The unfunded


Yesterday this blog dared to dis the CPP, along with anyone who thinks retiring on $16,500 a year is cool. It isn’t. Let’s hope you never find out. The finance minister thinks a weensy enhancement to benefits – which will result in a big bill to small businesses and higher premiums for workers – is a miracle cure for the disease of financial dorkiness. Sadly, no. The public pension changes will only encourage more to save nothing.

But if you really crave retirement security, there’s always Canada Post. Or, used to be. What a great example this now provides of why we’re heading into one mother of a pension crisis. On one hand a majority of taxpayers haven’t saved enough, lack corporate pension plans and have concentrated their wealth in the same asset, which is subject to market, rate and illiquidity risk. On the other hand, others have milked the system to such an extent everyone else will be hit with the spray.

Look no further than Canada Post. The indexed-to-inflation, defined-benefit pension plan there guarantees workers up to 70% of their former salaries, starting as early as 55. Yikes. But, of course, Canada Post is in trouble from something called ‘email’. Revenues and volumes have been declining exponentially, costs have been rising, postage has increased, and the number of employees is falling annually – now just over 53,000, compared with 59,000 five years ago.

But, whoa. Former employees on payroll have a way of turning into retired dudes on an inflation-indexed, defined-benefit pension. So in the same 60-month period, the number of retirees has mushroomed, from 23,635 to 33,448 – a 41.5% increase. This is not happy news, since the pension plan already has an unfunded liability of $6.2 billion which simply means the $21.9 billion sitting in the plan ain’t enough to pay the pensions of the people expecting to get one.

Here’s why. The dark line on the chart below is people who work for the corp and contribute to the pension plan. The lighter line charts the people drawing from it. Won’t be too long now before they cross!


This is a company dying before your eyes because (a) workers who enjoy considerable job protection are getting older every day and retiring in droves and (b) technology is destroying the letter mail business it was founded on, and will continue to do so, plus (c) it’s being bled to death by payments to former workers, no longer adding to the bottom line, and sucking off close to $1 billion a year. On the chart below the green bars represent contributions made by workers and the company. The red bars chart annual payouts to retirees, their survivors and beneficiaries.

Last year the plan shelled out $880 million. It took in $513 million. Try doing that with your chequing account.


Well, there ya go. Pooched. And do you think the government will let the Canada Post Pension Plan go under? If not, then you know who’s going to pay for it. In fact, it’s estimated currently the unfunded shortfall for all public defined-benefit pension plans across the country is more than $300 billion, or about $25,000 per family. Most are in similar shape to that of Canada Post, and represent a taxpayer liability equalling half the size of the existing federal debt.

This is why defined-benefit pension plans rarely work, and especially in a country with a giant cohort of expensive old farts like the Boomers. It’s also common in my business to interview government employees (like teachers) and find out they have zero savings. “Why should I save,” they ask? “I have a defined-benefit pension plan, you know.”

If Millennials, over-educated, indebted and under-employed as they are, want to rebel over something, this would be a good choice. Twenty years from now (or sooner) many of these plans will face collapse as the number of retirees exceeds workies. Governments will be tasked with saving them (and taking it out of the hides of taxpayers who will never have such retirement luxury), or not (and facing a political crap storm).

By the way, Canada Post workers are about to go on strike. The company is about to lock them out. The big issue? Pensions. The employer wants to phase out the DB plan and bring in a glorified RRSP. The employees say, up yours. So the conflict’s already begun.

Your best defence against what’s coming in the decades ahead is to build our own retirement fund, and count on nothing else. Or marry really well.


#1 bdwy sktrn on 06.22.16 at 6:22 pm

carbon is not pollution – it’s life

#2 TheSpangler on 06.22.16 at 6:24 pm

Have the Canada Post employees walk out, it will just make CP go under faster and will stop all those damn spam flyers coming to my mail box.

#3 bdwy sktrn on 06.22.16 at 6:26 pm

yeah, death to canada post – they only bring junk and bills.

#4 Caught on 06.22.16 at 6:27 pm

Do you think the govt will continue to pay these pensions 10+ years from now regardless of the collateral damage? Or will they be reduced?

#5 First time first? on 06.22.16 at 6:28 pm

It would be cool if I was first for once.

Wish I had one of those nice DB pensions. No wonder our politians don’t give a rats a$$ about wanting to pop the bubble. Their funded regardless of what blows up…

NDP David Eby did an AMA on reddit today.

#6 Caught on 06.22.16 at 6:29 pm

How far into the red can the govt go on these realistically speaking?

#7 unbalanced on 06.22.16 at 6:29 pm

A great explanation on D B pensions. Thanks! I have one. I packed it in at 53 and have never never looked back.

#8 Bill Gable on 06.22.16 at 6:29 pm

Stark posting, again, today. Yikes.

Brexit? What do you think, Mr. Turner – and the resulting ripples, of each choice?

My guess is we will see numbers like Canada’s Quebec Referendum, and the “remain” side will squeak out a ‘win’.

What worries me, is the impact of a “leave” vote.

When we were in Europe, things were getting, ‘unsettled’. Paris 2015, was NOT the Paris of 2013. Rome was FULL of Police cars, and uniformed gents with not so discreet machine guns.

Times have changed. ‘Change’. That’s the meme for the next decade or more.

#9 pathcontrolmonk on 06.22.16 at 6:30 pm

Canada Post-shmanadapost, Gregor is finally going to tax empty houses, apparently enough to deter foreigners wanting to buy them…

#10 JSS on 06.22.16 at 6:32 pm

If Canada Post is going after current employees to change their pension plan, why can’t they go after the retirees and tell them that they will be getting less pension? Why go after one, and not the other?

#11 Jimmy on 06.22.16 at 6:33 pm

This really blows chunks.

#12 slim on 06.22.16 at 6:33 pm

Looks like Vancouver’s mayor Robertson will be moving ahead with plans to impose a tax on owners of vacant homes. Someone please tell me this is not happening!

#13 conan on 06.22.16 at 6:35 pm

Not just Canada either. Every first world country has the same problem. Will the “F-35’d” parts of their economies cough up 25 k per capita in top up money? NOPE!!!!

So expect serious SHTF. Then we will see Parliaments announce the “Pension Security Act.” or whatever they want to call them.

Benefits reduced, no grand fathering, special tax on pension income………tax carnage at its finest.

So could be good dollars in the pension transfer business going forward. No one can say that the writing is not on the wall.

#14 ole Doberman on 06.22.16 at 6:41 pm

Gartho did you have any single daughters? I’d make a good retail store employee.

#15 Mean Gene on 06.22.16 at 6:42 pm

Canada Post is toast.

#16 Island Girl on 06.22.16 at 6:42 pm

Ugh, my mom is a Canada post employee, although not a walker but one of the ones that was brought in when Canada post made all their contractors join. She wasn’t happy about it, but had no choice. She’s now expecting that her Canada post pension plan will assist her when she eventually retires, but I’m more concerned that by the time she starts collecting there will be nothing left.

#17 Coopolier on 06.22.16 at 6:46 pm

In regards to taxing vacant houses
Maybe the should start by finding the grow op houses first. Can not even get that task done !

#18 Sebee on 06.22.16 at 6:49 pm

Where do you put odds of plans being bailed out vs. left to collapse? Seems like those with plans are a minority and thus are likely to be casualties, no?

#19 Oakville Owner on 06.22.16 at 6:50 pm

DB Pension Plan here as well. What a lot of people don’t realize is I pay close to 12% of every pay into it and cost has been rising over the years to get back to fully funded status. If everyone took 12% off their pay and saved it they would be doing ok in retirement as well!

Marrying up helps too!

#20 Simple solutions to pension crisis on 06.22.16 at 6:50 pm

Pensions crisis can be solved by taxing wealth and financial and real estate assets.

Say 0.5% a year until the baby boomers die off. Problems solved!

Won’t happen if millennials are brainwashed and divided.

#21 Bonhomme Carnaval on 06.22.16 at 6:52 pm

Just look at what happened to Greece, and Greek pensioners, in the last 5-6 years. DB-Pensions were slashed by up to 70% on past, current and future retirees.

They also had a R/E meltdown.

This is the view from the corner of Greed Boulevard & Ignorance Avenue.

Just saying.

#22 Coopolier on 06.22.16 at 6:52 pm

To post ten
Going after a pensioners pay out after they retire is like an employer telling a current worker that we have decided that we agreed to pay you too much for the last five,ten years. So we are now going to start deducting the excess from your cheque. The contract has been made you can not after the fact go back and arbitrarily change it!

#23 Dee on 06.22.16 at 6:53 pm

Hi Garth,

You’ve probably already seen this, but if not — Stephen Gordon did an analysis of the CPP changes as they apply to the bottom 20%:

Most of what I’ve seen focused on the middle class or higher, but this is really interesting. The bottom 20%–those who HAVE to be most reliant on CPP/OAS/GIS/etc–are getting screwed the worst by these changes. Higher payroll taxes (both employer and employee) mean lower paycheques in their working life, which they can’t afford to lose. And then, because CPP will be higher, they face GIS clawbacks.

In short, the working poor will get taxed more and get nothing in return. This doesn’t seem like a leftist victory at all. It’s hard to see who wins here (aside from CPP fund administrators) but it sure seems like everyone loses.

#24 Andrew Woburn on 06.22.16 at 6:54 pm

#96 BOOM! on 06.21.16 at 10:01 pm

UH… just one more thing. Consider Trump. Not young, not wet behind the ears as they used to say. Where does a guy like this fit in. T2 has youth as his excuse, for now.

Many US observers have commented that Trump seems to be a perpetual adolescent so maybe he comes by it honestly.

Of course there are those who doubt Trump comes by anything honestly.

#25 Ed on 06.22.16 at 6:57 pm

Marry well? Like marrying an MLA or MP. Nice benefits. And, this is Canada, not a culture known for standing up for things; especially with militant unions. Who could ever stand up to that? Not Bob & Doug, eh! Pass another cold one.

#26 Rainclouds on 06.22.16 at 6:57 pm

Pension Liabilities. Yup, most private sector employers have slammed the door shut and gone the DC route.
Governments of course have 0 political guts to address this

On another Note AIRBNB is getting slammed by the big apple. Fining people who let their apts, Presumably every jurisdiction currently taking an earful from renters and hotels is gonna be watching closely…..

