Pensions

I joined the Royal Canadian Air Force (RCAF) in November of 1965.  The Canada Pension Plan was brought into effect 1 January 1966.  Consequently, I was never involved in any briefing for the new CPP, I was paying into both pension plans almost from the star.

My understanding, and this is the understanding of most everyone I knew, of the military pension, was that for each year of service you would accummulate a portion of your annual salary for the average of your best six years of pay.

Pretty straight forward.

Now, for a few minor complications.

1. If you took a release within the first 10 years, you would not receive a pension, but instead a return of contributions.
2. If you serve 25 years or longer you get the 1/50th per year for the number of years served.
3. if you take your release in less than 25 years, then you will be penalized 5% for each year less than the prescribed 25 years.

Still pretty clear.  For example, in my case, I took my release with 24 years service. Therefore, I accummulated 24/50ths or 48% of my best 6 pay years. Since I served 1 year less than the required 25, I incurred a 5% penalty. Therefore, my pension is 43% of the annual average of my best 6 years of pay.

There's one other thing that comes into play, and that's what's called "Indexing". What this means is, I will continue to draw my pension at the established amount, without any increases including cost of living, until a combination of age and service time equals the magic number of 85. At this time, my pension will be indexed, increasing by the amount of the "cost of living" for the period since my retirement.

So, that's the general understanding of the military pension and nothing was ever said about a reduction at age 65.

Now, as for the CPP, I have paid into it at the maximum rate for my entire military carreer. Furthermore, I have been employed full time since taking my release from the military and have contributed to CPP at the maximum rate for the full time (and I expect to be employed at least to age sixety five  and continueing to contribute the maximum to CPP.

As you can see, a military member contributes to two pension plans. So how can they possibly take one away?

Another thing: military personnel contribute the maximum premium to EI and are not allowed to receive bennefits.  It's like paying life insurance premiums know that the only benneficiary is the insurance company, who get to keep all of the money you paid in premiums!

NICE!