Wage increases for most CF members will be 1.75% for 2011-2012, 1.50% for 2012-2013 and two percent for 2013-2014. Included in the pay increases are adjustments of 0.25% for FY 2011-2012 and 0.50% for FY 2013-2014 in consideration of the changes to the severance benefit.
In addition, the CF environmental allowances (for example: Paratroop, Rescue Specialist, Aircrew, Land Duty, Sea Duty) and special allowances (Submarine Crewing, Special Operations Assaulter, Stress Allowance for Test Participants, and Special Allowance Canadian Forces Station Alert) are increased by 1.50% each year for FY 2011-2012, FY 2012-2013 and FY 2013-2014.
At this time, there has been no decision made regarding wage increases applicable to General Officers, Colonels, and Legal Officers in the rank of Brigadier General, Colonel and Lieutenant-Colonel of the Legal Branch for FY 2013-2014.
For Legal Officers in the rank of Captain and Major, pay increases are subject to a separate process and will be announced at a later date.
The revised rates of pay and allowances are available on the DGCB website.
Severance benefits for the purpose of resignation and retirement are infrequent amongst other employers.
In addition, the ending of the severance entitlement for retirement and resignation will provide financial predictability for the Government in these times of fiscal restraint.
In this 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 CF is benchmarked to that of public servants, these changes now also apply to CF members.
CF members will cease to accrue eligible years of service for a severance benefit paid upon retirement and resignation.
The accumulation ceases:
CF members will have an opportunity to receive a one-time payment in lieu of their accumulated severance benefit.
The calculation of a severance benefit will be based on a CF member's years of eligible service, including prorated partial years, to a lifetime maximum of 30 years.
Under the new provisions, members will be able to receive a full or partial payment of their severance benefits by indicating that this is their choice during the election period mid-December 2012 to mid-March 2013, rather than waiting to receive this payment at release. This can give members greater flexibility in financial planning prior to retirement.
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.
Under previous severance benefit provisions, benefits were calculated based on full years of service. Under new provisions, a severance benefit will include prorated partial years of eligible service to the lifetime maximum of 30 years. For example, a member with 23 years and 50 days of eligible service would have received a benefit for 23 years only under the former provisions. Under the new severance pay provisions, the member would receive a payment for the total period.
In addition, eligible Primary Reserve Force service will be calculated based on elapsed time (i.e. continuous enrolment) rather than paid service.
The accumulation of years of eligible service continues for a member who is released for medical reasons (release Items 3(a) and 3(b)), or involuntarily (release Items 5(b), 5(d), 5(e), or 5(c) where the member has not reached retirement age under QR and O Chapter 15 but has completed the period of obligatory service because of a change in classification or trade specifications or in the establishment requirements of the CF). For these release items, and for death, the severance benefit will be calculated at seven days per year of eligible service and paid at the rate of pay for the substantive rank at release to a 30 year lifetime maximum.
Under the new provisions, all severance benefits will be calculated as seven (7) days of pay for every year of eligible service, including partial years.
If a member releases under certain Items to the table to QR&O article 15.01, such as Item 3(a) or Item 3(b), they will continue to accrue eligible years of service until their date of release to a lifetime maximum of 30 years.
If a member received a payment in lieu (PiL) of a severance benefit prior to their release, their final benefit will be reduced by this amount.
Eligible service excludes years of service for the following:
It is the most recent date of enrolment in the CF. A transfer from one CF component or sub-component to another is not considered, for the purposes of severance pay, to be a release and re-enrolment in the CF unless there was a break in service.
CFSP and the PiL of CFSP are based on eligible service, which is the number or years of service after the member's most recent date of enrolment in the CF. Therefore, if a CF member released and re-enrolled in the CF, regardless of whether the member bought back that period of service for pension purposes, the period would not count as eligible service.
Yes. If the period of YTEP service is part of the member's continuous period of service then the time is considered to be eligible service.
Should a CF member elect to receive a severance benefit upon release, then the monthly rate of pay and pay increment for the member's substantive rank in effect on the date of release or transfer, from the Regular Force or Primary Reserve Force, will be used to calculate the final severance benefit.