#27 Gramps on 06.22.16 at 7:02 pm

Yah, but if u marry for money ya end up earning it

#28 Cottingham a bargain on 06.22.16 at 7:06 pm

If the job is on us to build our own retirement savings and count on no else as you say, what’s the point if it will only be taxed away by the government as you also say.

Seems to me based on your own writing that the people who look out for themselves the best will have to look over their proverbial shoulders for the robin hoods which will steal and give to the poor

#29 Looney Baloney on 06.22.16 at 7:07 pm

Meanwhile every one of my shipments is taking increasingly longer to ship across the country than the previous. 22 days to ship a small packet from Quebec to SK. 5 weeks to ship a med cabinet from St. Jacobs. Luddites.

#30 juno on 06.22.16 at 7:08 pm

One thing to think about Garth

Not only are there more people retiring, you also have to consider this

– Lots of full time jobs are now contracted out, meaning, very little goes into feeding the pension,
– automation has killed a lot of jobs, including the tellers at Walmart and macdonald

therefore there will be less funds feeding the cpp,
Canada is looking like a $hit storm is about to hit it

#31 conan on 06.22.16 at 7:10 pm

RE: #17 Coopolier on 06.22.16 at 6:46 pm

Makes you wonder who is making the money at the very top…..

They just need to do one thing with some
“houses R grow-ops” and they will disappear within a month or two.

Bring in a bounty system with relevant reward amounts. They could do the same with illegal off shore money.

This is how you get huge results fast…… again makes you wonder why it is not being done.

#32 Andrew Woburn on 06.22.16 at 7:10 pm

#161 Brydle604 on 06.22.16 at 11:02 am
A week after the Bank of Canada announced that it will experiment with blockchain technology – the technology that underpins bitcoin – a new round of commercial banks have signed on with a San Francisco-based company to use the cutting-edge technology in the real world primarily to move money across borders in seconds rather than days.

I bet Kim Jong-Un already has his best hackers assigned to this file. North Korea is suspected to be the culprit behind the recent disappearance of $80 billion from the (not so) Swift international payments network. Got to pay for those cool haircuts.

#33 Canada Bites! on 06.22.16 at 7:14 pm

The government is so bloated, man Canada bites. Those Canada Post people are so entitled. They have crapy attitudes, all government workers have crappy attitudes. The other day I went into a government office and the lady at the front, just a jerk. A week ago, I went in to the passport office, front lady just a jerk. Fire them all.

#34 Lee on 06.22.16 at 7:15 pm

How can there be a problem with $21B in the plan? At even a 4% return that’s $800 Million a year. Add in $513 Million in contributions a year and you’re well over the $880 million needed to pay each year. The plan seems fine to me.

#35 Mayor Gregor here on 06.22.16 at 7:20 pm

Dear tax payers,
Mayor Gregor here has an important announcement: we will fake that we r doing something by creating a commission that will check all houses in Vancouver to see if they are empty or not!
Looks great, even my girlfirend Christina Clark likes it, she started to flollow me again on Twitter

#36 For those about to flop... on 06.22.16 at 7:21 pm

#159 BOOM! on 06.22.16 at 10:25 am


While you are still “too young” to invite to your local funeral home for their “free” pre-need estimate, it is never too early to enjoy oneself on their Birthday!

Enjoy your special day, then get back to the daily hustle!


Hey Boom, I don’t have it all figured out, but when looking for a rental I choose one 4 blocks from my wife’s school and 4 blocks from a graveyard and funeral home.

That way when she has a bad day with the kids and comes homes and strangles me ,she won’t have to go far to sort out her next problem…


#37 conan on 06.22.16 at 7:27 pm

RE: #21 Lee on 06.22.16 at 7:15 pm

They are in trouble. We are just looking at the snap shot. There is a 25 year train of bond purchases that are going to mature over the next 25 years. So, every year, sizable pension reserves will have to be invested into low yielding bonds.

Pensions are regulated. A certain percentage has to go into boring bonds.

Danger W.R.

#38 young & foolish on 06.22.16 at 7:28 pm

Hahaha … the whole First World is “underfunded” and running on enormous deficits. Maintaining funding on a few remaining Defined Distribution plans will be just adding to seemingly unpayable debt … and not just in Canada. Who is going to step up and hit the re-set button on this madness?

#39 Prairieboy43 on 06.22.16 at 7:31 pm

Walleye fishing yesterday, at Calling Lake, AB. Had a similar conversation with a couple retired teachers yesterday. They are happy with NDP government. Then it was my turn to speak. I told them wish King Ralph was back. Silence !! Government Debt out of Control. Pension crisis coming. They don’t get it. Only complaints.
But caught at 5.5 lb walleye. Yahoo! Unfortunately cannot keep that size fish. Returned into lake. Sadly!

#40 Bytor the Snow Dog on 06.22.16 at 7:31 pm

YOO-HOOOOO! Ga-arth.

How’s OMERS doin’?

#41 Jack Hammond on 06.22.16 at 7:31 pm

Let’s get real. The big problem is that pension plans have high costs to run and administer. The payouts at 55 years old are too early and are paid up more than is realistic.

The real problem is they could do this when interest rates for investors were in the 6%, 7%, 8% range.

It is almost impossible with 2.5%, 3% to 3.5% interest rates on bonds, GIC’s etc.

Looking at that chart, the difference is $367 million in 2015 but 4.55% higher interest rates on $21.9 Billion is $1.0 billion in lost interest.

By the way, the Federal Government of Canada is saving around $25 to $30 Billion a year in annual interest on its national debt compared to even late 1990’s were interest already dropped by 3% to 3.5% percentage points.

The governments overspending is what is wiping out those interest savings.

Financial abuse and mismanagement everywhere.

#42 Bytor the Snow Dog on 06.22.16 at 7:33 pm

@34 Lee- I don’t trust CP’s management spin numbers either. It’s contract negotiation time, and gov’t employees are the devil.

Film at 11.

#43 Alberta Ed on 06.22.16 at 7:33 pm

Hey! T2 is in charge now and All Will Be Well! Nothing to see here, folks, just move along! Think Positive! O Happy Days….

#44 liqudincalgary on 06.22.16 at 7:34 pm

bdwy sktrn on 06.22.16 at 6:22 pm

carbon is not pollution – it’s life


…and when politicians find a way to tax carbon, they tax life itself. bravo knutley!

#45 Yitzhak Rabin on 06.22.16 at 7:36 pm

“If Millennials, over-educated, indebted and under-employed as they are, want to rebel over something, this would be a good choice. ”

It would be a very good target.

Unfortunately, politicians being incompetent as they are will likely punt the problem into the future as best they can while possibly passing some cosmetic half-hearted measures that do nothing substantial.

Central banks will be pressured in to bailing out the mistakes of politicians by “buying bonds” or “increasing their balance sheets” any harmless sounding act which translates to creating new currency out of nothing.

History had too many examples to ignore of this. Few politicians will want to confront an overnight tax revolt or a public sector and pensioner strike. Currency debasement is much easier politically and most people are too stupid to realize the culprit of the damage it creates.

By the way, this problem is world wide.

#46 salonist on 06.22.16 at 7:37 pm

then there’s ……………….. retired at age 50,defined pension plan at $5000.00/month.been collecting for 42 years.ontario public servant.going good still

u of t, last I looked their pension deficit was in the billions.

in Oakville..all mail box delivery except business.
hardly any drivers left,attritions every 6 months or so.

each postal route the mail arrives presorted in the morning.

driver loads flyers, packages and the presorted mail.

their whole route fits into a station wagon or a small suv
sometimes you’ll see a beater van

#47 Andrew Woburn on 06.22.16 at 7:38 pm

Speaking of retirement, this chart shows the steady increase in the number of Americans working after 65 since 2000.

Seniors as a % of total population were about 12.5% in 2000 and 15% today. The chart shows that around 12.5% of seniors were still working in 2000 and nearly 19% today. About 65% of the total US population was in employment then and 60% now. If I did my maths right, that means seniors were about 2.5% of the workforce then and about 5% now and the trend is still up.

We’re going to need a lot more Walmart’s.

#48 Cici on 06.22.16 at 7:47 pm

#20 Simple solutions to pension crisis

Not a brilliant strategy…if they increase tax on wealth and financial assets, that money will high tail it out of the country along with all of the big earners…and probably never look back.

Nobody will want to invest in Canada, or earn or save big dollars here, if the incentive is to have it gouged to pay for the irresponsible spendthrifts.

#49 joblo on 06.22.16 at 7:50 pm

So get ready for mandated RRSP & TFSA investments into Guberment bonds to fund the mess.

#50 For those about to flop... on 06.22.16 at 7:51 pm

Brexit/ Euro 2016 update.

Well instead of giving you today’s scores I’m just going to skip to the good stuff and show you guys what’s happening in the knockout round.
It is now down to 16 teams and as the name suggests if you lose you go home.

Freedom First’s Switzerland Vs Jimmys Poland.

NoNames Croatia. Vs Brazil expats Portugal.

Ace Goodhearts Wales Vs. Gut checks Northern Ireland

Brdy Skrtns Hungary Vs Marks Belgium

Common senses Germany vs IHCTD9s Slovakia

WalMark of Sadkatoon’s Italy. Vs Crowdedelevators Spain

Garth Turners France Vs Smoking Mans Ireland

Floppers England Vs WULLYs Iceland.

There you have it some interesting matchups for sure.

In a side note , Booms team Sweden got voted as having the best looking fans.

Regarding Brexit Ladbrokes still have the same odds as yesterday 24 /76 in favour of Stexit and the Telegraph is slowly moving a point at a time that way as well but still pretty much has it as a tie.

The vote will happen and then this round of games will take place on the weekend.

Scotland did not qualify for this tournament ,but as you will see by the above matchups the other 3 countries are all still the tournament at the time of the referendum which is a really good thing for the stay side if it is as close as some of the polls have it…


#51 Jack Hammond on 06.22.16 at 7:55 pm

You want to solve the government pension crisis! For the next 10 years, 66% or two-thirds of their government annual pay raises and benefits goes to pay for the deficits of government workers pensions.

This should bring in hundreds of billions of dollars. The problem created by them and paid by them.

#52 Cowpoke on 06.22.16 at 7:55 pm

Go to for all the information you need for a CANEXIT strategy!

#53 Arfmooocat on 06.22.16 at 7:57 pm

Dad has been on a full company pension for 53 years now, longer then he worked.

