Pension Benefits - Common Questions
- Can direct deposit be used for one-time payments under the Canadian Forces Superannuation Act (CFSA)?
- How are CFSA pension benefits taxed?
- Can CFSA pension benefits be transferred to Registered Retirement Savings Plans (RRSP)?
- Can CFSA pension benefits be transferred to another employer?
- In the release digest, a release package is mentioned. When and from whom does this originate?
- When an ex-member has an option with respect to the type of CFSA pension benefit he/she is entitled to, how is this option made?
- What could cause delays in receiving CFSA pension benefits?
Can direct deposit be used for one-time payments under the Canadian Forces Superannuation Act (CFSA)?
Unfortunately, as of today, these payments are mailed to the payee or wherever else the payee has designated, direct deposit is not available.
How are CFSA pension benefits taxed?
One-time payments are taxed at source at the following rates:
- 10% if payment is less than $5,000.00
- 20% if payment is between $5,000.00 and $15,000.00
- 30% if payment is greater than $15,000.00
Residents of the province of Quebec are taxed at a combined federal and provincial rate of 19%, 22% and 22% for the same amounts.
Monthly payments are taxed at source at the rate in accordance with the applicable provincial and federal rate required for the amount paid and any tax credits the payee may have taken advantage of.
Can CFSA pension benefits be transferred to Registered Retirement Savings Plans (RRSP)?
Monthly pensions cannot be transferred to an RRSP. Lump-sum pension benefits payable under the authority of the CFSA can be transferred to an RRSP and there are no limits on these transfers. There are limits with respect to how much of a Gratuity can be transferred to an RRSP as this payment is considered a retiring allowance for tax purposes. To affect any transfer to an RRSP the form required is a TD2 or T2151.These are obtained from the member's financial institution or any office of Canada Revenue Agency (CRA). It should also be noted that these transfers are to be made to the ex-CF member's RRSP, not a spousal RRSP.
Can CFSA pension benefits be transferred to another employer?
Pension benefits can only be transferred to the RCMP or the Federal Public Service once the ex-CF member has become a contributor to one of these superannuation plans and has completed a valid election with his/her new employer.
In the release digest, a release package is mentioned. When and from whom does this originate?
This package is mailed to CFSA pensioners only, and should be received by the member 1 month prior to his/her final release date. It contains much valuable information about the member's pension such as when it should be expected, what deductions may come off this payment, what can affect the amount of this payment in the future (indexing and the Canada Pension Plan), insurance considerations, what, if any, necessary documentation is required by DCFPS to complete this payment as well as a list of telephone numbers for organizations that may help the ex-member in the future. This package can be requested in advance.
When an ex-member has an option with respect to the type of CFSA pension benefit he/she is entitled to, how is this option made?
DCFPS will inform the ex-member of the type of benefit payable and include an estimate of each benefit. When members are completing documentation with respect to the disposition of funds, for example RRSP forms, it should be noted that these are not sufficient to establish the entitlement to these funds. The option form which has originated from DCFPS denotes their choice of CFSA benefit.
What could cause delays in receiving CFSA pension benefits?
DCFPS attempts to pay all benefits within the time frames already mentioned but occasionally these benefits cannot be paid if necessary documentaion is missing. Some examples of missing documentation that can cause delays are, option of benefit forms, authorization required from outside agencies and late paperwork that can cause pay account debits.