A member who is released under Items 3(a) or 3(b) will continue to accrue eligible years of service to a lifetime maximum of 30 years. The eligible years of service used to calculate the member's payment in lieu (PiL) of a severance benefit will not be included in the final calculation of the severance benefit payable upon release.
Current CFSP processing timelines can be requested via email to: SocialPrograms-Programmessociaux@forces.gc.ca
A severance benefit paid upon release from the CF is considered a retiring allowance and the income tax rules for retiring allowances will apply when a severance benefit is paid on release or transfer from the Regular Force or Primary Reserve Force.
A severance benefit paid upon release from the CF is considered a retiring allowance and income tax rules in place for retiring allowances will apply.
If a CF member has unused RRSP room, they can request for a reduction of income tax at source. Members should consult the Canada Revenue Agency (CRA) for further details. Quebec residents should consult Ministère du Revenu du Quebec (MRQ). Members may also wish to contact their Release Pay Office for information.
Depending on individual financial circumstances, members may wish to increase the tax withheld at source. If so, members should notify their pay office.
A member may only receive a severance benefit based on a lifetime maximum of 30 years of eligible service. All previous years of eligible service used in the calculation of a prior severance benefit will be excluded including any paid or granted benefit calculated under:
Members have three options regarding the payment of a severance benefit under the revised policy:
All eligible members should have received an estimate package in the mail which consists of an estimate of their years of eligible service and an information letter that explains the process.
A member may request a duplicate estimate from their Unit Orderly Room. As there is no extension to the election period for any reason, it is extremely important that members who want at least part of their benefit paid out before release to get their estimate.
If the member does not agree with their estimate of years of eligible service, members should contact their Unit Orderly Room. Members may be asked to provide documentation supporting previous service. Questions concerning the estimate form should be directed to the member's Unit Orderly Room. It is important to act promptly if there is a discrepancy, as the election period will not be extended for any reason.
Yes. CF members can request a reprint of their estimates from their Base/Unit Orderly Room. For estimate reprints in CCPS or RPSR, Base/Unit Orderly Room personnel may send an email to firstname.lastname@example.org with Estimate Reprint Request in the subject line.
No. All estimates were based on the information in the pay systems for the Regular Force (CCPS) and the Reserve Force (RPSR) and were produced in the official language as identified in the pay system for each member.
CF members may request that their preferred official language be amended in the pay system. This change would only apply to the production of future documents (e.g. pay statements). The reprint functionality in the pay system would reprint estimates exactly as they were mailed to the member.
These templates may also be requested via email to: SocialPrograms-Programmessociaux@forces.gc.ca
No. CF members have received an estimate based on information that is contained in the pay system for the Regular Force (CCPS) or for the Reserve Force (RPSR). CF members who received an estimate that did not reflect all their eligible CF service and who wish to receive a PiL for all or part of their severance pay are required to contact their Base or Unit Orderly Room to verify all of their eligible service.
All estimates were based on the information contained in the pay systems for the Regular Force (CCPS) and for the Reserve Force (RPSR) as at 29 Feb 2012. Consequently, members who have released since that date would still have received an estimate. However, these persons will not be able to make an election during the election period and will receive the CFSP to which they were entitled as part of the normal release process. (See question # 13)
No. CF members are encouraged to seek financial advice and counselling from a financial advisor.
SISIP FS offers a wide range of financial products and services to CF members.
The election period will be between 14 December 2012 and 13 March 2013. The member will have 90 days in which to elect whether to receive all or part of their accumulated severance benefit prior to their release from the CF.
The election period will not be extended, and no elections will be processed if received after the end of the election period.
An election for a payment in lieu (PiL) of a severance benefit is a one-time opportunity. Once made, an election is irrevocable.
If the deadline is missed or if a member chooses not to make an election, it will be deemed that a member has chosen to receive their severance benefit payment when the member ceases to serve in the Regular Force or in the Primary Reserve.