Mom joked on fathers day about putting him in the freezer when he goes… he’s 93 and the end is near

#54 RudyGQ on 06.22.16 at 7:57 pm

During the last postal strike (2011), I would regularly walk past a post office on my way to work. I remember listening to the picketer’s plight and demands. I remember walking away thinking these poor saps won’t get a single one of their demands met. And they didn’t end up winning anything. The only thing they got when they went back (legislated back) to work was a loss of income. History repeats itself. Got nothing against postal workers, but this is an economic case of supply and demand. Supply—lots of people who can do this work, with growing competition in this space. Demand—less appetite for mail services with advent of electronic mail; the biggest customer (Govt of Canada) is reducing their usage as well.
Conversely, in looking at a totally different group—Doctors, last time doctors (in Ontario) went on strike against the Ontario government was in 1986 for a total of 25 days. The government caved and the doctors got pretty much everything they wanted. Supply—limited number of physicians. Demand—pretty much every living citizen.

#55 rory on 06.22.16 at 7:59 pm

Years ago I said, on this blog, that a 20% reduction in wages and benefits is required for all government employees (includes crown corps). If I remember correctly, I got dissed.

It still seems like the right and only thing to do at all 3 levels of government.

#56 Shawn on 06.22.16 at 7:59 pm

Lee Confuses the Argument With Facts

#34 Lee on 06.22.16 at 7:15 pm said:

How can there be a problem with $21B in the plan? At even a 4% return that’s $800 Million a year. Add in $513 Million in contributions a year and you’re well over the $880 million needed to pay each year. The plan seems fine to me.


But Lee, ignoring the earnings on investment is better if you want to exaggerate the problems of the Canada Post pension plan.

#57 HalfGovtWorker on 06.22.16 at 8:00 pm

I, um, took a government job a while ago, instead of a private job, because I needed some flexibility for long term family issues. (both jobs were offered)

Said flexibility cost me big time – 2.5x salary difference; When the big company closed, I figured that if I had taken the private job and kept the same spending habits, I’d have had something like 700k more in my pocket, and could have retired 10 years earlier.

Yes, I have a bit of a DB pension plan that pays below the poverty line, but the lack of RRSP room, the contribution payments, and the salary difference took their toll.

So, those of you who do not have a DB plan, save the equivalent of what the contributions would be, follow Garths’ advice, and you’ll be MUCH better off than the Government workers. Hindsight…

#58 Heisenberg on 06.22.16 at 8:03 pm

I hope Brexit happens.
I’m pretty sure it will happen. It’s not a big change for the British…they never changed over currency, so no expense there.
Half the Euro countries are leeches and bringing down the good ones…
Too bad the media is working so hard to form the public opinion that pro-Brexit voters will be considered racists and right wing nuts.
…I still think they will leave the EU.
Can’t wait until tomorrow morning to find out!

#59 Shawn on 06.22.16 at 8:03 pm

Ratio of Workers to Retirees in a Plan is a bit a red herring

A properly funded plan collects enough from workers while they work to fund their pension in retirement. It should not require today’s employees to subsidise today’s retirees.

Unfortunately, it is true that most plans are under funded and are subsidising retirees.

The under-fundedness is exaggerated because it assumes pension plans will invest ONLY in bonds and not in the actual balanced fashion which they actually pursue.

Just about everyone’s retirement plan would be underfunded if they assume they will invest only in Bonds.

Understand just what underfunded means before panicking.

#60 acdel on 06.22.16 at 8:05 pm

The game is on; make us as poor as possible so control over the populous is a sure thing; but it is not! Eventually they will learn. People in general know better and will defeat them. Heavy, I know, but I have faith in us.

My personal opinion only ” Go Brexit Go; take control of your own future.

Good post Garth..

#61 retiree on 06.22.16 at 8:07 pm

As any good financial planner knows …the unfunded liability is kind of a mythical figure…what the plan owes all employees if the plan was collapsed on a hypothetical date. Not to downplay the size of that $6.2 billion liability, I really don’t think the plan would be collapsed. You failed to mention that the CPC pension plan had a return on investments of 7.3 % in 2015 and had a going concern surplus of $1.2 billion.
What would happen to the markets if the Canada Post pension plan, Teachers pension and OMERS to name a few, were to collapse/ wound down?….thought so…damn DB plans….

#62 Shawn on 06.22.16 at 8:10 pm

Canada Pension Plan is better at Math

Most DB pension plans have two huge mathematical fails.

1. They give a pension based on average five years earnings rather than based on earnings over the full career. Rising stars get subsidized by clerical workers. CPP does not have this failed math.

2. Most DB plans sort of forgive the normal reduction in pension that applies for going at age 55 as long as your age plus years of service sum to some magic number like 85. There is absolutely no mathematical basis for this. Those who start work by age 25 in these plans are subsidies by those who start later and can never benefit from the magic number. CPP does not have this flaw.

#63 TRON on 06.22.16 at 8:10 pm

Why are these public employee pensions considered ‘untouchable’?

Screw them, give ’em a haircut like the rest of the population and move on. But before we do let’s make sure that governments are accountable for overspending on everything.

For those of us old enough to remember Canada Post had a militant violent union headquartered in Montreal run by the french members. They held a gun to the governments head and basically got everything they wanted.

It’s just mail and the alternatives are better for delivery.

#64 Penny Henny on 06.22.16 at 8:13 pm

Yesterday this blog dared to dis the CPP, along with anyone who thinks retiring on $16,500 a year is cool. It isn’t. Let’s hope you never find out-GT

Man O man you are one to talk aren’t you?
Millions in the bank and you still watch this blog like a hawk.
Maybe you have the problem?
Have fun with Dorothy before you can’t anymore!!

If I was having more fun I’d be dead. — Garth

#65 Shawn on 06.22.16 at 8:15 pm

All DB plan including CPP have another flaw.

They take risky uncertain investments to fund a guaranteed payout. The solution is that all pensions should be at best target pensions. If the target returns ain’t there then obviously pensioners should suffer as well. It’d be like, you know, real life.

I receive a DB and would not be happy with a cut. But really the original promise to me was simply unfair. I’d put up with a small reduction to spare current employees and my former employer of excessive contributions.

#66 WUL on 06.22.16 at 8:17 pm

Iceland RULES!!!

I did not marry for money. I did however, marry for frugality. Works just as well. I recommend it.


#67 Shawn on 06.22.16 at 8:18 pm

All DB pensions end upon the death of both spouses.

There is nothing for the estate. (Save maybe a tiny death benefit to cover costs)

That is NOT a flaw . That is a necessary feature that helps make DB pensions affordable. Those who die early subsidise those who die much later than average. That is sensible. (Don’t like it? Have your revenge by living past 100. You will like it by then though.)

#68 Joseph R. on 06.22.16 at 8:19 pm

Bill-78, which came into force in 2000, allowed the government to raid the public pension fund out of $28B it had in surplus of its members and use it to paying down the federal budget deficit.

In 2012, the Supreme Court of Canada ruled that the government can raid Public employees pension funds without having to repay it:

“Most importantly, the government did not undertake, either expressly or impliedly, to act in the best interests of the Plan members with respect to the actuarial surplus. Without such an undertaking of loyalty in favour of these particular stakeholders, the government’s duty was to act in the best interests of society as a whole. This is inconsistent with the existence of a fiduciary duty.”

In other words, the government is legally required to give you a pension for the rest of your life but the benefits that you will getting are not guaranteed.

If you are employee within the public service at the municipal, provincial or federal level, you are one Act of Parliament or provincial legislative away from getting your benefits slashed for the “common good”.

#69 Carlyle on 06.22.16 at 8:25 pm

I have a Defined Benefit Pension Plan through the provincial government I work with. I just started (age 39) and feel like I got in “just in time” to be able to really use it for retirement …

I’m just hoping another 20 years can be squeezed out before the public services all go defined contribution.

Whenever I hear “omg I pay 12% of my salary into my plan”. Yes it’s a sacrifice but let’s not forget that the gov matches that. Really I try to look at the government match like a part of my overall compensation rather than a freebie, adding it onto my salary when figuring out my total compensation.

#70 Ryan on 06.22.16 at 8:26 pm

As a HOOPP member/contributor this has me worried. I take more risk in my portfolio because I know I have a DB pension backing me, so my fixed income allocation is only about 25%.

Garth why are you stressing me? Let me have my blissful ignorance.

#71 Smoking Man on 06.22.16 at 8:29 pm

Only a matter of time before this thought process catches on in Canada.

#72 Alex in forest city on 06.22.16 at 8:33 pm

For Oakville owner, you put 12 per cent in, but are you getting a 12 per cent match? Most private companies match from 1 to 5 per cent, if at all.

#73 iwill on 06.22.16 at 8:37 pm

Oh Garth – didn’t you read the national post article yesterday that basically explained that increasing the CPP will allow the government to reduce the amount it has to pay to cover all the public defined benefit pensions? You see, they’re already getting joe public to pay for these pensions.

#74 WUL on 06.22.16 at 8:37 pm

I am quite happy to give away business ideas. I lack the “get up and go” and business smarts to carry them out.

With Mayor Robertson’s proposed tax on vacant houses in YVR, detection and enforcement are going to be problematic.

The business idea?

Smart meters on mattresses and toilet seats.

#75 common sense on 06.22.16 at 8:38 pm

Gee. I wonder how the Gov’t is ever going to try and fund most retirement programs…

Do I hear a wealth tax? And guess what? They know exactly what is in your RRSP and TFSA Accounts…

Hope your rich enough or poor enough to not care.

Possibly coming to you in 5-7 years…

#76 BOOM! on 06.22.16 at 8:43 pm

I have NO sympathy for governments (including the workers), private employers’ (and their workers)whose DB pensions run aground. I have NO sympathy for Unions, (and their members) when their multi-employer pension systems run into trouble.

This was known actuarily YEARS AGO.

WHY should the Nation’s Taxpayer’s be called upon to “Bail Out” public employees, or private Unions, or even private Corporations pension schemes for that matter?

Perhaps in a bankruptcy, pension obligations should be much higher-up the food chain, as it likely was not the employee’s fault, the promises made are getting diddled.

Still, ANY Government, Union, Private Employer who did not see the writing upon the wall YEARS AGO, was likely willfully blind.

I do enjoy a (rather modest) earned pension. I also helped to fund the dam thing, it was NOT FREE. New employees also pay more than my rate 30 years ago, as one would expect. That is for NO more of a pension payout either.

