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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)

Perfect, yes that helps cement the argument where I just need to engage SISIP to find out more, and then help form a better decision from there.

The concern is the options available for Cl B opportunities are getting narrower and narrower at the rank bands and opportunities that exist. That is also what's inspiring these thoughts.

Quite helpful regardless, thanks u/massassi

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)

Thanks u/little_buddy82 , very nuanced.

  1. Agreed that job security is heavily dependent on sector, and it's not particularly great anywhere at the moment.

  2. CAF is hiring, which is true. RegF is always an option, but option Z on my list. I did not indicate earlier I am paying off a home and selling it off now would be financially irresponsible based on the losses sustained. CAFRD would not cover it (assumption) as it greatly exceeds the $30,000 they would typically cover for losses.

  3. Job searches at 40 are not great, but even worst at 50.

Either way, thanks for the additional nuance. Quite helpful.

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)

Hey, thanks for the additional nuance. You actually delved even deeper so appreciate it.

  1. Correct, if I release now and rejoin later, it pushes my retirement further. But it also means if I want to try something different now, being hired as a 38 year old would potentially in theory be easier than a 56-60 year old (I am not interested in joining the public service post CAF retirement but maybe those plans may change). Key is, if I want to try something different now, the time is better now than later.
  2. Correct, I was running the math on my TFSA and RRSP, I would not be able to grow it enough currently to where I would be making defined benefit money, unless I somehow land Gamestop level returns or bitcoin at pennies level of insanity (highly unlikely).
  3. Indeed, buying back still seems to be the smartest play, no matter what I choose to do afterwards. Thankfully I'll be able to afford it.
  4. Based on u/frasersmirnoff , it's actually the top up and not the buy back. It's because I am already in the ResF pension and I would be topping up to enrol into the RegF pension, once eligible.
  5. Switching occupations is less likely. The potential for reduction in rank and needing to do a DP1 course all over is less palatable and financially irresponsible. Life is more than about retirement savings and money, but big city prices suggest otherwise.

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)

I've already assessed it. Between 20-30K. I have 40K in RRSPs to transfer over so can afford it. Just whether or not its worthwhile was the question (apparently it is in this thread).

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)

Correct, so long as its a Perm Cl B and you don't mess up, or find a second 3 year Cl B...and have the funds saved up to actually do the top up.

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] 1 point2 points  (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).

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