There are no special arrangements for a person who is on LWOP for maternity or parental reasons. It is the responsibility of each eligible CF member to ensure election deadlines are met. The necessary information will be mailed to their T4 address, as it will be for all members.
If the payment in lieu (PiL) election deadline is missed, it will be deemed that a member has chosen to receive their severance benefit payment when the member ceases to serve in the Regular Force or in the Primary Reserve.
The following information was supplied by Service Canada. Questions and requests for more information/clarification related to EI benefits and the PiL of CFSP should be directed to Service Canada. Residents of Québec should consult directly with Emploi et solidarité sociale Québec concerning the impact of the PiL on Québec Parental Insurance Plan (QPIP).
With respect to the Payment in Lieu (PiL) and the impact on EI benefits, the following applies:
Accordingly, CF members on LWOP MATA/PATA who are in receipt of EI benefits and who make an election, during the election period (from 14 Dec 12 to 13 Mar 13), to receive a PiL for all or part of their severance pay entitlements will have their EI benefits reduced or eliminated for the week in which the member elected to receive a PiL of CFSP. These CF members are required to inform Service Canada of their elections.
The election form is included in CBI 204.40 which may be accessed on the:
CF members who make a full and/or partial election will be required to submit a completed election form by mail, hand, email or facsimile to their Unit Orderly Room during the election period.
All election forms that were signed and/or received by the department prior to the start of the election period on 14 Dec 2012 have been returned to the members.
The completed election form must be received no later than the last moment on 28 March 2013. Additionally, election forms submitted prior to the election period will not be accepted.
The member's Unit Orderly Room will perform the initial verification of the election form as well as the initial calculation of the payment in lieu (PiL) of Canadian Forces Severance Pay (CFSP).
Once the election form is verified, the Unit Orderly Room will process the payment if all of the following conditions apply:
Concerns or issues for these specific situations should be discussed with the members' Unit Orderly Room.
All other elections will be the responsibility of a special team called the DMCA 4 PIL Team, which will be supervised by DMCA 4. Located in Ottawa, the main tasks of the PiL team, commencing 15 Oct 2012, will be to:
No. In order to meet processing requirements, status reports cannot be provided to members regarding their files.
The payment in lieu (PiL) of a severance benefit will be based on the CF member's substantive rank and pay increment for the following effective dates:
In accordance with the policy provisions under CBI 204.40, the amount of a PiL of all or part of CFSP is calculated by the formula:
(MP÷ 30) x 7 x Y
Example: PO1 Smith received an estimate of eligible years of service for 28 years and 300 days.
PiL of CFSP will be processed on an ongoing basis commencing 1 Apr 2013 and once all information is validated and/or any necessary audits are performed. Each member's situation will be different. CF members who are considering making an election for a PiL of CFSP should anticipate the possibility of lengthy processing times given anticipated volumes.
No. The calculation of CFSP is based on years of eligible service which consists of the number of years of service after a member's most recent date of enrolment. As this calculation is based on the total number of years of service, it is not possible to separate the Regular Force service from Reserve Force service when a member makes their election. Additionally, for CF members with mixed service who elect to receive a PiL, there is a requirement for the files to be audited in order to ensure that all eligible service is calculated correctly.
For CF members, the years of eligible service toward a severance benefit ceased to accrue effective either 1 Oct 2011 or 1 Mar 2012. CF members who elect to receive a part of their payment in lieu (PiL) now, will receive the other portion when they release from the CF, if eligible.
The accumulation of years of eligible service continues for a member who is released for medical reasons (release Items 3(a) and 3(b)), or involuntarily (release Items 5(b), 5(d), 5(e), or 5(c) where the member has not reached retirement age under QR and O Chapter 15 but has completed the period of obligatory service because of a change in classification or trade specifications or in the establishment requirements of the CF).
If a member elected to receive a payment in lieu (PiL) of Canadian Forces Severance Pay (CFSP) and is then released under one of these release items or by reason of death, the eligible years of service used to calculate the member's payment in lieu (PiL) will not be included in the calculation of the severance benefit payable upon release.