That said, there are both pre-tax, as well as after tax schemes for them to invest a portion of their earnings, just like those enlisted by me.

Only a FOOL should trust all their retirement stipends to others, beyond their control.

Give me one reason, I should trust MY government, any Union, or your government? They can and need to be able to alter the terms of any ‘promises made’ over time. All situations change.

If you desire “retirement security” in the final analysis it is truly up to you. caveat emptor applies.


#24 Andrew Woburn….

Trump’s reputation and record precedes the candidate. I’m not much interested in TRUMP the candidate.

#36 Flopper…..

Looks like you have the “options” covered here. Well Done! For now just continue as you have been. None of us really has it “All figured out” They keep moving the dam goals…. At least we can still bitch, and THAT is worth something. The Brewers won today!

#77 Julia on 06.22.16 at 8:44 pm

Worrisome. I have a DB as well. If I leave my employer before age 55 I can commute. Otherwise I am locked in.
Last year, some amendments were made to the plan and I fear more will come.

#78 derric brannagan on 06.22.16 at 8:48 pm

Aren’t you forgetting that the $21.9 billion is also making a return of let’s say for arguments sake 7% but I think it is more so that although $800 million is going out much more is going in or am I missing something?
Also the $6.2 billion funding liability you quote is actually a solvency deficit which means that if Canada Post goes kaput tomorrow they wouldn’t have enough to pay out all it owes to its employees. It has nothing to do with Canada
Posts’ ability to meet its pension obligations.

#79 WalMark of Sadkatoon on 06.22.16 at 8:51 pm

The contract has been made you can not after the fact go back and arbitrarily change it!

insolvency doesn’t care

#80 common sense on 06.22.16 at 8:53 pm

Happy Belated Birthday Flopette…

Hope you and the Mrs enjoyed well and wishing you many more…..

#81 hope & ruin on 06.22.16 at 8:55 pm

They’re just waiting for all the boomers to get too old to do anything about. Then the pensions will go.

As the boomer death counter spools up they will lose their voting power too.

#82 crowdedelevatorfartz on 06.22.16 at 8:58 pm

@#9 and #12
Gregor Robertson is ignoring the elephant in the telephone booth.
Taxing empty houses owned by rich people is a complete cash grab and does nothing to alleviate the 2000 + Airbnb tourist rental suites that are off the market for local renters.
Vancouver has ByLaws and Bylaw enforcement officers…..but perhaps “Mayor” Gregor has his eye on the Premiers office and doesnt want to piss off potential campaign contributors a la Christy Clark and her never ending cash flow from the Real Estate and construction cartels?

Corruption and its acolytes

#83 bdwy sktrn on 06.22.16 at 9:01 pm

bc intl visitors up 20+% y/y

china, germany mentioned

it really is different here.

re brexit — if they have any bollocks they go.
i think they will.

#84 blog dog cookie crumbs on 06.22.16 at 9:03 pm

long time reader, lurker and first time poster… and a postie!

Hey Garth and dogs,
Just want to add some crumbs here in the comment section…

“The employees say, up yours.”
Sure, the ones who are like <7 years from retirement, and why shouldn't they? After how many years of institutionalized BS and they want to convert your DB plan to 'glorified' RRSP. sheesh.
It takes 25 years to reach full pension payout at age 60; to retire at 55 you need 35 years of 'pensionable' service. So those retiring now at 55 or 60 started in 1981 or 1991, way before the information superhighway was a household thing, in a day when floppy disks were more than just a screen icon, and mortgage rates where how much again?

"Your best defense against what’s coming in the decades ahead is to build our own retirement fund, and count on nothing else."
As the Garth likes to say: Duh! There's plenty of young posties doing the FireCracker/Wanderer thing trading stocks on iPhone apps, etc; doubting that DBs will still be there when we get to the age of retirement. I figure DB is worth it if you can do the 25+ years, I am nowhere near that. The commuted opt out, thats my 'up yours'.

Canada post really is the prime example though, of why DBs are not likely future proof. DBs only pay off if you stay put and work at the one employer for 25 years or more, plus it is a huge deduction every payday. DB pensions were invented to keep workers from quitting, ya know the ones who've been chased by dogs in snow and rain since 1991 or longer –life sentence. There's a huge dif between working outside with cheques (bring it haters) and online merch than a climate controlled office job, just saying.

Oh also, you totally forgot about the 8 month pension holiday in 2007. Thats kinda a nifty tidbit. And what was the interest rate in 2007 again? ~4% ish. Garth, arent you the one going on about raising rates?

And before I'm outta here… gotta give a shout out to the 22 vice prezies and their 30% annual bonuses! Quelle Gross.

#85 Good Healthcare on 06.22.16 at 9:04 pm

Come to Asia for good healthcare. If you have $$$ we heal you. Then we use money to buy Vancouver house.

#86 Smudgekin on 06.22.16 at 9:15 pm

Regardless you can be sure the Canada Post brass aren’t getting their pensions chopped.. Right Raj?

I thinks its gonna be a 6 – 8 week lockout.

#87 Kilt on 06.22.16 at 9:21 pm

The more important thing is: Canada post is thinking about using drones to deliver mail. How do we stop this before they start. My neighbor has a drone (his kid) and they fly the bloody thing over everyone’s houses. Nothing worse than having the sound of a very large mosquito flying around when you are trying to have a BBQ. I might get myself a paintball gun and see if I can bring the thing down.

#88 barb on 06.22.16 at 9:23 pm

If it weren’t for online shopping like eBay, Canada Post would have died years ago.

Have a look at the bonuses Canada Post paid out:

Search “blood sucking leech” in an image file, and you’ll see Canada Post’s logo *grin*

#89 Smoking Man on 06.22.16 at 9:24 pm

Wtf someone posted on Facebook all EU new borns to be micro chipped starting Dec 2016.

Anyone got any good Intel on this.

#90 White Crock BC on 06.22.16 at 9:24 pm

Going on strike in this economy, is nothing short of lunacy.

They have no idea how good they have it.

#91 Metaxa on 06.22.16 at 9:29 pm

…The other day I went into a government office and the lady at the front, just a jerk. A week ago, I went in to the passport office, front lady just a jerk. Fire them all.

My daddy used to tel me that if you wake up in the morning and bump into an azzhole, well, you did.
But if you wake up in the morning and everyone you bump into is an azzhole, well maybe the fault lies with you.

My daddy was rarely wrong.

#92 Freedom First on 06.22.16 at 9:36 pm

#51 Smoking Man

Right on Smoking Man!

Yet, let it be known, I have barred the sjw’s, feminazi’s, white knights, and mangina’s from my life for decades.

All without saying a word, as I am a kind, patient, loving, tolerant man, who respects free speech. However, not everyone is as open minded as I am. Hence, they yell and scream at someone who is not subservient to them.

All I really know for sure, is it is up to me to always put my own Freedom First. Compromise is just another word for loss of freedom.

#93 Just Me on 06.22.16 at 9:40 pm

As with all governments, anything is possible.

This is a bit older but still valid for what might happen in Canada. Hopefully not but you never know.

#94 MF on 06.22.16 at 9:41 pm

#20 Simple solutions to pension crisis on 06.22.16 at 6:50 pm

Great post. Won’t happen because are busy getting high and being lazy/stupid. Blinded by the spectre of legalized weed. What an embarrassment.


#95 dave on 06.22.16 at 9:43 pm

I got so upset reading this. I hate government pension plans. I wish everyone knew about the libertarian party.

#96 pathcontrolmonk on 06.22.16 at 9:44 pm

#17 Coopoolier & #34 Conan re: grow ops

Did both of you just wake up from a Rip Van Winkle sleep? What grow ops does thou speak of? Come to Washington State, there are more retail marijuana stores than Starbucks. Which imaginary buyers are these supposed grow ops selling to?

#97 not 1st on 06.22.16 at 9:46 pm

I dont contribute a cent to CPP cause I have no idea what amount I will get back and who I will be subsidizing. I build my own plan with my business.

IMO you should have no money in any govt program except RESP. Dont put money in RSPs or even TFSAs. Those are just temptations for the govt to tax hard one day. T2 has changed just about every program since he started. There is no way the govt can keep their hands out of your pocket.

#98 rainclouds on 06.22.16 at 9:47 pm

Aaaand of course FedEx cannot charge less than Canada Post for their services.its the law.
Welcome to Canukistan.
competition bad.

#99 NoName on 06.22.16 at 9:47 pm

Its all fun and games until someone looses a pension.
I remember when my previous employer switched from DB to DC (2010-ish), my monthly pension @ age 65 went from 3700 down to few dollars shy of 800. And on top of that they canceled matching RSP, because we (employee-red working stiff) were getting “bigger” matching in new DC plan.
i was never good with logic and math but i run a nubers anyways and i come to conclusion that i should email ceo and let her have it, give her pise of mi mind, but me being me (chicken) i was afraid that i will get my self fired if i use palin text in an email, so i encrypted text with Phil’s (Philip R. Zimmermann) invention called PGP and i email it.
(funy story about that pgp, i suget googeling it.)
never got any response back, she is probably using some super computer and trying to decript. wrong way.

just for you guys here is a how to decrip stuf with a breeze in a jify.

#100 MF on 06.22.16 at 9:57 pm

So I guess this is how the situation in Greece developed. Too many people on the doll and not enough contributing. I feel for Canada Post employees I really do. It’s really not their fault, it’s just the demographics are not there anymore. Garth has been writing about the looming demographic/retirement crisis ahead for many years. I think this is just a taste of what is to come.

Let’s hope those Canad Post pensioners can at least sell their trillion dollar bungalow complete with all ELF’s and a “dazzling” foyer to some millennial working at Mcdonalds making $12/hour. Don’t worry if the bank won’t give him the 95% leveraged mortgage at an “emergency” interest rate than some other slime bucket “broker” POS will.


#101 WalMark of Sadkatoon on 06.22.16 at 9:59 pm

YVR and YYZ are the epicentres of insanity

real estate prices continue higher … ending will be epic

#102 prairiegopher on 06.22.16 at 10:03 pm

My wife and I both have DB plans. They are as good as winning the lottery! If I live on pension for 20 years I will be paid out over a million dollars, I don’t think I put in a quarter of that. They are a legal Ponzi scheme.

#103 xyz on 06.22.16 at 10:04 pm

Dying to know your thoughts on Gregor Robertson *suddenly* discovering we have a dire issue here in Vancouver in terms of housing.

