1. Department of National Defence Modernization of the Canadian Forces Pension Plan Reserve Force members under Part I February 2007

2. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I2 Outline  Eligibility, contributions, and definitions  Benefits  Pension formula  Counting past earnings/service  CF employment after annuity starts  RFRG  Coming into force

3. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I3 For more information 1-800-267-0325 Toll-free www.admfincs.forces.gc.ca/pension/intro_e.asp On-line pensioninquiries@forces.gc.ca PriorPensionableServiceArrears@forces.gc.ca EligibilityCC@forces.gc.ca Email  Presentation focuses on pension policies Consult the CFPMP website www.forces.gc.ca/hr/dgcb/cfpmp  Beginning 1 March 07, contact DAPPP/Pension services for eligibility, benefit and election questions

4. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I4 About CFSA Part I  Provides a benefit based on set formulas (defined benefit)  Uses best 5-year average (full-time)  For Reserve Force members who are: Long-term Class B Long-term Class C

5. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I5 Eligibility  Reserve Force members join Part I after working 1,674 days (55 months) out of 60 continuous calendar months Service from April 1999 can be used towards eligibility Credits from the part-time plan must be transferred  “Once in, always in” rule Contributions to Part I will continue until retirement

6. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I6 Contributions  A fixed percentage of pensionable earnings  Reduces to 1% of pensionable earnings when member has 35 years of pensionable service  Pensionable earnings include basic pay and pensionable allowance YMPE—Year’s Maximum Pensionable Earnings Canada Pension Plan earnings ceiling (2007 = $43,700)

7. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I7 CF service  Days of service in the Regular Force for which pay was authorized and authorized maternity and parental leaves  Days of service in the Reserve Force for which pay was authorized and authorized maternity and parental leaves Days of training or duty of less than 6 hours = half-days Days of Class “A” service = 1.4 days Periods before April 1, 1999 (when duration of period is verifiable but not the number of days) = quarter time During maternity and parental leaves, days of CF service will be based on service in previous 12 months Definitions After 25 years of CF service, a member is entitled to an immediate annuity.

8. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I8 Pensionable service  Any period during which the member is a contributor  Any period for which the member has elected to pay  Authorized periods of maternity and parental leaves  Counted on elapsed time basis Definitions

9. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I9 Vesting  Vesting is the right of a plan member to receive a benefit from the pension plan other than a return of contributions An immediate annuity, or A deferred annuity that may be converted to an annual allowance or transfer value  Vesting occurs after 2 years of pensionable service Definitions

10. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I10 Transfer value  A lump-sum amount, expressed in today’s dollars, of your future pension benefits payable at age 60 Received if... Vested, Not entitled to an immediate annuity, and Younger than age 50 Must be transferred to... Locked-in RRSP, New employer’s plan (if accepted), or Insurance company, to buy an annuity Definitions

11. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I11 Benefits at retirement or release

12. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I12 Benefits at retirement or release

13. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I13 Ceasing participation  Members cease participation when they… Release from the Reserve Force Do not have any earnings for a 12-month period

14. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I14 Benefits in case of death  At death of vested member or pensioner, his or her… Spouse receives a survivor lifetime pension 1% X pensionable service X best average earnings Dependent children receive a child annual allowance Payable to age 18 or age 25 during periods of full-time school attendance

15. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I15 Benefits in case of disability  With 10 or more years of pensionable service and becomes disabled while a contributor, member is entitled to… An immediate annuity  If no longer a contributor and eligible for a deferred pension or annual allowance and becomes eligible for C/QPP disability pension, member is entitled to… An immediate annuity Offset begins immediately You are considered disabled if you suffer from a mental or physical impairment that prevents you from performing your duties.

16. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I16 Other features  Annual increases for inflation – indexing for CPI For annuity and annual allowance, indexing begins at... Age 60, or Age 55 or older, if age plus full years of pensionable service total 85 or more For survivor and child annual allowance and disability pension, indexing is... Immediate  At death, minimum guarantee of 5 years of annuity payments

17. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I17 Pension formula 2 % X pensionable service X best average earnings X adjustment factors 0.7 % 1 X pensionable service 2 X best average earnings, up to the average YMPE X adjustment factors 1 Reduction will gradually decrease from 0.7% in 2007 to 0.625% in 2013 2 Includes CF service only Temporary bridge pension payable to age 65, included in the annuity Annuity

18. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I18 Pension formula Adjustment factors  A pro-rata adjustment is applied to the pension formula to take into account… All calendar years during which member worked part-time If member opted to pay for less than the full cost when election was made to count past service

19. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I19 Counting past earnings/service  Eligible periods of service Prior Reserve Force periods (no retroactivity restriction) Service becomes pensionable service Election includes all past earnings Regular Force periods Other eligible periods of service (same as Regular Force members)

20. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I20 Counting past earnings/service  Limited time to make election Later of 1 year after notice of opportunity and 3 years after CIF No “late” elections  Paid by lump sum or life-insured instalments by the later of 20 years or age 65

21. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I21 Election calculation  Cost of electing pensionable earnings for any calendar year Pensionable earnings of the calendar year updated to year of election X Current RF contribution rate in year of election + 7% interest compounded annually from the middle of the year bought back to the date of the election + Difference between contributions from Part I.1 and Part I, if any

22. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I22 Election calculation  The member’s total cost is sum of the costs for all the years of past service  The member can elect to pay part of the full cost Service counts in full but pensionable earnings will be prorated (thereby affecting benefits) The member cannot revisit the partial payment decision later

23. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I23 Election calculation Example

24. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I24 Election calculation  Member’s cost to buy back 2003 pensionable earnings Example

25. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I25 Election calculation Note: The transfer value is based on a 35-year-old male and based on CIA Standard of Practice for Determining Pension Commuted Values, using the interest rates applicable in February 2007. Example

26. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I26 CF employment after annuity starts  Once you have earnings in the Reserve Force, your annuity stops and you begin contributing to the pension plan again

27. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I27 New rules for RFRG  The Reserve Force Retirement Gratuity has been amended RFRG is now similar to a severance pay plan Benefits will be calculated on actual periods of paid service rather than elapsed time These changes will be effective when the Reserve Force Pension Plan is implemented—March 1, 2007 Calculation for periods before March 1, 2007 will be unchanged

28. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I28 New rules for RFRG With service at and after CIF Under old rules for RFRG Under new rules for RFRG A CWO, age 43, with 25 years of service at CIF, and releases 5 years from now with 30 years of service. The member has always served 60 days per year. $50,400$43,900 A CWO, age 43, with 25 years of service at CIF, and releases 5 years from now with 30 years of service. At CIF, the member has served 60 days per year for 16 years and worked full-time for 9 years. The member will work full-time for the next 5 years. $50,400 Examples

29. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I29 New rules for RFRG With no service at CIF Under old rules for RFRG Under new rules for RFRG A CWO, age 48, with 30 years of service after CIF when he releases. The member has served 60 days per year for 16 years and worked full-time for 14 years. N/A$25,200 A CWO, age 48, with 30 years of service after CIF when he releases. The member has always served 60 days per year. N/A$8,900 Examples

30. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I30 Coming into force

31. Modernization of the Canadian Forces Pension Plan—Reserve Force under Part I31 Questions? This presentation provides an overview of the some of the provisions under the Canadian Forces Superannuation Act. If there is a discrepancy between this presentation and the Act, the Act prevails.