The severance benefit payable upon release will be calculated as seven (7) days per year of eligible service (less any years of eligible service used to calculate the payment in lieu (PiL) of Canadian Forces Severance Pay (CFSP)) and paid at the rate of pay for the members' substantive rank at release, to a 30 year lifetime maximum.
Once a member has elected to receive a PiL of CFSP, this decision is irrevocable and the election cannot be withdrawn. For those who decide to leave the CF after they have submitted their PiL form and do not yet have payment, their file will be expedited as part of their release process.
The CFSP policy, including the provisions pertaining to the PiL of CFSP, is governed by CBI 204.40. CBI 204.40 provides for the entitlement, eligibility, calculation, and payment provisions of the CFSP and the PiL of CFSP to eligible CF members. These provisions do not regulate or direct the division of severance pay benefits.
No. Payment cannot be deferred to another taxation year.
Yes. The payment in lieu (PiL) of Canadian Forces Severance Pay (CFSP) and/or the final severance benefit paid upon release will be adjusted for any applicable retroactive pay increases.
Employment Insurance (EI), Canada Pension Plan (CPP)/Quebec Pension Plan (QPP), and Quebec Parental Insurance Plan (QPIP) may be deducted from the payment in lieu (PiL) of Canadian Forces Severance Pay (CFSP) if the maximum annual contribution limit has not been reached at the time the payment is made. In addition, the payment in lieu (PiL) is subject to income tax.
Any contribution to a TFSA must be made using net income. Members are responsible for making the arrangements to deposit the payment in lieu (PiL) of Canadian Forces Severance Pay (CFSP) into their TFSA. A financial advisor or financial institution will be able to assist with options and make the necessary arrangements.
SISIP FS offers a wide range of financial products and services to CF members.
There are no special provisions to transfer the payment in lieu (PiL) to a member's buy-back of pensionable service.
The payment in lieu (PiL) of a severance benefit is considered employment income. As such, the one time payment will be subject to Income Tax and will be reported as income on the T4 (Relevé 1 in Quebec).
If a CF member has unused RRSP room, they can request for a reduction of Income Tax at source. Please consult the Canada Revenue Agency (CRA) for further details; residents of Quebec should consult Revenu Quebec (MRQ).
The PiL of CFSP is considered employment income by CRA. As such, a member who receives any PiL of CFSP while on operations will be receiving/increasing their employment income.
The rules for the computation of income tax as they apply to CF members on operations continue to be applicable in accordance with the Income Tax Act (ITA) at: http://laws-lois.justice.gc.ca/eng/acts/I-3.3/index.html, Division C Computation of Taxable Income, 110. (1) Deductions for payments (f) (v).
For individual taxation matters, CF members should contact CRA directly.
The Canada Revenue Agency (CRA) and the Ministère du Revenu du Quebec has allowed the employer to reduce the required income tax on the full or partial amount paid to affected CF members as a payment in lieu (PiL) of severance benefit.
Should the CF member intend to contribute $10,000 or less to an RRSP, a completed Payment in lieu (PiL) of Canadian Forces Severance Pay (CFSP) - Tax Waiver $10,000 or less form must be included with their election form. Income tax will be withheld on any remaining amount not indicated on the Tax Waiver form.
The Tax Waiver forms (for Quebec and non-Quebec residents) are in the Canadian Forces Severance Pay (CFSP) Administrative Directive, available on the:
CRA approval is conditional on the following:
This approval applies to the least of the following three amounts:
If the portion of the payment in lieu (PiL) of a severance benefit to be contributed to an RRSP will be more than $10,000 and the member's RRSP deduction limit is over $10,000, the member must complete, for the full amount up to their deduction limit, the CRA form T1213 Request to Reduce Tax Deduction at Source for Years and the MRQ form TP-1016-V (for members living in Quebec).