20 years of ignorance is bliss I guess

#104 TurnerNation on 06.22.16 at 10:06 pm

Austerity now! Anyone owning a home in small-town Ontario has a near worthless asset.

When ON goes BK or close to it, services (like rural hospitals) will be cut. But oldsters need them ergo, cities.
“Carbon” taxes will crimp truck deliveries to B.F. Ontario regions. Already, Ont. Northland train service was shuttered.

Those not walking in downtown TO cannot fathom the massive infilling of condos into every lot and old building. Development signage abound.
Call it Agenda 21 or what, we’re being herded into large cities.

No millenial will venture far and purchase a smelly boomer bung in regions with 20%+ unemployment and are rife with rednecks and drugs (small town bring down.)

Gord Downie sang it, best (with twang) on their first album:

“All the drinks are on the Crown; it’s a matter of a trickle down”

What a downbeat on that one.

#105 gladiator on 06.22.16 at 10:15 pm

this one’s for you:

#106 M on 06.22.16 at 10:17 pm

Gartho baby.. u got it wrong (as you usually do when talk “mone’ – You should stick with housing baby)

Gov employees retire at 55 with 70% of the best 5 yrs IF THEY HAVE 35% YRS IN baby.

Most losers barely have 15-20 by the time they are 55 so the “new” gov employee will work till’ll drop.
re Gov expertise in “anything” the latest Phoenix screw up is quite telling: an inhouse developed software.

Sonny will start his nuke engineering degree in the fall. I told him that if he ends up working for those gov tramps I’ll break his legs. case you didnm’t know Gartho baby, an engineer hired as an expert proffessional is usually paid 30+% LESS than in the private sector.
Where govvy pays well is at the “barely read and write” or artsy-fartsy degrees.

The real money goes out for gov contract work.

30 years ago, gov had all the expertise in the world. Today… zippo.

Trust me..I KNOW :)

#107 Lee on 06.22.16 at 10:24 pm


If you had put $20000 in for about fifteen years then let it sit for fifteen more and then continued to let it grow as you draw about five percent a year out for twenty more you will have eaten or have about a million. I am sure what you put in is about the same. It’s really all about saving and investing.

#108 Keith in Calgary on 06.22.16 at 10:25 pm

I haven’t bought a stamp in over a decade.

Canada Post can go under for all I care……….it’s nothing more than a junk mail delivery system now.

Sitting in Newmarket, Ontario, this week on another business trip. Nice little town…….clean streets, pretty landscaping, and some folksy character.

$800K starting prices on cardboard houses at a builder’s site I drive by everyday on my way to the client…..LOL……

#109 Smoking Man on 06.22.16 at 10:30 pm

#105 gladiator on 06.22.16 at 10:15 pm
this one’s for you:

Thanks. Fake as I thought.

#110 BS on 06.22.16 at 10:32 pm

Canada Post is run by a typical union that kills the business. If CP goes on strike or is locked out people will change the last remaining bills they receive by mail to online/email. Businesses who use Canada post will find other couriers who may do a better job. Once CP is back to work most of that business is gone for good. Which means bigger losses and less workers.

These unions never learn. There are times when you have bargaining power and times you don’t. This time they don’t.

#111 A sceptic tank on 06.22.16 at 10:34 pm

Lock ’em out, shutter Canada Post, do whatever needs to be done to teach the lazy entitled public sector boomers a lesson. I couldn’t care less about CP workers who want every Canadian to fund their golden goose.

#112 BOOM! on 06.22.16 at 10:38 pm

#106 M

Yes. Many Gov’t agencies / departments no longer hire full time, high-priced talent, whose “expertise” is needed only half-time, or less. Enter the contractors…

Frankly, why would we want any other arrangement today? Plug N’ play-PAY-go away. No long term commitments. If you are good, you get called again when your “expertise” is needed anew.


#113 Doug t on 06.22.16 at 10:39 pm

I always told my son – marry for love and if she’s loaded well that’s great

#114 TRT on 06.22.16 at 10:41 pm

Buy Euro’s now!!

Brexit set to fail because the vote is rigged.

All public exit polls have been cancelled. Unprecedented. Means that it would be impossible to prove vote rigging and electoral fraud.


But buy Euro’s. Leverage them 200x. With $5,000 bet.

#115 james on 06.22.16 at 10:49 pm

Sadly, government meddling (mostly Conservative, Garth) over the years has truly messed up the pension systems. Strange, how neocons who should know better have undermined our economy far worse than Liberals or even the NDP has over the years.

One example – the OMERS pension in Ontario is in pretty good shape. As directed by the Mike Hair-ass government, they could not collect contributions in the late 1990s due to good performance on the markets of their investments. Imagine that! Let’s punish efficient economic performance, in the name of right wing ideology and vote harvesting! So members were given a contribution holiday of about five years. No surprise, when the markets turned after 2001, the fund found itself in a huge deficit, which it is just pulling itself out of now.

Lesson 1: leave well managed pensions alone, and let them build up funds in good times for worse times.

Lesson 2: keep all conservatives out of political office at all times – they are all, uniformly, economic retards

#116 Twinky on 06.22.16 at 10:51 pm

Garth, my friend works at University of Toronto. He’s on their defined contribution pension plan. The plan is that he will get 100% of his best year working there. He must contribute 6% of his after-tax salary (380$ on a salary of 75k).

No idea how they will pull that off.

I hear that UT also has a defined benefit plan and that one is in trouble.

Would love to hear what you can find about the UT pension. Thanks.

#117 Smoking Man on 06.22.16 at 10:58 pm

I’ve come to realize that alcoholism rots the brain. I had a wee project around the house tonight.

Took me 1/2 an hour to figure out that I needed a Robertson screw driver when nothing was happening with star driver. The scratched glasses didn’t help either.

#118 NoName on 06.22.16 at 10:58 pm

#87 Smoking Man on 06.21.16 at 9:31 pm

#119 jay on 06.22.16 at 11:10 pm

#120 George S on 06.22.16 at 11:19 pm

It boggles my mind that everyone is so surprised that we have a pension problem because of the boomers. I have been hearing about the baby boom generation and how there is going to be a larger proportion of older people since I was a kid, at least 50 years ago. Once vaccines and antibiotics were developed and people stopped eating so much crap and started exercising they started living longer. That happened long ago.
Remember back in the 1990’s when investment yields were nice and high. Instead of putting money into the DB plan the federal government took a holiday to the amount of 18 Billion dollars of their contractually obligated pension contributions because their actuaries told them they could and still meet the pension demands. Then around about 2000 the actuaries told them they could take 30 (thirty) Billion dollars out of the pension plan because there was more than enough to meet future demands. For a grand total of $48 Billion . When this situation was taken to court the ruling was that since the government was contractually obligated to pay the pension of its workers it didn’t matter how much was in the pension fund they still had to do it. The amount taken out of the pension plan was about $100,000 per employee. Figure that out with an average yield of 6% for 20 years. The sole reason that the DB pension plan is in trouble is because of gross mismanagement and outright theft by every government that has been elected since the plan was invented. The plan was set out to be sustainable for ever with an investment yield of 4%. That is why they have to make the plan compulsory for all employees, if they didn’t there would be too many people taking a DC option and managing the money themselves. The plan is invested essentially what amounts to Canada Savings Bonds. Money owed to the plan by the Government of Canada. No different than anyone else’s DC, DB or whatever plan. Usually most plans have at least half in bonds, more as they get closer to retirement.
When you consider that there are plenty of people handing over 2 to 3% annual management fees for their mutual fund DC pension plans the federal employees plan is a good deal. No management fees at all.
If you retire earlier than 65, for example at age 60 the CPP you would get at 65 is deducted from your DB pension payments. So you get a lot less. The plan only appears to be “gold plated” because various business and companies have so thoroughly screwed their employees that the comparisons look bad.
The only jobs in the Federal Government that pay more than their counterpart in the private sector are clerk/secretary jobs. The rest pay less and one of the big reasons that people in almost all areas of the Federal Government work there is the DB pension plan. It is a form of deferred salary.
If anyone else made the same pension plan contributions, both employee and matching employer and CPP contributions too (remember it is deducted from your pension at age 65) into RRSP and TFSA investments they could easily get their own “gold plated” pension plan, especially if they follow Garth’s advice. The employee pays 5% plus 2.5% for indexing (yes they pay a lot for indexing) plus 5% from the employer, plus 3% total CPP totals 17.5% of gross salary. That is why when you have a Federal Government job you have very little RRSP contribution room.
So that is how it is. It is not free manna from heaven. People buy a financial product from their employer when they start work, exactly like buying a “freedom 55” pension plan from a life insurance company when you start work.

#121 George S on 06.22.16 at 11:23 pm

One more thing that I forgot about is that since basically the CRA is paying the Federal Pension payments they don’t have to pay the tax portion of the pension payments. So for example if you are a single person making $50,000 pension the Federal Government only would have to pay you about $40,000. So they really have to pay substantially less, unlike other pension plans which are on the hook for the whole gross amount.

#122 Bottoms_Up on 06.22.16 at 11:29 pm

Yes, it is amazing some people don’t let facts get in the way of a good hate-on for things such as DB pensions.

Employee + employer contributions + professional investing (=growth) + time (compounding) results in you getting a fraction of your money back, monthly, when retired.

And really, the biggest risk is dying early, where your estate doesn’t get a dime (Garth had a good blog on this regarding commuting before you get locked in). If and only if you live really long, is it ever like “winning the lottery”.

#123 Smoking Man on 06.22.16 at 11:38 pm

You would think the imperial aristocratics that all Canadians suck up to would grow a set.

A British accent tells the listener you’re less than. After all these people invented the language.

You would think they would give the middle finger to Brussels. Appointeee commies.

If they don’t. Get the losers pics off our money.

#124 Smoking Man on 06.22.16 at 11:48 pm

The shit I had to do, the bs I sold to the Nictonite council to allow safe passage to Antarctica. Off limits to humans.

I deserve the Nobel Peace prize for that.

#125 Smoking Man on 06.23.16 at 12:00 am

Mrs Smoking Man and son number 1 talking religion. Mrs SM happy about being a protester. Son 1 defending the x wife’s position on God.

I’m sitting in my easy boy chair hammered out of my mind thinking.

How is is posable that my DNA never made it to son 1. Why haven’t I seen that Mrs SM is a total retart.

How’s that for staying on topic.

My life is complicated.

