Retired member with two or more years of pensionable service

Immediate annuity (unreduced pension)

An immediate annuity (IA) is a monthly pension payable immediately upon release or when your participation in either of the CAF Pension Plans ends, if you:

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

The pension formula to calculate an annuity, which includes the lifetime pension and bridge benefit (refer to the Canada Pension Plan or Quebec Pension Plan subsection under General Information), for members of the Regular Force and the Reserve Force in the Regular Force Pension Plan is:

The pension formula to calculate a basic benefit for participants in the Reserve Force Pension Plan, which includes the lifetime pension and the bridge benefit is:

Annual allowance (reduced pension)

An annual allowance is a reduced monthly pension that you may opt for if you are entitled to a deferred annuity, are between age 50 and 60, and have at least two years of pensionable service. Unless you become entitled to disability benefits under the Canada Pension Plan or Quebec Pension Plan, the reduction is permanent and it is applied to your deferred pension, taking into account your choice to receive it early. This benefit is payable from the later of your 50th birthday, date of release (or the date when your participation in either of the CAF Pension Plans ends) or date of option. The reduction applied to the pension is calculated according to age and/or service.

Your pension is reduced for every year and fraction of a year by whichever of the following calculations provides the lowest reduction.

• 5% x (60 minus your age); or
• if you have 25 or more years of pensionable service and are at least age 50 when you stop participating in the plan, the greater of:
  • 5% x (55 minus your age); or
  • 5% x (30 minus your pensionable service)

In the reduction calculation, your age and pensionable service are rounded to the nearest one-tenth of a year.

Deferred annuity (deferred pension)

A deferred annuity is an unreduced pension that becomes payable at age 60. You are entitled to a deferred annuity when you release from the Regular Force or when your participation in either of the CAF Pension Plans ends, if you have two or more years of pensionable service and you are not entitled to an immediate annuity. Depending on your age, you may opt for a benefit other than a deferred annuity (such as a transfer value if under age 50 or an annual allowance to commence between the ages of 50 and 60). You will be deemed to have accepted your entitlement to a deferred annuity unless you exercise your right to opt for another benefit within one year of release from the Regular Force or from the date when your participation in either of the CAF Pension Plans ends.

If you are entitled to a deferred annuity, you may at any time between age 50 and 60, request a reduced pension payable immediately (please refer to the annual allowance subsection above for more details). If you become entitled to Canada or Quebec Pension Plan disability benefits before reaching age 60, you may be entitled to an immediate annuity.

Transfer value

Should you release from the Regular Force or stop participating in either of the CAF Pension Plans before you reach age 50, you may take your earned pension benefits as a transfer value rather than as a future monthly pension. A transfer value is a lump sum equal to the value of your future pension benefit (deferred pension). If you choose this option, you must do so within one year of releasing from the Canadian Armed Forces (CAF), otherwise you will be deemed to have accepted your entitlement to a deferred annuity.

The rate of return made by funds invested in a locked-in vehicle depends on the rates of return that are available over time in the market place as well as your investment decisions, which will in turn determine the eventual level of income available to you in retirement. The investment risk is your full responsibility.

If you choose this option, there is no guarantee that the retirement income generated by your investments will match the pension income that you would have received had you kept your deferred annuity. As well, it is important to keep in mind that the transfer value is equivalent to the value of all of your pension benefits in today's dollars, including such features as indexing and survivor benefits and if you choose this option, you will no longer be entitled to these benefits.

The transfer value is calculated as of the valuation date, which is the later of your date of release from the Regular Force (or when your participation in either of the CAF Pension Plans ends), or the date of option, and is based on a number of economic assumptions including net interest rate assumptions. The payment amount may differ from the estimate amount due to the fluctuation of interest rates. These interest rate assumptions vary monthly and the rates in effect, at the later of the date of option or release date (or the date on which your participation in either of the CAF Pension Plans ends), determine the amount of the payment.

If you are making service buy-back payments, only the service paid for up to the date of the option can be included in the transfer value. Therefore, it is important to consider the potential benefit of making a lump- sum payment towards the balance owing on your service buy-back before making your transfer value option in order to increase the payment amount.

Unpaid instalments that remain outstanding due to a period of leave without pay or instalments that are in arrears on service buybacks will be recovered from your transfer value payment unless you make payment arrangements before the transfer value is paid.