The completed form, which must be sent directly to the appropriate CRA Tax Services Office (TSO) and MRQ office (Quebec residents), will be reviewed and a Letter of Authority will be issued directly to the CF member if the eligibility criteria have been met. Processing of the T1213 or the TP-1016-V takes four to six weeks and the Letter of Authority will be issued only for a specific tax year. In order to avoid having to re-submit a T1213 and/or a TP-1016-V, members are reminded to indicate, at the top of each form, the year that payment is expected. If there is a balance owing for previous income taxes or if an income tax return is outstanding, the CRA will not usually issue a Letter of Authority. The Letter of Authority must accompany the member's election form to ensure the appropriate amount of income tax is withheld when the payment is made.
If the Letter of Authority is not received prior to the deadline for making an election, a copy of the T1213 or TP-1016-V should be attached to the CFSP Election form to hold payment until the letter from CRA and/or MRQ is received.
CF members completing a T1213 should provide the following information:
Employer: Department of National Defence
Contact Person: Pay Officer
Telephone/Fax Number: Local Pay Office
Address: Unit Address
Under the section Request to reduce tax on CF members select lump sum and provide the PiL amount and indicate Payment in Lieu of Canadian Forces Severance Pay in the spaces provided.
CF members may attach, to the T1213, a copy of their estimate of eligible service.
PiL of CFSP files for Reserve Force members, members with combined Regular and Reserve Force service, files for members with previous Regular Force service (released and re-enrolled into the Regular Force) or elections of more than 50% of entitlement will require verification of service before payments can be made. It is anticipated that the volume of PiL of CFSP elections will be high.
If payments are made in 2014, then a new CRA Form T1213 will need to be submitted to CRA.
Members may complete Form T1213 for any deductions other than RRSPs and send it along with the supporting documents to a CRA Tax Services Office (TSO). The TSO will review the request and, if the member has met the criteria, the TSO will send the member a Letter of Authority. The member will be required to provide a copy of the Letter of Authority with their election form. Examples of situations where a tax reduction may be approved can be found at: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/ncmtx/rdcng/thrty-eng.html.
No. Whether requesting a reduction of income tax withheld on the payment in lieu (PiL) of severance benefit for more than $10,000 or less than $10,000, the member is responsible for depositing the contributions directly to an RRSP account. Director Military Pay and Allowance Processing (DMPAP) or the Unit Orderly Room will not make deposits into the RRSP accounts on behalf of members.
No. This rule does not apply to the payment in lieu (PiL) of Canadian Forces Severance Pay (CFSP). Members can only transfer the eligible part of their retiring allowance to their own RPP or RRSP.
For more information on transferring the eligible part of a retiring allowance, please contact CRA or view the webpage at: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/trnsfrrng/lgbl-eng.html.
Yes. A member may contribute to an RRSP for their spouse or common-law partner as long as the member has sufficient contribution room in their RRSP.
A member may have to pay a tax on unused contributions that exceed their RRSP deduction limit by more than $2,000. For more information, members should discuss their particular circumstances directly with CRA.
There are several ways to determine an individual's RRSP deduction limit:
To date, over 100,000 Regular and Reserve Force members are affected by the cessation of severance accumulation for resignation and retirement.
The payment in lieu (PiL) of a Canadian Forces Severance Pay (CFSP) benefit is calculated at the rate of one week of pay for each year of eligible service up to a lifetime maximum of 30 years.
The largest potential payment in lieu (PiL) of a severance benefit would be at the maximum level paid to officers at the highest ranks.
The cessation of accumulation of severance benefits brought public service compensation more in line with the private sector, where severance benefits for voluntary separation are usually not offered. The compensation package for CF members is benchmarked to that of the public service.
Supplemental information may also be available by contacting the DMCA 4 PiL Team at: email@example.com.
For information on Canadian Forces Severance Pay (CFSP) administration, the member may contact their Release Pay Office or DMCA 4.
For information on the payment in lieu (PiL) of Canadian Forces Severance Pay (CFSP), members may email the DMCA 4 PiL Team at:
+ DMCA 4 PIL TEAM.
For information regarding income tax deductions, RRSP contributions, T1213 and Letters of Authority contact:
For information regarding income tax deductions, RRSP contributions and TP-1016-V for residents of Quebec, contact: