pay for the buy-back or
  • withdrawing money from your RRSP and paying tax on it

If the PSPA is not certified by the CRA, the buy-back is denied, and whatever payments you have made will be returned to you or to the fund from which it was transferred.

Pension adjustment

The Canada Revenue Agency (CRA) limits the annual tax-deductible contributions you can make to all your retirement savings plans. The maximum amount is 18% of your earned income in the previous year, up to an annual dollar limit. In 2009, the maximum is $21,000 and in 2010, $22,000. After 2010, the limit should increase in line with average Canadian wages.

This 18% limit is the total you can save under all tax-sheltered retirement plans, including the Regular Force Pension Plan and your personal registered retirement savings plan (RRSP). A formula established by the CRA is used to estimate the value of your benefits under the Regular Force Pension Plan. This value is referred to as the pension adjustment (PA). Your PA isn't related – in a dollar-for-dollar sense – to the amount of contributions paid into the plan. The formula set out by the CRA is as follows (the PA is rounded to the nearest dollar).

PA = 9 × benefit earnedFootnote 1 − 600

In any given year, the maximum you can contribute to an RRSP is calculated as 18% of your previous year's earnings, less the PA and any PSPA, plus any previous years' allowable contributions that you did not use. Each year, after you file your income tax return, the CRA sends you a Notice of Assessment which indicates this amount. You can make an RRSP contribution up to this amount or carry it forward for use in future years.

Pension formula for members born before 1947
Year of birth 1946 1945 1944 1943 1942 and before
Percentage applied to average earnings up to the average Year's Maximum Pensionable Earnings (YMPE) 1.36% 1.345% 1.33% 1.315% 1.3%
Percentage applied to average earnings above the YMPE 2% 2% 2% 2% 2%
Percentage for bridge benefit 0.64% 0.655% 0.67% 0.685% 0.7%
Pensionable earnings
Your pensionable earnings include your pay for your rank and a $30 monthly allowance.
Pensionable service

Pensionable service is used:

  • to determine what type of pension benefit you receive at release (unreduced pension, reduced pension, deferred pension etc.)
  • in the pension formulas, to calculate how much pension you receive at release and
  • to determine by how much your pension is reduced, if you retire before being eligible for an unreduced pension

Pensionable service includes:

  • the period of service when you contributed to the Regular Force Pension Plan since you last enrolled
  • for reservists, the period of service when you contributed to the Reserve Force and Regular Force pension plans since you last enrolled. For Reserve Force service, only the number of days with earnings are considered in calculating how much pension you receive
  • any service you buy back; and
  • any service you transfer from the Federal Public Service or the Royal Canadian Mounted Police

If you enrolled in the Regular Force on or after 1 March 2007 or, as a reservist, if you qualified to participate in the Regular Force Pension Plan and, in either case, you bought back Reserve Force service:

The full period you were eligible to buy back counts as pensionable service towards the type of pension benefit you receive at release and the early retirement reduction, but only the service for which you paid will count in the pension formula.

Topic beginning with the letter R

Reduced pension

A pension that is reduced because you are taking it early – that is, before you are eligible for an unreduced pension. In the Regular Force Pension Plan, you are eligible for a reduced pension when you are age 50 or older, with at least two years of pensionable service, and you do not meet the criteria for an unreduced pension.

Also known as annual allowance.

Regular Force (Full-Time) Pension Plan
Also known as Part I of the Canadian Forces Superannuation Act, which describes pension benefits for members of the Regular Force and for Reserve Force members who meet certain eligibility requirements. In this website, Part I is always referred to as the Regular Force Pension Plan.
Reserve Force (Part-Time) Pension Plan

Also known as Part I.1 of the Canadian Forces Superannuation Act, which describes pension benefits for members of the Reserve Force. In this website, Part I.1 is always referred to as the Reserve Force Pension Plan.

Topic beginning with the letter S

Simple interest

Interest calculated annually on the original principal amount only. Any accumulated interest from prior periods is not used in calculations for the following periods.