#126 Bat Flipper on 06.23.16 at 12:01 am

Make no mistake, your money is yours only as long as the government allows you to have it. Through taxation, they can decide to take it all back. Think you have a DB pension, savings, RRSP, TFSA, etc.? They could just as easily flip the switch and take it back from you. The only safe dollar…well, really there is no truly safe dollar.

#127 White Crock BC on 06.23.16 at 12:08 am

rainclouds on 06.22.16 at 9:47 pm

Aaaand of course FedEx cannot charge less than Canada Post for their services.its the law.


#128 The Original Dave on 06.23.16 at 1:07 am

There’s a few people in life who truly make an impact on your life. With that being said, thank you for everything G. Forever indebted to you for your help. True hero.

#129 White Crock BC on 06.23.16 at 1:15 am

You think Canada Post is messed up?

The USPS loses between 5 and 15 billion (USDs) per year.

They won’t even consider anything less than 6 days/week delivery.

They recently (April) REDUCED the price of a stamp.

#130 Krampus on 06.23.16 at 1:23 am

Pension liabilities bankrupted GM and Chrysler, and sent ripples across the US economy. For us, we can expect European sized tax brackets and perhaps a few rounds of hyper-inflation. Hmmm………..its as if the feds are aware of the looming liability, and are letting housing run out of control to give inflation a head start. So when the dollar inevitably drops to $0.50 USD, housing will be more attractive to foreigners and prices will stay high for another round.

#131 WalMark of Sadkatoon on 06.23.16 at 1:27 am

I always told my son – marry for love and if she’s loaded well that’s great

marry for luv and if she’s a spendaholic that’s great to?

#132 Bloke in the UK on 06.23.16 at 2:00 am

Interesting case study, Garth. Over here we have any number of DB schemes mostly in the public sector, of course. They’re all underfunded and we face the same threat of the government having to organise the rest of us to backstop them.

Worse (and I hate to have to return to the Referendum today on the EU), Europe is full of DB pensions too and they’re in a worse state than ours are. Another reason why we have to get out of the EU is that Brussels, sooner or later, will get round to thinking about “sharing the load equally” – and the UK will be the biggest single contributor to the EU Pensions Bailout.

We have to get away from these unelected politicians in Brussels. And to that end – it’s 0700hr here, and the polls are open. I’m away to cast my vote in favour of Leave.

#133 Paul on 06.23.16 at 2:04 am

Garth….why do you only tell part of the story? The CONS signed the TPP without protection for CP like a couple of other countries have done. Why doesn’t Canada Post take some of the billions in profits away from the banks by getting back into the banking business?

Canada Post is the only one that delivers to every address in Canada. They have more outlets then Timmies. Other countries expand into other services like banking, internet providers, cell providers, etc. There’s a lot more then 1rst class mail. The possibilities are endless. Unless of course you are a Conservative and then it’s all about privatizing and making your friends rich instead of paying millions in dividends to the public coffers like CP has been doing for years.

#134 Freedom First on 06.23.16 at 2:37 am

#126 Bat Flipper

Yes. That is why the truly wealthy, who are also wise, invest in a wide variety of hard assets. Such as: Art, Autos, Watches, Jewelry, Precious metals, Antiques, to name only a few.

This is on top of having a liquid, balanced, and diversified portfolio.

Nobody who is truly wise and wealthy has too much of their wealth in only one, or very few assets. That’s for stupid people.

#135 nonplused on 06.23.16 at 2:39 am

Garth, you should always marry well. As I like to say, “I don’t mind giving her half the house and pension if she paid for half of them!” Only marry a woman who works.

Look guys it just doesn’t matter how big her “assets” are if they aren’t financial. The only woman you want earns about the same as you do and has similar assets and financial plans (and definitely does not have any kids from a previous relationship!!!)

Don’t go for the girl that says she has similar financial plans now that you have bailed her out. Baad!!

As for the CPP thing, what a useless thing to talk about! The thing is insolvent and cannot be saved even by these rate hikes. See, what they are doing is a classic scam! You pay in more now and we will pay you more later! But the money is to pay the shortfall now. When now becomes later there won’t be anything and anyone under 50 should expect nothing. Unless they can raise the CPP contributions to $30,000 a year it’s a dead program, eventually, and if they can raise it to that amount I think there will be a fair amount of protest.

#136 TradeZero on 06.23.16 at 2:41 am

The lowest commission structure for the active traders.

#137 Keith on 06.23.16 at 2:55 am

$16500 isn’t cool. But 33000 per year for a couple, plus OAS of 11000, comes to 43 K. In Vancouver, where median family income is 72 K, all you need is 30 K in investment income to match that in retirement, or about 450k in a Garthian portfolio. And the CPP expense ratio is about .35%. And they can invest in private equity which you can’t. Beats the 2.5% most people are paying for their private sector solution. What, government does it better and cheaper? Ayn Rand is spinning.

#138 bdwy sktrn on 06.23.16 at 3:03 am

it’s brexfast time over in jolly ole uk. i’m having bracon and bremench toast.

the pound just dropped half a cent in a flash and looks fishy.

they need to go . island nation unlike europe.
scaremongering about the economy is just that.

this is not about dollars anyway. keep your identity, keep your rules, this is not a damn condo strata – you have your own real house. dont get swallowed into the mess that is euroland , and their poor plumbing and hygiene. Egad!

UK were wise and foresighted to keep the pound and will be equally right telling europe to go stuff themselves (john oliver was a sellout on this one, although the song was awesome)

#139 Julia on 06.23.16 at 6:14 am

#62 Shawn
“Most DB plans sort of forgive the normal reduction in pension that applies for going at age 55 as long as your age plus years of service sum to some magic number like 85. ”

My plan had a rule of 90 until last year. Most newer employees don’t make a career with 1 employer so it would not matter that much I don’t think but since the change applied to everybody it’s the current older, long term employees that lose out.
They also changed retirement age with full pension from 60 to 65.
Up until those changes I was eligible for full pension at 57. No longer.

#140 Julia on 06.23.16 at 6:23 am

#76 Boom
“Perhaps in a bankruptcy, pension obligations should be much higher-up the food chain, as it likely was not the employee’s fault, the promises made are getting diddled.”

Pension already ranks ahead of senior creditors in a bankruptcy to the amount of a wind-up deficiency.

#141 NoName on 06.23.16 at 6:23 am

for people from u UK that tread this blog, if you are about to vote exit write your neighbor name on balot, will be funny when though police pays him a visit…
go UK, go !!!

#142 Zen Headspace on 06.23.16 at 6:53 am

I mailed a letter yesterday. Yup. Bought a stamp, licked it, stuck it on the envelope, and put it in a mailbox. I am 56 years old, and I haven’t done that in a very long time. It was quaint. I had to do it because some poor dude I needed to communicate with in writing had no email. After reading Garth’s post today, I feel really good about myself, insofar as that stamp purchase will help add to the funding of the Canada Post employees’ pension fund. Good luck posties!

#143 CJBob on 06.23.16 at 7:36 am

#73 iwill on 06.22.16 at 8:37 pm
Oh Garth – didn’t you read the national post article..that basically explained….
That’s funny. The National Post doesn’t ever explain anything, they simply publish article after article of political opinion disguised as news.

And speaking of pensions going broke, it will happen to the entire National Post first. And soon. Google National Post losses.

#144 pBrasseur on 06.23.16 at 7:36 am

Great post Garth!

Want to know more about how public sector pensions are bankrupting this country? Check this out:

Inequalities matter but the real culprit is not the 1% who are essentially entrepreneurs, the true scandal is the massive transfer of wealth form ordinary Canadians to civil servants (and their politician bosses).

#145 Mr. Frugal on 06.23.16 at 7:43 am

#71 Smoking Man on 06.22.16 at 8:29 pm
Only a matter of time before this thought process catches on in Canada.


Milo is the absolutely right. We need to shutdown this SJW crap.

#146 maxx on 06.23.16 at 7:49 am

We used to spend at least $70 a year on Xmas cards and about the same again on other mail and bills. No more.
I’m also regularly getting uncancelled stamps on incoming snail mail which I reuse of course. Amazing, at least a dozen a year. Caching. :-)

These over-privileged “workers” exist in an alternative reality and their leaders are fools with seemingly zero clue as to how to run the operation. The worker attitude appears to be: “I’m invincible, I have all the rights in the world, and it says so right in my employment contract, sick days, holidays, DB pension and all!”

Management really ought to consider cutting back on the dumb, useless retail “merch” and focus on core services. I can just imagine the stockpile of crap warehoused in the back of beyond because there was no interest. Mini plastic mailboxes? Really?!

#147 Emma Zaun - GreaterFool Unpaid Intern #007 on 06.23.16 at 8:02 am

Garth, to save Canada Post, we propose that you take this blog back to snail mail.

All postings must be mailed in to your general store and envelopes opened by the interns, wit the blog mailed out daily for a small charge – god forbid, there will be so much work, you might actually be able to pay us, you prick!

The multiple postings by Smoking Troll alone should buy up enough stamps to put Canada Post back into the black!

#148 robert james on 06.23.16 at 8:03 am

This ad is getting some attention at the coast..

#149 Shawna on 06.23.16 at 8:07 am

Nowhere in your post do you mention the $ 15 billion raided from the Canada Post pension plan (and many other public pension plans) by the Chretien liberals to balance the budget.

Funny I would have thought you’d never pass up a chance at a partisan shot like that. But I guess railing against honest unionized workers who want to retire in peace is more important.

Are non-unionized workers dishonest? — Garth

#150 The Final Post on 06.23.16 at 8:11 am

Get a grip people.

This government, like all socialist governments (see Venezuela ) will tax its population into poverty. There is no end to their spending plans, so ergo, there will be no end to increasing taxes (printing money and/or expanding debt is a stealth tax).

Zero interest rates shows the disdain for capital and its formation and preservation. Debt is what they want.

So now you have to shoulder unacceptable risk to that (already heavily taxed) capital via overpriced assets (stocks and housing) that their policies have distorted the prices of ( low interest rates for 8 years will do that) to obtain any meaningful return.

Want a house?

We’ll just restrict land use and drop interest rates to the lowest ever and make gobs of debt easily available through our agents, (the banks) , who we will insure against YOUR default. Oh yeah, we have also allowed a lot of immigrants in to compete for your labour, so your wages won’t rise even though your necessary expenses will.

And you think this just all happened ?

Really ?

