Make your choice before March 15, 2013

Larger image Linda Thibodeau, a supervisor for the Personnel Support Services at 5 Area Support Group at the Release Centre for the Montreal and Saint-Jean garrisons. (Photo: Servir)

Daniel Rancourt – Servir

Since CANFORGEN 062/12 was published, the Canadian Forces Severance Pay (CFSP) issue has aroused everyone’s interest. Linda Thibodeau, a supervisor at the Release Centre for the Montreal and Saint‑Jean garrisons, has outlined the key points.

The two information sessions given recently by Ms. Thibodeau were presented to a full house in the auditoriums at both the Saint‑Jean and Montreal garrisons. “In Montreal, there was not even enough room,” she clarified. “We are expecting the same large numbers at the presentation in Valcartier on May 31. We would like to encourage people to be proactive and not to wait until fall or the last minute. There are military members who will be deployed in the coming months. They must take the time to review their situation, think about it, and discuss it with their spouse in order to make the best decision.”

The Canadian Forces Severance Pay (CFSP) is replacing the Severance Pay and the Reserve Force Retirement Gratuity, which have both been cancelled. Therefore, between the end of August and the end of September 2012, all members of the Canadian Forces enlisted before March 1, 2012, whether they are in the Regular or Reserve Force (class A, B and C), will receive an information package in the mail from Ottawa.

The package will contain an estimate of the service time in the Canadian Forces (in years and days) eligible for the CFSP. “Each military member will be responsible for verifying the estimate and for making sure that all the information in the documents is accurate and up to date,” stated Ms. Thibodeau.

As of September 10, teams will be in place (in Montreal, Saint‑Jean and Valcartier) to help military members who would like to make corrections to the information in the estimate. However, the military member must be the one to provide the source documents so that the corrections can be made.

Three options, one date

Once the information has been verified, approved and corrected, military members must choose from among three options for the CFSP payment.

- The first option consists of receiving a complete payment in lieu of severance pay before release. If a military member chooses that option, and a few years later he must be released from the CF for a “non‑voluntary” reason, he will receive the remaining portion of the CFSP upon release.

- The second option allows military members to receive a portion of the CFSP before release and the rest upon release. The CFSP that they will receive upon release will thus be calculated on the basis of the rate of pay that corresponds to their substantive rank upon release.

- The third option is to collect all the CFSP upon release from the CF.

Military members must make their choice and then sign and return the document between December 15, 2012, and March 15, 2013.

Taxable income

It should be noted that regardless of the option selected, the payment received in lieu of the CFSP is considered income and is thus taxable. For military members who choose option 1 or 2, they should know the status of their contribution to a Registered Retirement Savings Plan (RRSP) in order to potentially benefit from reduced tax deductions at source. They are advised to consult the Canada Revenue Agency and Revenu Québec about the matter.

“We recommend that military members consult their financial advisor or planner in order to have a broad overview of their financial situation and make the choice that suits them best,” said Ms. Thibodeau. “Obviously, the employees at the SISIP financial services are well suited to help military members because they understand the military members’ situation. Since they are employees, they are neutral and will not earn commissions by suggesting one solution over another.”

Other considerations: the maximum number of years for which severance pay is payable is no more than 30. The rate of pay that will determine the payment amount corresponds to the substantive rank, including the increases on the effective date.

In addition, please note that for military members who choose option 1 or 2, the payment may take up to one year, depending on the date when the military members indicate their choice.

The authorities in Ottawa expect to receive approximately 70,000 applications for CFSP options. “All applications will be verified by Ottawa,” added Linda Thibodeau. “With the budget restrictions and reductions in staff, it may take some time. Lastly, it is important to specify that the decision will be final and that there will be no extension of the time limit. It is the responsibility of military members to provide the source documents and to send their choice of option to Ottawa before March 15, 2013,” said Ms. Thibodeau.

For military members who have not indicated their choice by that date, the authorities will consider option 3 as their choice.

 

Ms. Thibodeau’s presentation is available in French and in English on the intranet at: http://armyonline.kingston.mil.ca/SQFT/143000440002737/PRESENTATION_IDFC.PPT#257.

FAQs will soon be available under the heading What’s New on the intranet (DIN/DWAN).

For further information, please write to: +crhm libérations@5gss svc sn pers@st-jean.

For pension calculation estimate questions, please write to: +crhm calcul pens@5 gss svc sn pers@st-jean.

 

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