Service buyback

Does more pensionable service mean more pension benefits? What are the advantages in buying back service?

Discover the answer to these questions and many others by viewing the video below. Other topics include the different types of service buyback and methods of payment. Click on the links below for additional information on this topic.

Transcript of the Service buyback

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If you have service prior to becoming an active member of the public service pension plan, you may be able to buy back this service and have it counted as pensionable service under our plan. A buyback may be advantageous because increasing your service credit may allow you to retire earlier and provide you with a greater pension at retirement. It also allows you to reach 35 years of pensionable service sooner. As well, it increases the pension payments made to your survivors in the event of your death.

There are several types of prior service that you may be able to buy:

  • Federal public service
  • Canadian Forces or the Royal Canadian Mounted Police (RCMP) or
  • Pensionable employment

For example, federal public service includes service for which you received a return of contributions, periods of service of 6 months or less or part-time service for which you have worked at least 12 hours per week. It is also possible to buy back periods of authorized leave without pay that you had previously chosen not to count as pensionable service.

You may transfer to the public service pension plan Canadian Forces or RCMP service for which you are entitled to a pension. You may also buy back periods of service for which you received a return of contributions or periods of full-time service of 6 months or more.

Pensionable employment is service outside the federal public service such as service with provincial governments, universities, private companies, financial institutions, just to name a few.

The cost of the service is calculated differently depending on the types of service you buy back. For example, federal public service, Canadian Forces or RCMP service are usually calculated at single rate. Service from an outside employer and certain types of leave without pay are calculated at double rate.

A service buyback can be paid by a lump sum, monthly installments or a combination of both.

If you wish to pay with a lump sum, you may send a cash payment or make a transfer of funds from an RRSP with no tax deducted at source. When the full amount is received in a lump sum within 30 days of signing your buyback form, there is no additional cost.

If you choose to pay by monthly installments, it will cost you more than if you were paying with a lump sum because installments include interest and mortality charges. Since the installments are life-insured, the outstanding balance will usually be considered paid in full in the event of your death.

In order to buy back service, certain conditions must be met. With a few exceptions, you will have to undergo a medical examination as part of the buyback process.

There are a number of other things to consider before signing your service buyback form and we encourage you to consult the Service buyback package at Pension and benefits for more information.

Since a service buyback is a legal agreement you should obtain an estimate of cost before you sign your service buyback form. You can obtain an estimate from the Service buyback estimator on our website or by contacting the Government of Canada Pension Centre.

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View the Service buyback video.

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