To say otherwise you are either naive or complicit in this destruction of the middle class.

And, for clarification, I am in my 6th decade on this planet, semi retired, and realize that I am very, very lucky to be ensconced in the much better than 1 % .

#151 maxx on 06.23.16 at 8:13 am

#33 Canada Bites! on 06.22.16 at 7:14 pm

“The government is so bloated, man Canada bites. Those Canada Post people are so entitled. They have crapy attitudes, all government workers have crappy attitudes. The other day I went into a government office and the lady at the front, just a jerk. A week ago, I went in to the passport office, front lady just a jerk. Fire them all.”

My experience as well, for the most part. I’ve never found this to be the case in the U.S.

Entitlement, entitlement, entitlement.

#152 Bottoms_Up on 06.23.16 at 8:13 am

#116 Twinky on 06.22.16 at 10:51 pm
Defined contribution carries no guarantees. I suggest you get your friend to reassess what the actual pension payout might be.

#153 George S on 06.23.16 at 8:14 am

Most national post office systems are crown corporations so are subsidized by the government of each country to make them affordable to the average person. They are not designed to be run at a profit.
Since times have changed, the mail service is mostly used by business for advertising and various notices, sometimes for bills and such. The parcel department is used to deliver parcels all across the country at a reasonable rate when delivery time isn’t critical. The planes and trucks are running anyway, Canada Post owns Purolator, might as well fill them up.
If you weren’t as a taxpayer subsidizing Canada Post, you would have to subsidize some other courier company to deliver to the far reaches of the country anyway.
When the SK government was talking about cutting back or eliminating the subsidized bus service (STC) to most small towns, the public outcry was so bad that they backed off and didn’t do it. The bus service was a lifeline for the communities. Farm equipment parts, elderly people needing to get to medical appointments, all sorts of parcel deliveries from the cities, flowers, plants, these are services that people need and want. Even the most right wing, low tax, zero government, die hard conservative rural SK people.
Canada Post serves the same purpose, only with letters and parcels, in the rural towns the post office is like a meeting place, people drive in for their mail a couple of times a week and go for coffee, etc.

#154 crowdedelevatorfartz on 06.23.16 at 8:14 am

@#127 White Crock.

Its been the law for oh about since forever( or when the multinational delivery companies were finally allowed to deliver door to door in Canuckda). Kinda like the same “protectionist” Air Canada Cabotage policies. Hmmm come to think of it. Their pension plan is bankrupting them too.

All the relevent info re Canada Post’s legislated monoploy is in the link provided. Enjoy.–_Canada_Post.shtml&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwj9lfDvjr7NAhVD2mMKHae6DRIQFggsMAQ&usg=AFQjCNHloDU4UJ–nIKjsCEiMcEdz_cCxw

#155 Linda on 06.23.16 at 8:16 am

“Your best defence against what’s coming in the decades ahead is to build our own retirement fund, and count on nothing else.”

Hmmm. How about this, then, Garth,…..

Your best defence against what’s coming in the health care funding shortfall ahead is to practice amateur medicine and learn which drugs to take and how to operate a scalpel from youtube videos, and count on nothing else.

Seriously, Garth, sometimes these neo-con talking points are so predictably lame and robotic.

We have built a S-O-C-I-E-T-Y together as humans, and we are to some degree interdependent, dear neo-cons.

We mutually agreed to use things like taxation to pay for costs, as Rawls would say, that could accrue to any of us, determined by chance and the unknown.

Sounds reasonable to me, and has worked, imperfectly but well, for centuries now.

What is unreasonable is how so many neo-cons become selfish greedy parasites on the overall system, rig it to their own benefit, then try to claim that the whole system is wrong (once they grow fat and rich) and should be abandoned.

CPP and properly funded and administered pensions plans are an overwhelmingly superior alternative to what you propose.

Nice try, though ;)

You should learn it’s possible to forward an argument without personally disparaging those who hold an opposite view. That’s most arrogant of you. Self-reliance is a virtue and skill more should learn. There’s nothing ‘fat’ or ‘parasitic’ in believing that. — Garth

#156 The Final Post on 06.23.16 at 8:25 am


I have experienced numerous RE cycles, not just in Canada and it is indeed different this time, and not just in Canada.

Do you think that Central Banks (including Canada’s) didn’t know what dropping interest rates would do to property prices, especially in the absence of supply ?

Do you think they will allow this to change, knowing that the wealth foundation and collateral of the world is real estate ?

They are buying TRILLIONS in bonds to keep it so. Do you see Central Banks diverging from these policies any time soon.

Forget it, put a fork in it, return to two classes – a lot of highly indebted poor with little opportunity to improve their lot in life and a small rich minority with no worries.

Governments worldwide are cheating their populations of their futures. Canada is a willing partner in this, the true “crime of the century”.


( and this is from a long time 1% member ! )

#157 fancy_pants on 06.23.16 at 8:29 am

#110 BS on 06.22.16 at 10:32 pm

Agreed that unions now do more harm than good. protecting the chaff destroys the wheat. If the gov’t could cull and replace the useless 1/3 of their workforce and replace with efficient workers, they would be far more efficient. They are carrying way too many liabilites on it’s payroll backstopped by PSAC and other public service unions. It’s no wonder the are trying to outsource what they can.

#158 crowdedelevatorfartz on 06.23.16 at 8:31 am

Apparently your reading and comprehension skills are up to par with most public servants.
What part of “unsustainable” did you not get in the “subect of the day”?
The Govt employee Defined Benefit Pension system is broke and getting worse daily.
And if you think unpensioned, overtaxed private sector citizens are going to sit back and quietly be taxed to death to pay for YOUR retirement…..
I’ve got some swampland in Florida for sale.

As someone else noted. Look to Greece and its bankrupt govt employee pension payments.
Arbitrarily cut buy 20, 30 , 50 percent.
Wack! Done.

Or the US cities in a similar predicament,(Detriot civil servants pensions Police, Fire, etc. cut, cut cut.)

Surprise, surprise, the govt employers actuaries lied to their employees
Its coming to a City, Province, Country near you.

And if you think taxpayers that have zero pensions will be happy to pay higher taxes to pay for YOUR retirement…………think again.
Be prepared.

#159 Ret on 06.23.16 at 8:33 am

Unfortunately, Canada Post appears to have many of the same problems that Stelco in Hamilton had.

1. Denial of the new realities in the global marketplace until it was too late to take meaningful action to save the operation.
2. A strong belief that the government and the country needs us, would protect us and would never let us fail. All of this, as Stelco’s steel customers were winding up their operations and leaving the country.
3. Refusal of labor or management to agree on just about every issue. Minor workplace issues invariably escalated and became on-going noise that diverted attention from the real big issues staring the company and the workers in the face.

Hindsight is 20/20. In 1972, standing in front of those five open hearth steal furnaces belching fire, watching liquid iron pours into Basic Oxygen Furnaces, and feeling the earth move as massive ingots of steel were repeatedly flipped and rolled, it is hard to believe how the company finally ended up.

Stelco’s 10-13,000 pensioners, amazingly, are still getting cheques from USS (U.S.Steel) but the union rant continues. USS wishes that they had never got involved.

Most of the other employers that folded in Hamilton just walked away and left workers to fend for themselves.

#160 paul on 06.23.16 at 8:33 am

Hey Garth
Is this why we don’t see who was responsible for the TFS,
I guess JUSTIN does not want any direct comparison to what he has accomplished. Oh wait

#161 Centre Wing on 06.23.16 at 8:57 am

“DB Pension Plan here as well. What a lot of people don’t realize is I pay close to 12% of every pay into it and cost has been rising over the years to get back to fully funded status. If everyone took 12% off their pay and saved it they would be doing ok in retirement as well!”


Same here. With the employer matching. I hate to think what would happen to all my contributions if something were to happen. The plan claims it’s 110% funded.

#162 Ole Doberman on 06.23.16 at 9:33 am

#108 Keith in Calgary on 06.22.16 at 10:25 pm

I haven’t bought a stamp in over a decade.

Canada Post can go under for all I care……….it’s nothing more than a junk mail delivery system now.

Sitting in Newmarket, Ontario, this week on another business trip. Nice little town…….clean streets, pretty landscaping, and some folksy character.

$800K starting prices on cardboard houses at a builder’s site I drive by everyday on my way to the client…..LOL……

Just sick, they’re just praying a HAM will scoop it up.

#163 sue on 06.23.16 at 9:38 am

I think we all send a message and go paperless bills/ statements. I did a few months ago. I had the odd opened piece of mail as well as missing a couple of bank statements. I spend way less time opening filing etc.
Wish I had done it years ago.

#164 salonist on 06.23.16 at 9:46 am

Robertson screw driver from Milton,ontario

#165 Rational Optimist on 06.23.16 at 9:59 am

117 Smoking Man on 06.22.16 at 10:58 pm

“Took me 1/2 an hour to figure out that I needed a Robertson screw driver when nothing was happening with star driver.”

Here’s a real Canuck. No need to know the proper name of any drive besides the Robertson. Good stuff.

#166 sue on 06.23.16 at 10:08 am

Garth, if you really want to stir the pot…would you be so brave to do a post on a very detailed example of DB pensions. For example what a teacher, federal/ provincial employee pays in throughout their career, what is matched by taxpayers and what an average payout would be.. When they can start collecting. Is any of this public knowledge? Actually I already know your brave for coming here nightly. But doesn’t that sound like fun people?

#167 salonist on 06.23.16 at 10:18 am


Toll lanes coming to QEW on Sept. 15

#168 Skeeter on 06.23.16 at 10:42 am

Garth – normally I agree with most of what you say but not in this case.

The Government pension plan was doing so well that a 28 billion surplus was taken out by Liberals and supported by the Conservatives. If the money had been left in the pension fund would be doing just fine.

Also don’t make it sound richer than it is. A federal pensions are reduced by any CPP received. In other words federal employees pay into CPP but don’t really get to collect it.

#169 Ole Doberman on 06.23.16 at 10:48 am

Does anyone know if the parabolic spike in Vancouver RE market is working off the frothyness yet?

Do we have any people on the ground to comment.

I emailed David from the $3.8 million, just asking about the absurdity of the price, no response yet.

Either he’s too busy caught in the crossfire of bidding war or he’s sitting twiddling his thumbs wondering where all the cowboys have gone.

