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CFSA/CPP Bridging Bonus

A common issue raised by a

large number of our members con-

cerns the termination, at age 65, of

the bonus which was intended to

bridge the gap from when the CAF

member retired until he/she became

eligible to receive Canada Pension

Plan (CPP) benefits. The following

is an update of an article titled “Claw

Backs” which appeared in this

newsletter eight years ago.

For the past half century, retire-

ment experts have preached that, on

retirement, one needs about 70% of

his/her pre-retirement income to

maintain one’s life style. CAF annu-

itants’ CFSA and combined

CFSA/CPP benefits have been and

continue to be based on providing

this level of income (35 years @ 2%

of best 5 or 6 years) on retirement.

When the Canada Pension Plan

(CPP) was introduced in 1966 it was

mandatory for all Canadian employ-

ees to contribute to the plan. CF per-

sonnel were not exempt and a small

percentage of our CFSA premium

was diverted from our CFSAaccount

to our CPP account however the total

combined premiums (about 7% of

salary) and the combined benefit

were essentially unchanged. But, be-

cause CAF members (and many

other federal and provincial employ-

ees) would retire before reaching 65

years of age when they would be-

come eligible for their CPP benefit,

a ‘bridging’ bonus was established to

maintain the equivalent of a ‘full’

CFSA benefit until the retired mem-

ber became eligible to receive the

CPP benefit on his/her 65th birthday.

CF members have not contributed to

this bonus which is in excess of their

earned CFSA benefit but approxi-

mately equal to the earned CPP ben-

efit. Similar ‘bridging’ arrangements

were established for most other fed-

eral and provincial public sector, and

some private sector, pensioners.

In 1987 CPP regulations were

amended to permit anyone who was

“substantially retired” to draw

his/her CPP retirement benefit at any

time after reaching his/her 60th birth-

day (albeit with a 0.5% penalty for

each month short of the 65th birth-

day, a penalty which recently was in-

creased). However the pension acts

which govern federal and provincial

employee pensions were not

amended thus pensioners, including

CAF annuitants, continue to receive

their bridging bonus until his/her

65th birthday – regardless of when

CPP retirement benefits actually


Since 1966, all CAF members on

retirement from the Forces have been

notified that the bridging bonus will

terminate on their 65th birthday, and

each member is provided a one-page

document (DPS-4 Form B-2 ) which

shows how the individual’s CFSA

benefit has been calculated and the

amount by which it will be reduced

at age 65 when the bridging bonus


When a CAF annuitant over the

age of 65 passes away, the amount of

the terminated bridging bonus is in-

cluded when calculating the sur-

vivor’s 50% benefit. This could

change when the current government

increases the survivor benefit to 70%

as promised during last year’s elec-

tion campaign.

We would like to take this opportunity to

welcome over 1,600 new members who have

joined the AFP/AAC since our last newslet-


Of the new members, 33% reside in On-

tario, 19% are from Quebec, 16% are from

British Columbia and 9% are from Nova

Scotia. We have new members in every

province and territory in Canada, with the ex-

ception of Nunavut. We also have new mem-

bers residing in the US and around the world.

The quickest and most cost-effective

way to keep in touch with our members is via

email. If you have an email address that you

have yet to provide, please email it to us at

. We do not sell or share

our email mailing list and we will not bom-

bard you with junk. The emails are used

strictly to keep our members informed of im-

portant information relating to your pensions

and pension rights.

A great way to keep track of what’s hap-

pening is to check out our website at

or by following AFP/AAC

on Twitter or by liking us on Facebook. To

access our Twitter or Facebook accounts,

simply click on the respective logos on our


If you would like to purchase an

AFP/AAC lapel pin, you can do so at any

time. The cost is $7 each, plus $2 for ship-

ping in Canada. Simply send us your request

with a cheque payable to AFP/AAC or call

our office with your credit card information.

One final point: we need your help and

support to keep our association relevant and

vibrant. We want your feedback on the is-

sues that concern you, and your ideas on

what you would like to read in this newsletter

or see on our website. Remember – this is

your association so you need to contribute to

making it a success.