Department of National Defence

Department of National Defence

March 01, 2007 13:57 ET

Canada's New Government Announces Canadian Forces Pension Modernization

OTTAWA, ONTARIO--(CCNMatthews - March 1, 2007) - The Honourable Gordon O'Connor, Minister of National Defence, and General Rick Hillier, Chief of Defence Staff, are pleased to announce that Regular and Reserve members of the Canadian Forces (CF) will now benefit from a modernized pension plan, which comes into force today.

"Today's announcement is another step our new Government is taking for our proud men and women in uniform. This modernization was recommended in 1998, and now we are getting things done for the Canadian Forces," said Minister O'Connor.

"Members of the CF will benefit from the modernization of the pension system," he added. "These changes will improve the quality of life of our members, encouraging people to join the CF and those members currently enrolled to continue their service."

Changes to current pension arrangements for Regular Force members, include a shorter vesting period and a broader range of pension benefits.

The Reserve Force is the last large federal public sector workforce without a pension plan. It is estimated that in excess of 21,000 Reserve Force members will now be entitled to coverage under the Canadian Forces Superannuation Act.

Implementation of the new pension arrangements will give all CF members pension coverage comparable to the pension plans provided to other federal public sector employees and the coverage will still take into account the exigencies of military service.

For example, the new pension arrangements include an immediate pension payable after twenty-five years of service in the CF, and also provide an expanded opportunity for the portability of members' earned pension entitlements. This means that pension credits will not be adversely affected by breaks in military service and CF members will have greater financial flexibility and security in planning for the future.

"These important changes to the CF pension plan will help ensure that current and future members of our valued CF family are well cared for," said General Hillier, "and that the CF continues to be an employer of choice among Canadians."

Background Information: Pension Modernization Timeline

- Public sector pension plans are kept under constant review to ensure they continue to meet members' and employers' needs and that the plans are competitive with those offered by other Canadian employers. In a sense "pension reform" is a continual process.

- However 1999 was a particularly important year for public sector pension reform: Parliament gave regulation-making authority to introduce a number of "flexibilities" into Canadian Forces (CF) pension arrangements, including establishing a pension plan for the Reserve Force.

- Following on the 1999 legislation, CF/DND hired consultants and engaged in wide-ranging consultations on what should be done under the new powers. The conclusion was that the 1999 legislation did not go far enough.

- Accordingly, in 2003 another set of amendments to the Canadian Forces Superannuation Act (CFSA) was approved by Parliament. These amendments brought the Regular Force pension arrangements in line with the plans of other large Canadian employers, especially the plan provided to federal public servants.

- They also allowed for the inclusion of Reserve Force members in the Regular Force Plan. CF members, especially Reserve Force members, were extensively consulted throughout the process.

- In June 2005, Treasury Board ministers gave approval in principle to the main elements of the Reserve Force Plan, but much work needed to be done to implement the 2003 changes including policy development, regulation drafting and development of administrative systems and procedures.

- Seven years later, on December 14, 2006, Treasury Board ministers approved the first of the modernization regulations: beginning in January 2007, all reserve force employment will be subject to the CPP.

- Treasury Board ministers approved in February 07, the regulations that will support the modernization of current pension arrangements and establish the Reserve Force Pension Plan effective 1 Mar 07.

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