Release—Regular Force enrolled before March 1, 2007

Find out about your pension entitlements and benefit options if you are releasing from the Canadian Armed Forces (CAF).

You may want to know

What pension benefits do I receive at release?

At release, the type of pension benefit you receive depends on your age and pensionable service or on your Canadian Forces (CF) service:

  • If you are age 60 or older with at least two years of pensionable service, you release with an immediate pension
  • If you are any age and have at least 25 years of CF service, you release with an immediate pension
  • If you are any age and have less than two years of pensionable service, you release without being eligible to immediately start a pension
  • If you are under age 50 with at least two years of pensionable service, you release without being eligible to immediately start a pension

When can I release and receive an immediate pension?

You are entitled to an immediate unreduced pension when 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 years of pensionable service and are disabled on release; or
  • 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

An unreduced pension is calculated according to the pension formula.

You are entitled to an immediate reduced pension if you don't meet any of the above criteria, are age 50 or older and have at least two years of pensionable service.

Check out the Scenarios to see examples of different situations at release.

How much will I receive?

Your pension is calculated using formulas:

  • The lifetime pension formula uses your pensionable service and average earnings
  • The bridge benefit formula uses the average Year's Maximum Pensionable Earnings (YMPE) or your average earnings (whichever is lower) and your pensionable service

Annual lifetime pension

1.375% × total pensionable service × average earnings up to the average YMPE
+

2.0% × total pensionable service × average earnings above the average YMPE

Annual bridge benefit paid until you reach age 65 or until you become eligible for a Canada Pension Plan/Quebec Pension Plan disability pension

0.625% × total pensionable service × average YMPE or your average earnings (whichever is lower)

Check out the Scenarios to see examples of different situations at release.

You may also be entitled to severance pay when you release.

Contact the Government of Canada Pension Centre for an estimate of your pension.

Why is my pension reduced if I take it early?

If you are age 50 or older, have at least two years of pensionable service and are not entitled to an unreduced pension, you are eligible for a reduced pension. Your pension is reduced to take into account the fact that it will begin sooner than expected and you will receive it for a longer period of time.

If I take my pension early, what is the reduction?

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

  1. 5% × (60 minus your age); or
  2. 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% × (55 minus your age); or
    • 5% × (30 minus your pensionable service)

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

This is how it works:

Scenario: Jacky releases at age 52 with 25 years of pensionable service. To determine her reduction, consider which of the calculations below provides the lowest reduction:

Calculation 1

5% × (60 minus Jacky's age)

5% × (60  52) =

5% × 8 = 40%

40% reduction, which means Jacky would receive a pension of 60% of the amount from the formula.

or

Calculation 2

The greater of…

5% × (55 minus Jacky's age)

5% × (55 52) =

5% × 3 = 15%

and

5% × (30 minus Jacky's pensionable service)

5% × (30 25) =

5% × 5 = 25%

25% reduction, which means Jacky would receive a pension of 75% of the amount from the formula

Answer: The 25% reduction is the lowest, so Jacky gets 75% of her pension according to the formula.

Can I get an estimate of what my pension will be if I release?

Your most recent personal Pension Benefits Statement provides you with a summary of your entitlements and their approximate value. This can be found on the Web Application pension calculator, which can help you estimate your yearly and monthly pension based on the information you enter.

You may also contact the Government of Canada Pension Centre to get an estimate of your pension.

What pension benefits am I entitled to if I release and I am under age 50 with two or more years of pensionable service?

If you release before age 50 and have at least two years of pensionable service, you are entitled to the value of your pension earned up to the date of your release. Your earned pension includes the share of your pension paid by the Federal Government on your behalf. This pension is a valuable part of your overall compensation as a member of the Canadian Armed Forces (CAF).

Although you may not need this money for many years, you have an important choice to make about your earned pension.

If you are not entitled to an unreduced pension on release and you have more than two years of pensionable service you are entitled to a deferred pension, payable at age 60 or as early as age 50 with a reduction (see calculation above).

If you are entitled to a deferred pension and are under age 50 on release you may opt for a transfer value instead.

A transfer value

Transfer the value of your earned pension out of the pension plan as a lump sum. The amount of money you transfer is called your "transfer value". You can choose to transfer the lump-sum, to the maximum allowed by the Income Tax Act (ITA), to:

  • a locked-in retirement plan, such as a locked-in registered retirement savings plan (RRSP) or a locked-in retirement account (LIRA);
  • an insurance company, to purchase a pension; or
  • to your new employer's registered pension plan (RPP), if that plan accepts transfers

Consider carefully when making your decision.

Check out the Scenarios to see examples of deferred pensions and transfer values at release.

You may also be entitled to severance pay at your release.

What benefits do I receive if I release and have fewer than two years of pensionable service?

You receive a refund of your contributions, plus interest. You can choose to:

  • take your contributions, plus interest, in cash less income tax; or
  • transfer your contributions, plus interest, to a registered retirement savings plan (RRSP). If you do, no income tax is deducted.

What are some of the things to consider when choosing between a deferred pension and a transfer value?

