Beth Lepage, a former air force captain, said a portion of her Canadian Forces pension — accumulated as a part-time member — can't be converted because of a difference in the way government and military retirement benefits are calculated.
Lepage said she believes that will be a significant barrier to ex-soldiers with both full- and part-time service applying for federal jobs, a transition the Conservative government says it's eager to facilitate.
In order to fix the problem, the federal Treasury Board would have to rewrite the regulations governing how pension funds are converted — something it has so far refused to do.
"I may not be an Afghanistan veteran, but I served my country for just under 24 years," Lepage said in an interview.
"The government is holding tens of thousands of dollars I took out of my RRSP a few years ago. They're making the interest on it. So, I feel like they're holding my pension hostage. They're aware of the problem and don't have any plans to do anything about it."
There are approximately 30 cases similar to Lepage's in the system right now, The Canadian Press has learned. Lepage predicts it will become a bigger problem as more ex-soldiers with mixed-service time look to take advantage of the fast-track offer of federal jobs.
"Many, many reservists served in Afghanistan and should they apply to come over to the civil service, they could be in the same boat I am," she said.
"They'll naturally want to bring their pension and it'll be, 'Too bad, so sad, we're not going to have any way for you to collect it.'"
Military ombudsman Gary Walbourne said he doesn't understand why the government is reluctant to make what he believes would be a relatively easy fix.
"There is a good potential that this can become a larger problem than it is," he said.
But several defence sources say National Defence was told by Treasury Board that it "doesn't consider it a big enough problem," and has even rebuffed an offer by defence bureaucrats to rewrite the regulations for them.
Treasury Board spokeswoman Lisa Murphy said reservists with more than six months full-time service can elect to convert their pension and that the department "is not presently considering any changes to the legislation governing the public service pension plan in respect to part-time service."
The nub of the problem seems to be that since there is no formal part-time work in the federal government, Treasury Board has no mechanism to convert that military service into a full-time equivalent.
It's just the latest hurdle in the government's attempt to give veterans a leg up in the civil service job market. Walbourne has called on the Senate to fix the legislation that, once passed, will set the fast-tracking process in motion.
A number of soldiers, many with post-traumatic stress, have complained since 2013 they were being summarily released by the military because of their medical conditions. The Harper government responded with legislation to fast-track them into government jobs.
That legislation is flawed, said Walbourne, because even though the Department of National Defence decides when to dismiss a soldier, the bill allows Veterans Affairs to determine whether that dismissal is attributable to the soldier's military service.
As with pensions, the Harper government appears reluctant to make the recommended changes.
Critics such as Canadian Veterans Advocacy have said they don't understand why the government would want to pass flawed legislation.
Lepage originally joined the military in 1983 and served as a regular member, but spent several years on part-time status as a reservist when she had children. She joined the public service nearly eight years ago and applied later to convert her pension; that's when the trouble started.
In order to move her military pension between the two plans, Lepage was required to buy back the time. But since not all of it could be migrated — and until the regulation is changed — she will be entitled to a smaller pension based only on her full-time service.
Also on HuffPost