Plan Management - Canadian Forces Superannuation Account

The Canadian Forces Superannuation Act (CFSA) applies to all members of the Regular Force component of the Canadian Forces.

The pension fund accounts under the Canadian Forces Superannuation Act are operated in accordance with principles of funding, closely resembling those generally accepted for employee-employer pension plans. The Government as employer assumes the cost of benefits in excess of contributions received from the employee and, in addition to statutory contributions, is required to make up any deficits due to experience factors that turn out differently from the assumptions used in the most recent periodic actuarial examination of the fund accounts.

Before April 2000, member's contributions and the Government's contributions were both deposited to the Canadian Forces Superannuation Account, which forms part of the Public Accounts of Canada. The balance in the Superannuation Account is credited with interest calculated at the same rate as the interest payable on Government of Canada bonds. All contributions made before April 2000 will remain in the Superannuation Account, and will continue to be credited with interest at the Government of Canada bond rate.

As of April 2000 new contributions from both the Canadian Forces members and the Government are deposited into the Canadian Forces Pension Fund (CFPF) which was created by the 1999 reform legislation. The balance of the new Pension Fund is fully invested in the financial markets by an independent Public Sector Pension Investment Board. The results of money market investments of the contributions are expected to exceed the Fund earnings that would be generated by credits calculated on the basis of the interest rate payable on Government bonds.

The plan is a defined benefit plan whereby members who retire with more than 20 years Regular Force service or, in special circumstances, with less service, receive an immediate annuity based on two percent of the contributor's average salary over that period of six consecutive years, (if retired prior to 17 June 1999) and five consecutive years, (if retired on or after 17 June 1999), during which the salary is highest, multiplied by the years of pensionable service to a maximum of thirty-five. Since 1 January 1966, an annuity type of benefit to which a contributor is entitled is subject to an adjustment in respect to contributory service, when the annuitant reaches the age or state of health, for which a benefit under the Canada Pension Plan or the Quebec Pension Plan would be payable.

In addition, the Act provides for survivor benefits, deferred annuities, and returns of contributions or cash termination allowances to those who do not qualify for an annuity.

Annuities and annual allowances are subject to indexing to protect against the effect of inflation. The indexation benefits are paid pursuant to Part III of the CFSA.

The Special Retirement Arrangements Act was enacted for the Canadian Forces on 1 May 95. This Act was created in order to accumulate and pay the pension benefits that cannot be paid under the CFSA due to the limitations contained in the Income Tax Act. The Income Tax Act currently restricts the payment of pension benefits from a Registered Pension Plan (RPP) to a maximum of $1,722.00 per annum per year of service.

The CFSA, Defence Services Pension Continuation Act and the Supplementary Retirement Benefits Act (SRBA) are administered by the Pension and Release Benefits Section of the Director of Accounts Processing, Pay and Pension, National Defence Headquarters, Ottawa, Canada.