Survivor

The person of the same or the opposite sex who:

  • was married to you at the time of your death or when you reached age 60, whichever is earlier or
  • had been living with you in a conjugal relationship for at least one year at the date of your death, and, if you are over age 60, has cohabited continuously with you since before you reached age 60
Survivor allowance

See survivor pension.

Survivor pension

The monthly pension payable to your eligible spouse at your death. Under the Regular Force Pension Plan, a pension is payable to your eligible spouse if you have two or more years of pensionable service at your death.

Also known as survivor allowance.

Topic beginning with the letter T

Transfer value

The present value of your earned pension in today's dollars. The calculation is based on a set of actuarial assumptions which include economic and demographic assumptions.

You must be under age 50 to be entitled to receive the transfer value of your pension - paid as a lump sum. You can choose to transfer the lump-sum to:

  • a locked-in retirement savings plan, such as, a locked-in registered retirement savings plan, life income fund, or a restricted life income fund
  • an insurance company to purchase a pension or
  • your new employer's registered pension plan, if that plan accepts the transfer

If you transfer the value of your pension, no tax slip will be issued by the Government of Canada Pension Centre or by the financial institution receiving the transfer, since your transfer value will be directly transferred from one tax-sheltered vehicle to another.

Limit on amount that can be tax-sheltered:

  • The Income Tax Act sets a limit on what part of the transfer value can be tax-sheltered. This limit is the annual pension payable at age 65 (plus applicable indexing) × 9
  • When you release, the Government of Canada Pension Centre will provide you with the breakdown of the portion that is outside the tax limits, if any. In some cases, the full transfer value will be within the tax limits; for other plan members, it is possible that a portion of the payment will be in excess of the applicable tax limits

If a portion of the transfer value is outside the tax limits, either:

  • that portion will be paid directly to you, with income tax deducted at source. A T4A (and Relevé 2, if applicable) will be issued for this portion of the transfer. In some cases, the tax deducted at source may not be enough, and you may owe additional tax when you file your income tax return
    or
  • if you have sufficient RRSP room, you may choose to transfer this portion of your payment to an RRSP. No tax will be deducted from the payment, but a T4A (and Relevé 2, if applicable) will be issued, and your financial institution will provide you with a tax receipt for filing your income tax return

Topic beginning with the letter U

Unreduced pension

A pension that is paid immediately with no reduction for early retirement. Under the Regular Force Pension Plan, you are entitled to an unreduced pension if you:

  • have 25 years (9,131 days) of CF service
  • are age 60 with at least two years of pensionable service
  • are age 55 with 30 years of pensionable service
  • have 10 or more years of pensionable service and are disabled on release or
  • you are involuntarily released due to a reduction in the Canadian Armed Forces and either
    • have 20 years of pensionable service or
    • are age 55 or older with 10 years of pensionable service

If you were a Regular Force member during the period from 28 February 2007 until your release and are grandfathered (see grandfathered above), you may be eligible to release with a pension earlier.

Also known as an immediate annuity.

Updated to year of decision to buy back

In calculating the cost to buy back previous Reserve Force service for members who enrolled in the Regular Force on or after 1 March 2007 and for reservists who participate in the Regular Force Pension Plan, your earnings are updated to take into account the average increase in Reserve Force wages since the date of your earnings.

Topic beginning with the letter V

Vested

The point in time at which a member earns the right to a benefit from the pension fund based on their contributions and those made by the Federal Government on their behalf, even if the member releases from the CAF. In the case of the Canadian Forces Superannuation Act (CFSA), this point in time is following two years of pensionable service.

Topic beginning with the letter Y

Year's Maximum Pensionable Earnings

Year's Maximum Pensionable Earnings (YMPE) is the maximum amount of earnings that the Government sets each year and uses to calculate contributions and pensions under the Canada Pension Plan or Quebec Pension Plan. Annual changes to this amount are based on increases in the average Canadian wages.

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