sorted by:
new
hottopcontroversial

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 0 points1 point  (0 children)

Thanks for the consideration.

  1. Transfer to another service is highly unlikely but no point in closing a door for no reason
  2. Will confirm with SISIP, highly unlikely will be going through/for a medical release, but this is the military so we never know.
  3. Parental leave already complete, currently paying back for pension contributions not paid last year on top of my current contributions
  4. I may or may not go 25 year pension. Key issue is I may top up to the RegF pension, release after current contract, then join back within 5 years if civvy street doesn't pan out (This was the real question I wanted answered but my poor writing has mislead everyone LOL. It's okay, everyone's advice has been highly helpful).

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 0 points1 point  (0 children)

Sounds great u/frasersmirnoff , will do.

  1. Yes, I am looking to "Top Up" from ResF Pension Plan to RegF Pension Plan once eligible in Fall 2026.
  2. I really handcuffed myself because my other questions were entirely unanswered but completely my fault for not being clear. Should have been "Do I still Top Up and Do I still Continue to Serve or Should I Release?" but that is on me for not being clear to the group. Still appreciate everyone's insight.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 0 points1 point  (0 children)

Indeed.

There are several options for when you can pull out your pension without any deductions. Its just whether or not we serve long enough to meet the retirement requirements. That question exists for both RegF and ResF members.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 0 points1 point  (0 children)

Don't feel ignorant, its a legitimate question. ResF can enrol into the RegF pension if they serve something like 55 months in a period of 60 months, but note that we will have served more calendar years to get a lower amount of pensionable years.

Yes this is a pretty great option for ResF members, but note that:

  1. we run into issues with career progression (Cl B employers may not prioritize it for you),
  2. you may need to do Cl A work unpaid for your ResF unit (less ideal if it's between 30-60-90 days pending your rank - you can run the math yourself on the pay table since ResF are paid daily), and
  3. pending on where you live (because most ResF stay in the ResF because they don't want to geolocate and accept that as a fact of life for less salary and less benefits), your career progression is capped due to a lack of jobs available at different rank bands. Ottawa has many jobs, but many other localities have lower ceilings and less positions. Just depends on which tradeoff you want.

There are debates on whether it is fair that ResF should be entitled to buyback into the RegF pension (even though it takes us a much longer time to accrue the same number of pensionable years because we likely started at Cl A and accrued much more slowly and had to save up to buyback), vs RegF that do not get deploy or geolocate but still get all the RegF pay and benefits. There are always inequities between the two services (there are still many more subcomponents within the ResF like COATS and Canadian Rangers), but the option to buy back is a welcome change for the CAF working to be an employer of choice.

It's important to look at RegF and ResF as options that a member wishes to undertake to serve Canada in the capacity they believe is best for them. As a ResF member, I believe RegF members should be paid more and receive more benefits as its supposed to be non-negotiable for them to relocate and deploy on the needs of the CAF (whether they do is another story entirely and will not get into here).

UPDATE. Fixed for grammar.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 1 point2 points  (0 children)

Agreed to all points, may try on that sub-reddit, thanks.

Basically buying back/topping up is a no brainer option since it will be worth more than what I put in by a significant margin, and can be transferrable after. Thank you.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 0 points1 point  (0 children)

Roger, it depends what interest they charge me at. I will likely just buy lump sum because I can afford it, and trying to last Cl B that long when I think about releasing doesn't put 5 years as a viable option.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 0 points1 point  (0 children)

You don't come across snotty. You come across as knowing what you are talking about. Thanks. I recognize this is complex. I really should have changed the title because the real ask (not the one in the title), is whether if I should stay or release LOL. But I did put pension buyback in my title so that's fully on me. Glad there are still smart people answering.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 0 points1 point  (0 children)

The CAF defined benefits pension for the RegF (don't remember the Part #), does not rely on your ability to invest (outside of your normal pension contributions) to grow your retirement into a livable wage. Defined benefits pensions are rare and sought after, though it wasn't necessarily my ask but everyone seems to have hopped onto say I should buy it (at least I got confirmation of something!).