In accordance with the limits specified in the Income Tax Regulations, a transfer value payment may have three components:

Amount within tax limits (the prescribed amount)

This portion of the lump sum must be moved directly into a Registered Pension Plan (RPP), a locked-in Registered Retirement Savings Plan (RRSP), or a to financial institution in order to purchase an annuity. In order for us to issue your payment, you and your financial institution must complete and return the following forms:

• T2151 Direct Transfer of a Single Amount under Subsection 147(19) or Section 147.3
• Certification of Lock-in for purposes of the Canadian Forces Superannuation Act or the Pension Benefits Division Act (CF-FC 2347-18)

Amount in excess of tax limits

Where a portion of the transfer value exceeds the tax limit amount, the payment will be made directly to you and that amount becomes part of your taxable income. If you have sufficient contribution room in your RRSP, no tax will be deducted on the amount that you transfer to your RRSP.

If you wish to transfer all, or a portion, of this amount to an RRSP, you must provide us with the form ADM 314 Appendix Transfer Value Outside Tax Limit Payment Options certifying that you have sufficient RRSP contributions room available. You must also provide the name and address of your financial institution, your account number and the specific amount of the payment that is to be transferred to an RRSP.

Amount under a Retirement Compensation Arrangement

The Income Tax Act (ITA) places restrictions on the amount of pension benefit that may be accrued in any given year of service. Pension benefits that are within the limits allowed under the ITA will be paid in accordance with the provisions set out under the Canadian Forces Superannuation Act (CFSA), with the remainder being paid in accordance with the provisions set out under the Special Retirement Arrangements Act (SRAA). A Retirement Compensation Arrangement (RCA) is a plan that provides benefits that exceed the allowable limits for a Registered Pension Plan (RPP). Any RCA portion of your pension entitlement cannot be transferred to an RRSP or an RPP. This portion is payable directly to you and tax is deducted at source. If this applies to you, an RCA amount will be indicated on your Pension Benefit Estimates Statement.

Other circumstances

Disabled on release or when you stop participating in either of the CAF Pension Plans.

Transfer to the Public Service or the Royal Canadian Mounted Police Pension Plan

If you have accepted or plan to accept a position with the Public Service or Royal Canadian Mounted Police, you may wish to consider transferring your pensionable service under the Regular Force Pension Plan to their pension plan. If you are interested in such a transfer, please contact the Government of Canada Pension Centre for more information on initiating the process.

Supplementary Death Benefit participant at regular rate

If you are entitled to receive an immediate pension (immediate annuity or annual allowance) on release from the Regular Force and elect to continue as an SDB plan participant, your contribution rate will remain unchanged and will be deducted from your monthly pension.

Effective April 1 or October 1, whichever comes first following your 65th birthday, you will be credited with $5,000 of paid-up coverage and your contributions will be reduced accordingly. In addition, your coverage and contributions will be reduced effective April 1 or October 1 following your 61st birthday, whichever comes first, by 10% each year until age 70, at which time you will retain the paid-up coverage of $5,000 at no further cost for life.

At any time after your release, you may reduce your coverage to $5,000 by completing the Election to Reduce Benefit to $5,000 (Form 1) form which may be obtained by contacting the Government of Canada Pension Centre.

If you are eligible to continue your SDB coverage at the regular rate after your release, please refer to the SDB Estimates Statement received from the Pension Centre or contact them for your coverage and contribution information.

Supplementary Death Benefit participant at commercial rates

If you are entitled to a deferred annuity or should you opt for a transfer value, you may elect to continue your coverage under the SDB plan at the commercial rate as long as you have been a participant in the SDB plan for five or more years without interruption at release. Contributions are paid annually, in advance to the Government of Canada Pension Centre. When you become eligible to start receiving your deferred pension, you may choose to have your deductions taken from your monthly pension at that time.

Commercial rates are higher than the regular contribution rate. Your estimated contributions are available on the Supplementary Death Benefit Estimates Statement.

If you opted for a transfer value and elected to continue as an SDB plan participant, contributions are to be paid annually in advance to the Government of Canada Pension Centre.

To apply for continued coverage under the SDB plan, you must complete the Election to continue Supplementary Death Benefit (SDB) Plan form (CF-FC 2017) and return it with your first annual contribution payment to the Government of Canada Pension Centre within one year before or within 30 days after your release.

If you elect to continue as a participant in the SDB plan, your coverage and contributions will reduce by 10% each year following your 61st birthday. Your contributions and coverage will cease at age 70.

Quick guide

Your eligibility for certain benefits is dependent on your pension entitlement on release or when you stop participating in either of the CAF Pension Plans. If you are entitled to a deferred annuity and you are under age 50, you may opt for a transfer value; or you may choose to start receiving an annual allowance (reduced pension) as early as age 50. What option should you choose?