If you take a deferred pension

  • your pension stays in the Regular Force Pension Plan and the Federal Government takes care of investing it – you do not have to take care of investing it;
  • your pension is indexed;
  • your pension provides for an immediate pension for your survivor and children when you die;
  • you are eligible for the Public Service Health Care Plan (PSHCP) and the Pensioners' Dental Services Plan (PDSP) when you begin receiving your deferred pension;
  • if you are paying in monthly instalments to buy back previous service, you continue to make monthly payments if you choose a deferred pension;
  • you can start taking your pension unreduced at age 60, or as early as age 50 with a reduction; and
  • you have to stay in touch with the Canadian Armed Forces (CAF) so that you can be contacted when it's time for your pension to start

If you choose a transfer value

  • you control all investment decisions – your money is no longer the responsibility of the Federal Government;
  • you do not know in advance how much you will get at retirement – your future retirement income amount will depend on how well you invest your money;
  • the transfer value includes the value of indexation and survivor benefits; however, pensions bought from an insurance company typically do not include indexing and it may be costly to provide survivor benefits;
  • you must transfer the money to a locked-in retirement plan; however, under new rules, you can unlock a portion of your transfer value;
  • if you are paying in monthly instalments to buy back previous service, you must pay the balance of your buy-back in full when you elect a transfer value, otherwise the calculation of the transfer value will only include the portion of the buy-back that you have paid;
  • you can transfer your money to a life income fund to begin drawing a pension at any time – there is no age restriction;
  • the Income Tax Act restricts the amount you can transfer from pension plans on a tax-sheltered basis, so you may have to pay taxes on a portion of your transfer value, which reduces the amount of money you have left to invest for retirement; and
  • you have some flexibility in how you wish to withdraw your investment

How do I make a pension benefit option upon release?

Once the Government of Canada Pension Centre is notified of your release, the Pension Centre will provide you with a personalized Pension Benefit Options Statement outlining your pension choices.

For more information about this, visit the Pension Entitlement Information Package.

What if I release and go to work for the Federal Public Service or the Royal Canadian Mounted Police?

If you leave the Canadian Armed Forces and go to work for the Federal Public Service or for the Royal Canadian Mounted Police (RCMP) and begin to contribute to their pension plan, you can get credit for your service under the Regular Force Pension Plan by transferring your pension credits. Contact your Human Resources administrator at the Federal Public Service or at the RCMP for more information.

Is it a good idea to transfer my pension credits to the Federal Public Service or to the Royal Canadian Mounted Police?

The decision of whether or not to transfer your pension credits to the Federal Public Service or to the Royal Canadian Mounted Police (RCMP) is a personal one and depends on many factors. You may wish to consult an independent financial advisor before making the decision.

The following table lists some of the questions you may wish to ask yourself if you are considering transferring your pension credits:

Question Consideration

Do I expect my salary at the Federal Public Service or at the RCMP to increase during my employment there?

Your pension calculation is based in part on your pay – the higher your pay, the higher your pension.

Am I eligible for an unreduced pension from the Regular Force Pension Plan?

In the Regular Force Pension Plan, you are eligible for an unreduced pension after 25 years of CF service with no age restriction. Under the Federal Public Service pension plans, you have to be at least age 55 to be eligible for an immediate unreduced pension.

Do I plan on staying at the Federal Public Service or at the RCMP until age 55 or later?

Transferring your service may allow you to retire earlier.

Can I transfer my pension to an employer other than the Federal Public Service or the Royal Canadian Mounted Police?

Yes. You can transfer the value of your pension to another employer's pension plan, if that plan accepts the transfer. Consider your decision carefully, since it may not always be to your advantage. Inquire with your new employer about how your transferred funds will be treated.

How do I decide what to do with my pension?

If you leave the Canadian Armed Forces (CAF) before you are eligible to start collecting your pension, you will need to make a number of financial decisions, including what to do with the money you have accumulated in your pension plan. These decisions can affect your financial security for the rest of your life. Even if you have only a few years in the CAF, your pension is a valuable asset and can make a difference in financial security at retirement down the road.

It is important to weigh your options carefully to make an informed decision. Be sure to take your entire financial situation into account before making this decision.

For assistance with these decisions, you may wish to seek the advice of an independent financial advisor. An independent advisor can be a financial planner, an actuary or an accountant whom you trust to give you impartial advice and who is qualified to do so. However, remember that as a CAF member, you have exclusive access to Service Income Security Insurance Plan (SISIP) Financial Services, a division of the Canadian Forces Personnel and Family Support Services. Their team of certified financial planners and licensed insurance representatives can help you access your financial status at time of release.

Can I get an estimate of what my deferred pension will be if I release?

Contact Government of Canada Pension Centre for an estimate of your deferred pension if you release today or in the future.

What steps do I need to take in regards to my pension if I am ready to release?

  1. Buy-back estimate

    If you have previous service that you can buy back, you may wish to examine the benefit of buying back that service. Buying back service may increase your pension, deferred pension or transfer value. It may also increase the amount of pension payable to your survivor or children and you can make payments in monthly life-insured instalments during your lifetime for any length of time. See the Service Buyback Package for more information.

  2. Pension estimate

    To obtain an estimate of your pension entitlement and the choices available to you at release, contact the Government of Canada Pension Centre.

  3. Consider consulting an independent financial advisor

    To assist you with your decisions, you may wish to seek the advice of an independent financial advisor.

  4. Contact your Unit

    Contact your Unit to ensure that your release date has been recorded.

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