Pay Increases and Changes to Severance Benefits for Canadian Armed Forces Personnel – Backgrounder - March 29, 2012

 

Pay Increases

Economic Pay Increases (Pay Raise) and Adjustment for Cessation of Accumulation of Severance Benefits

Economic pay increases for the Canadian Armed Forces (CAF) are intended to mirror pay increases awarded to members of the Public Service. Similarly, adjustments to pay to accommodate the cessation of accumulation of severance benefits will be reflected in the CAF pay levels.

Approved wage increases for Non-commissioned members, General Service Officers, Pilots in the rank of Lieutenant-Colonel and below, and medical and dental officers are 1.75% for 2011-2012, 1.50% for 2012-2013, and 2.00% for 2013-2014. Included in the pay increases are adjustments of 0.25% for fiscal year (FY) 2011-2012 and 0.50% for FY 2013-2014 in consideration of the changes to the severance benefit.

Approved wage increases for General Officers, Colonels, and Legal Officers in the rank of Brigadier-General, Colonel, and Lieutenant-Colonel of the Legal Branch are 1.75% for 2011-2012, and 1.50% for 2012-2013. Included in the pay increases is an adjustment of 0.25% for FY 2011-2012 in consideration of the changes to the severance benefit. There has been no decision made regarding a pay increase for FY 2013-2014.

For Legal Officers in the rank of Captain and Major, pay increases are determined separately and will be announced at a later date.

Increase in Allowances

Allowances for CAF personnel will also be increased. Allowances provide financial compensation to CAF members, whose military duties involve sporadic or continuous exposure to adverse environmental conditions, including hazards which other members do not usually experience. The allowances are intended to serve as an incentive to attract and keep personnel properly motivated under such conditions.

The CAF environmental allowances (Paratroop; Rescue Specialist; Aircrew; Land Duty; Sea Duty; Diving; Hypobaric Chamber; Submarine; Exceptional Hazard; Special Operations; and Survey), and special allowances (Special Operations Assaulter; Submarine Crewing; Stress Allowance for Test Participants; and the Special Allowance Canadian Forces Station Alert) are increased by 1.50% each year for FY 2011-2012, FY 2012-2013, and FY 2013-2014.

Changes to Severance Benefits 

Severance benefits for voluntary departures are typically not offered by private sector employers. In addition, ending the accrual of severance benefits for retirement and resignation will help provide financial predictability for the Government in times of fiscal restraint.

In this current context, the Government signed collective agreements with bargaining units representing over 95,000 public servants that included the elimination of severance for voluntary departures. 

Since compensation for the CAF is benchmarked to that of public servants, these changes now also apply to CAF members.

The changes to the severance benefit will be at no additional cost to Canadians. These changes respond to the need for both fiscal responsibility and financial predictability.

Under previous severance benefit provisions, all members voluntarily releasing (release Item 4(c)) with less than ten years of eligible service received no benefit. Regular Force members releasing voluntarily with ten or more years of eligible service received a benefit calculated at 3.5 days of pay per year. A Reserve Force Retirement Gratuity (RFRG) benefit for eligible Reserve Force members releasing voluntarily with ten to twenty years of eligible service was calculated at 3.5 days of pay per year; with twenty or more years of eligible service, it was calculated at 7 days of pay per year.

Under the new provisions, all severance benefits will be calculated at 7 days of pay for every year of eligible service, including partial years. The requirement to have a certain number of years before being eligible for severance benefits when voluntarily releasing has been eliminated. In addition, eligible Reserve Force service will be calculated based on elapsed time rather than paid service.

 

For CAF members, the accumulation of years of eligible service ceases: 

  • Effective October 1, 2011: for General Officers, Colonel, and Legal officers in the rank of Lieutenant-Colonel and above
  • Effective the date of promotion: for members promoted to the substantive rank of Colonel and above, and to legal officers promoted to the substantive rank of Lieutenant-Colonel after September 30, 2011 and before March 1, 2012
  • Effective March 1, 2012: for all other CAF officers and Non-commissioned members (excluding military judges)
  • Exception: the accumulation of years of eligible service continues for a member who is released for medical reasons (release Items 3(a) and 3(b)), and involuntarily releases (release Items 5(b), 5(d), 5(e), or 5(c) where the member has not reached retirement age under QR&O Chapter 15 but has completed the period of obligatory service because of a change in classification, trade specifications, or in the establishment requirements of the CAF), or who is released by reason of death.

CAF members will have three options regarding the payment of a severance benefit:

a. Elect to be paid a full severance benefit prior to release;

b. Elect to be paid part of a severance benefit prior to release and to receive any remaining severance benefit at release; or,

c. Receive all severance benefits at release. 

Severance benefits are earned at the rate of one week per year of eligible service, payable to a maximum of 30 years in a member’s lifetime.

All members will be provided with an estimate of their years of eligible service in an information package to be mailed by early fall. The election period will be between mid-December 2012 to mid-March 2013 inclusive. This election period will not be extended. Members who do not elect during this period will receive all severance benefits at release.