Below is a guide for your reference.

Acronyms

IA

Immediate annuity

AA

Annual allowance

DA

Deferred annuity

TV

Transfer value

ROC

Return of contributions

X

Indicates those benefits/plans/programs for which contributions/premiums can be withheld and paid on your behalf depending on your pension benefit

Public Service Health Care Plan

Pensioners' Dental Services Plan

If you are in receipt of an immediate annuity or an annual allowance, you may be eligible to join the Pensioners' Dental Services Plan (PDSP). If you are eligible and the Government of Canada Pension Center receives your PDSP enrolment form within 60 days of the date you become entitled to your pension (including eligible survivors), your coverage will begin on the effective date of your pension entitlement. If you choose not to apply within the initial 60-day period, you still have the opportunity to join the PDSP at a later date.

If your enrolment form is received later than 60 days from the effective date of your pension entitlement, your membership will begin on the first day of the second month following the date the Government of Canada Pension Centre receives your enrolment form. Coverage for all dental services begins on the same day as your membership begins. When you begin to receive your deferred annuity, you or your survivor(s) may be eligible to join the PDSP at that time.

Should you opt for a transfer value, you will not be eligible to join the PDSP.

Further information on the PDSP may be obtained from the Pensioners' Dental Services Plan booklet.

If you choose to apply for coverage, you can obtain the form "Pensioners' Dental Services Plan" (PWGSC-TPSGC 439-E) from the Government of Canada Pension Centre.

For Quebec residents, the employer's portion of these insurance contributions is considered a taxable benefit and is subject to Quebec income tax.

For Quebec and Ontario residents, the plan member's premiums are subject to provincial sales tax.

British Columbia Medical Services Plan

For residents of British Columbia: Monthly premiums may be deducted from your pension.

Further information on the British Columbia Medical Services Plan may be obtained from the Health Insurance British Columbia website or by contacting the British Columbia Medical Services Plan directly at 604‑683‑7151 or 1‑800‑663‑7100.

If you choose to have this monthly premium deducted from your pension, please complete and forward the British Columbia Medical Services Plan Application for Group Enrolment form (HLTH 167) to the Government of Canada Pension Centre.

The premiums paid by the employer on your behalf for this insurance in any one year will be considered a taxable benefit for income tax purposes.

Service Income Security Insurance Plan

If you have life insurance coverage under the Service Income Security Insurance Plan (SISIP) and you wish to convert your Insurance for Released Members (IRM), you must do so within 60 days of your release date. Further details regarding SISIP coverage may be obtained by contacting the SISIP toll free at 1‑800‑267‑6681.

Military Post-Retirement Life Insurance Plan

The Military Post-Retirement Life Insurance Plan (MPRLIP) is a life insurance benefit which is automatically provided to eligible officers who retire from the CAF, with an immediate annuity and the General Officer's Insurance Plan (GOIP) coverage in force at the effective date of release. Further details regarding MPRLIP coverage may be obtained by contacting the SISIP toll free at 1‑800‑267‑6681.

Survivor benefits

If you are entitled to a monthly pension benefit, now or in the future, your survivor and eligible children will be entitled to a pension in the event of your death.

A survivor pension is payable to a legal spouse or to a common-law partner with whom you have lived in a relationship of a conjugal nature for at least one year as long as that relationship began prior to your 60th birthday and continued without interruption until your death. For children to be eligible for a pension, they must be under age 18 or in full-time attendance at school, college or university and under age 25.

Regular Force Pension Plan annuitants: If you marry after your 60th birthday, your spouse will not be entitled to a survivor pension in the event of your death. However, you may choose to provide your spouse with an Optional Survivor Benefit (OSB) by taking a reduction in your own pension. You must apply for this coverage within one year from the date of your marriage, or one year following your 60th birthday, whichever is later. See the section titled When Death Occurs for more information.

If you are entitled to a deferred annuity and you opt for a transfer value instead, your survivor/child(ren) will not be entitled to survivor benefits.

Additional information on survivor benefits may be obtained from the When Death Occurs web page.

Canada Pension Plan or Quebec Pension Plan

If you are entitled to a monthly pension benefit under either of the Canadian Armed Forces Pension Plans, your pension will consist of two parts:

1. a lifetime pension; and
2. a bridge benefit payable to you until the earlier of either the date you start receiving Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) disability benefits or the first of the month following your 65th birthday. Receipt of CPP/QPP early benefits (age 60 to 65) has no impact on your bridge benefit

It is important that you complete a Pension Information Release form (CF-FC 2265) to confirm whether or not you are in receipt of a disability benefit from the CPP or QPP prior to age 65. Until we receive the form indicating that you are not in receipt of a disability benefit, we will assume that you are receiving disability benefits from the CPP or QPP and the bridge benefit amount will not be paid to you from your date of entitlement or date of release, whichever is later.