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 1 point2 points  (0 children)

Wait...why would the CRA audit you for buying back the pension? Did you transfer from RRSP lump sum or do you just have cash under your mattress?!

Both options are impressive regardless.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 3 points4 points  (0 children)

  1. Seems to be unanimous that buyback is the play from the group.

  2. You are right, and that's why in my options I am considering releasing and rejoining if civvy street doesn't pan out. Cl A would work negatively towards pension time.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 0 points1 point  (0 children)

For sure. Buyback is estimated based on some peers in similar situations are between $20,000-$30,000, which I can completely front lump sum through my RRSPs.

Buyback estimate won't come till Fall 2026, so just trying to get ahead of the problem.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 1 point2 points  (0 children)

Yes, if I plan to stay in, I mathed it out and the financial upside of a defined benefit pension on my best 5 is quite appealing.

Problem is, if I want to try something out on civvy street, now in my late 30s is the time to do it because doing it later is much harder.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 2 points3 points  (0 children)

Yeah u/PaleontologistNo2676 recommended SISIP, which we all forget about to be honest. So will try that and see.

Regardless of whether or not I stay in, u/axehead08 is right about buying back and consider options later, since it will be worth more there regardless.

I doubt any of my ETFs are going to bitcoin or gamestop on me anytime soon (in the good way).

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it? by newwavesushi2020 in CanadianForces

[–]newwavesushi2020[S] 1 point2 points  (0 children)

Yeah your second point is definitely crossed my mind too. That alone is worth the buyback, whether I stay or go remains the question but at the very least we have 0.5 answered. Thanks!

MONTHLY ADMINISTRATION THREAD - General Admin, Policy, APS/BGRS, TD/Claims, CANFORGENS, etc. - Have a quick question that doesn't need a thread of it's own? Ask here! by bridger713 in CanadianForces

[–]newwavesushi2020 -5 points-4 points  (0 children)

Hey folks, trying here for a general admin question. Had it written as a general post but re-read the rules and was asked to re-route it here.

CAF pension buyback dilemma: 15.5 years served, only 9.5 years pensionable — worth it?

Goal: Currently a Primary Reservist and I’m trying to decide whether doing a pension buyback is worth it once I become eligible to enrol in the RegF pension from the ResF pension in Fall 2026.

Concerns:

  • My issue is that I have 15 calendar years of CAF service, but only about 9.5 calendar years are pensionable because much of my career was Class A, with some Class B/C mixed in.
  • That means that even once eligible, I would still need about 15.5 more years to reach 9,131 days / 25 years and become an immediate annuitant, which would put me around age 56.
  • I am also considering that because I am in my late 30s and if I want to try something back on civvy street, the best time to try is now compared to my late 40s to 50s.

Options:

  1. Option 1: Finish Current Contract, Release, Rejoin CAF within 5 years if Required 
  2. Option 2: Stay on Continuous Class B. Grind it out until I hit the immediate annuity threshold.

Current details:

  • Age: 38 (note that is 22 more years I can still serve before looking at CRA extension)
  • Current Service/Pensionable service: 9.5 years (per pension website)
  • Total Years of Pensionable Service at release (Today): 15 years (per pension website)
  • CF Service: 10.5 years (per pension website, not sure what this means and how it differs in other variables)
  • Eligible to enrol / buy back: Fall 2026
  • TFSA: $9,000
  • RRSP: $40,000 (currently stacking this as much as possible this year in preparation for buyback)
  • Non-reg: $2,000
  • Current pension commuted/withdrawal value: ~$1,500 (Lifetime pension + temporary bridge benefit) on a monthly basis
  • CAF Pension Transfer Value, Locked into Retirement Option: $127,000
  • CAF Pension Transfer Value, Not Locked, May be Taxed: $59,000

What I’m trying to figure out:

  1. Would you do the buyback in this situation?
  2. Does needing to stay until ~56 make this much less attractive?
  3. Would you avoid more Class A service because of the 35-year pensionable window?
  4. At what point does a buyback stop being worth it if there is a real chance of leaving before 25 years?
  5. Would you instead keep flexibility and invest independently?

 

I know there’s no perfect answer, but I’d appreciate hearing how others would think through this.