For information on the CPP or QPP, please contact the appropriate office.

Information about the CPP may be obtained from the Service Canada website.

Information about the QPP may be obtained from the Régime des rentes du Quebec website.

Old Age Security Pension

Information about the Old Age Security may be obtained from the Service Canada - Old Age Security Pension website.

Re-enrolment in the Canadian Armed Forces

I If you are re-enrolled in the Canadian Armed Forces (CAF) within 60 days of your release, you cannot exercise a benefit option until you release again.

If you are in receipt of an ongoing pension benefit (immediate annuity or annual allowance) and you re-enrol in the Regular Force your monthly pension (including indexing, if applicable) will cease. If you are in receipt of an annuity as a former participant in the Reserve Force Pension Plan once you again have earnings as a member of the Reserve Force, your annuity ceases immediately.

It is important to note that if you again become a member in either of the CAF Pension Plans, your pension entitlement may be negatively affected in several ways. First, indexing will be calculated based on your most recent release date and you will lose any annual cost-of-living increases you may have accumulated. In addition, if you were receiving an annual allowance previously, your future benefit may be reduced when you release to take into account the length of time that you were in receipt of an annual allowance.

Potential service buy-back

If you have any prior service that you have not yet elected to count as pensionable under the CFSA, you may wish to consider doing so prior to release as it may result in an increase the value of your pension benefit.

For additional information, refer to the Service Buy-back Package.

Current service buy-back

If you are currently paying for a service buy-back by way of instalments withheld from your salary or through pre-authorized debit (PAD) from your bank account and you are entitled to an immediate annuity or opt for an immediate annual allowance on release, your monthly instalments will be withheld from your pension benefit. Otherwise, your monthly payments should be sent directly to the Government of Canada Pension Centre until you become eligible to receive a pension.

You may choose to delay payment until your deferred pension becomes payable at age 60. However, it is important to note that if you choose this method, interest will continue to accrue at an annual rate of 4% on the outstanding balance. This may result in a substantially higher monthly amount to be deducted from your pension when it becomes payable.

You may choose to pay the balance (or a portion) of your service buyback in a lump-sum prior to your release. Please advise us if you wish to pursue this payment method and we can provide you with an estimate of the balance owing on your service buyback.

You can make a lump sum payment at any time to either pay off your balance owing, or shorten your repayment period. You may also increase the amount of your monthly payment at any time to shorten your repayment period.

Leave without pay

Debts due to the Crown

If the Government of Canada Pension Centre is informed that you owe a debt to the Crown, such as overpaid salaries and allowances, these amounts will be recovered from your pension benefit. You will be advised in writing of any such recovery action.

Direct deposit

A direct deposit service is offered to pensioners. This service offers the automatic deposit of monthly pensions to your financial institution. At the time of making your option, you will be required to complete Part 2 – Banking Information of the Pension Benefit Options Statement form (CF-FC 2011E-PF) and to enclose a void cheque.

Income tax

If you opt for an ongoing pension, income tax (federal and provincial) will be deducted at source based on your province of residence (for non-residents, based on the country of residence). If you wish to claim more than the basic personal amount, you must complete the federal TD1 Personal Tax Credits Return form and the applicable provincial or territorial form which can be found on the Forms web page.

Quebec residents should use the federal TD1 form and the provincial Source Deductions Return form TP-1015.3-V also available on the Forms web page.

Government of Canada Workplace Charitable Campaign

If you opt for an ongoing pension, you may have the remaining deductions pledged as a member deducted from your monthly pension.

You may also choose to complete your pledge by making payments directly to the Government of Canada Workplace Charitable Campaign (GCWCC). Arrangements can be made by contacting 613‑228‑6700. More information can be found on the Government of Canada Workplace Charitable Campaign website.

National Association of Federal Retirees

The National Association of Federal Retirees (NAFR) is a non-profit organization bringing together pensioners from the Federal Public Service, the Canadian Armed Forces and the Royal Canadian Mounted Police as well as spouses and surviving spouses of these pensioners. The association advocates measures beneficial to its members and ensures that pensioners are kept informed with regard to their rights. More information can be found on their website National Association of Federal Retirees or by calling 613‑745‑2559.