#170 steelman on 06.23.16 at 10:51 am

DB pension well I have one, and I did belong to a Union that got it for me. So for all you Union bashers how are you doing NOW with your pension plan?? Its not working is it… you got sucked into the “Propaganda” about Unions. Even a bad Union is better than no Union. Get your share of the pie before bad management blows it away.

#171 BOOM! on 06.23.16 at 10:52 am

#140 Julia

Not necessarily true. Here in the U.S. anyway.

Ask the employees and retired of the city of Detroit, MI for example. California cities of Stockton, and one other are currently in the US courts.

Automaker Studebaker in South Bend, IN; or a myriad of private employers who have filed chapter 7, or 11 bankruptcy petitions in the US. For clarification chapter 11 is re-organization in order to ‘save’ the business, chapter 7 is outright liquidation.

Sometimes a chapter 11 turns into a 7 when the business is found not able to be saved.

#172 Gonkman on 06.23.16 at 11:16 am

@ #166 sue on 06.23.16 at 10:08 am

Sue.. I will save Garth some time. As DB Pensions are different by Municipal/Provincial/Federal it would be hard to list them all.

But for Federal Public Servants info is below. Since there seems to be soo much hate being posted. I will fuel the fire.

This is all publicly available knowledge. Just most people don’t care to use that fancy internet thing.

Link to info on Federal Government Pension Plan

Link to the Company Manading the Federal Goverment Pension Plan and Value/Investments it makes.

Federal Employees have had increases over the last few years so it is now 50/50 Employee/Gov contributions. ie: Employees are now paying more in. They have also changed retirement requirements for new employees since Jan 1st 2013. New employees must pay into and work longer to receive full pension.

The amount the employees pay in differs from year to year based on the employees Salary.

See Link below for contribution rates and payouts. But bring your Calculator.

I myself average almost 10% of my salary going into the Pension plan. There is no OPT OUT option.. if you choose to be a Civil Servant you must pay in.

Also note your RRSP Contribution room gets cut by a “Pension Adjustment” so my annual RRSP Room is very small. Which is why most DB Pension employees don’t have much RRSPs…They don’t get the Contribution room. Also why I am annoyed they cut the TFSA back as that allowed me to save more.

So read it and weap or actually understand how it works.

There has been soo much spew in the comments of people not understanding how the funding works.

But hey.. everyone hates lazy useless Public Servants..

Until they need to..

1. Use Roads and Infrastructure
2. Educate their children
3. Flush their toilets
4. Ensure the Drugs they take don’t kill them
5. Go to the hospital
6. Ensure Border Security and screen all goods coming into the country

Now think how things would be run if Private Companies ran all these things… really think.

#173 Julia on 06.23.16 at 11:59 am

#171 BOOM

This is a fairly recent issue that was ultimately decided by the Supreme Court that overturned an earlier court of appeals decisions in a CCAA insolvency proceeding. It may be different in the US.

Lets be clear though, the priority applies to the funding shortfall in a wind up of the plan in the insolvency and nothing else. Whatever is accumulated at that time is it.

#174 RyYYZ on 06.23.16 at 12:00 pm

I think I’m really going to have to look at retiring outside this country, as much as it pains me to say that. Between the limited amount I will have managed to save/invest for my own retirement, the piddly public pensions (much of which will probably be clawed back anyway), and rising taxes to pay for gold-plated pensions for others who didn’t need to plan for their retirements (they thought), I just don’t think I’ll be able to afford to live in this country in retirement, in any like the style to which I’m accustomed. And no, I don’t owe this country a damned thing in retirement – I’ve more than paid my way as far as whatever I may receive in public pensions.

And yes, I think people have a right to be upset over high levels of taxation to pay for very generous pension benefits for people who had good pay and job security for all their working lives, while the rest of us deal with job insecurity and stagnant pay levels. Why should they be compensated better than comparable workers in the private sector?

#175 Ace Goodheart on 06.23.16 at 12:07 pm

This is exactly what I’m talking about. Inflationary pressures. No government is going to be able to raise taxes enough to pay the interest on the debt, all of the unfunded obligations and still meet basic services.

This is what causes inflation and currency devaluation. What’s the best way to meet an unfunded pension obligation (and still get re-elected?). Answer: Borrow money.

How do governments usually pay back runaway debt?

By printing money.

#176 LDS Seventy on 06.23.16 at 12:15 pm

Retirement is a new idea not seen before the 1900’s. People either didnt live that long, or worked.

Focus on staying mentally sharp, physically active, because chances are high if you are not well, doctors cant fix it. To do this takes mental discipline.

Do I have rrsps, work pension plan, stocks? Yes. Will I be able to retire? Maybe. Another 25 years? Even when I retire I will be working always. Probably get a job in a fitness center again because I like weights.

By the time I retire most of these “boomers” will be in Heaven or Hell.

#177 PR on 06.23.16 at 12:28 pm

Did you know that more than 50 real estate and mortgage agencies have closed, in the quebec province, at the renewal of permits in April 2016. So 2017 look to be, interesting, to say the least.

#178 Bat Flipper on 06.23.16 at 12:41 pm

Just like houses in Vancouver, taxation will eventually take on a hockey stick graph. Just like our Federal debt.

As our personal, federal, and provincial debt spirals out of control, so will our taxation system.

We have kicked the can so many times down the road; eventually, it will catch up to us. Generations have made a bill that they won’t and don’t expect to pay. Lots of people buying homes, never expect to pay it off.

#179 Looney Baloney on 06.23.16 at 12:45 pm

#172 Gonkman

Thanks for the info, but are you suggesting your behaviour and performance to perform a given task would be different based on whether you were hired by a private company or by the government?

#180 gladiator on 06.23.16 at 1:09 pm

@175 Ace Goodheart:

Governments don’t print money. Central banks do. Governments then BORROW this money from central banks at interest and pay for stuff/services. Then, governments tax their citizens in order to pay the banks interest and repay the money borrowed.

The big question is who central banks belong to and who benefits from interest on money lent to governments.

If central banks belonged to their people, governments would not have to borrow money at all. They would be completely debt-free and taxes on populace would be way lower, because there wouldn’t be any interest to be paid, and this burden just keeps growing. Another way to put it: we are being fleeced big time by someone via our governments. But who are they? The mistake of the sheep is to confuse their shepherd with their owner, but these are two different people. The shepherd just takes care of them, milks and shears them. The owner gets the profits.

#181 Ace Goodheart on 06.23.16 at 1:29 pm

RE: #180 Gladiator: Partially true however in Canada, it is very difficult to find any separation or dividing line between the Bank of Canada (who print our money) and the Ministry of Finance. Legally yes the lines are there. Practically, not so much.

I agree that the United States long ago adopted a form of “fiat currency” system which now benefits a certain (and very small) ruling class by having what are essentially NGOs print and loan money to the government at interest. However even this system is very closely tied to the ruling government.

RE: #178 Bat Flipper: Governments that over tax their population, don’t get re-elected. What ends up happening is governments “buy” the population with election promises that they cannot deliver, and then borrow money to keep throwing it around, so they can win future elections.

In a Western style democracy, any action taken by a sitting government, be it for spending, taxation, borrowing, any policy at all, is taken for the purpose of GETTING RE-Elected. Any benefit that derives to the general population as a result, is just a happy co-incidence.

#182 Julia on 06.23.16 at 1:40 pm

#180 gladiator

Here’s a thought: If the Government balanced their budget and paid back the debt, they wouldn’t need to borrow.

Being able to borrow at zero interest only makes it easier to get further indebted, as the current rates show for debt hungry Canadians. Wouldn’t zero interest make it worse?

#183 numbercruncher on 06.23.16 at 1:46 pm

“Your best defence against what’s coming in the decades ahead is to build our own retirement fund, and count on nothing else. Or marry really well.”

The way that things are going these days, you probably need both.

#184 Aggregator on 06.23.16 at 1:47 pm

#175 Ace Goodheart – How do governments usually pay back runaway debt?

No government throughout history has ever paid its debt other then Romania under Ceausescu's regime.


Anyone who's on fixed income (paid in CAD) with little or no knowledge of investing and wealth preservation will be ruined by inflation over the long run. Government schemes such as TFSAs, RRSPs, RIFFs are just as unreliable as CPP because Ottawa will change the rules on retirement as they go.

Read history. You're on your own.

#185 A Canadian Abroad on 06.23.16 at 1:47 pm

As a financial trader, I’ve been actively monitoring the Brexit pulse on the markets on a tick-by-tick basis.

As of writing, Leave is +7%

Even though I am in the financial industry and don’t want to bite the hand the feeds, I have to do my own due-diligence and say you might have noticed it’s the Financial and Political interests that are pushing for a “Stay” vote. That should be a BIG warning to citizens.

I have lived in the UK for 3.5 years and would vote leave myself if I was still there. Britain will survive, the EU in it’s current structure; I’m not so sure.

Bloomberg’s current odds: Leave 25%, Stay 75%. — Garth

#186 Brydle604 on 06.23.16 at 1:49 pm

#163 Sue Green my Ass

Banks and utility Companies love to sell the idea that by downloading their bills over the internet, you are saving the earth.

The reality is they are saving money at your expense.
Now you get to use your printer, your consumables, your electricity, your time and saving them postage which you are already paying them for.
When was the last time they gave you a discount for going to so called paperless?
Canadians are sure gullible! It is all BS Downloading cost onto the customer.
Re banks, I can print out or put the statement in a spread sheet any time I need them if I cannot find a statement, no problem.
End of Rant.
I feel much better now.

#187 ponerology on 06.23.16 at 1:56 pm

The issue isn’t defined benefit pensions per se. The issue is that the contributors weren’t made to pay in enough in order to keep the fund viable (probably because of union issues). They aren’t meant to work on one generation’s contributions paying for the benefit of the next but for a variety of reasons this is what happened. The advantage to the “glorified RRSP” DC pensions (or if you are lucky enough for your employer to kick in a matching contribution) is that the amount is known, and is yours no matter what happens to your employer. The downside is the crazy fees you pay to assume investment risk over which you have less control in terms of participation and investment selection.

#188 ponerology on 06.23.16 at 1:57 pm

(sorry to post again): it’s also just not public sector DB plans that got mismanaged.. also some private sector ones which have been the demise of several companies

#189 WalMark of Sadkatoon on 06.23.16 at 2:06 pm

#155 Linda on 06.23.16 at 8:16 am

found the poor person

#190 John on 06.23.16 at 2:11 pm

Defined benefit pensions are a great way to trap people into working the same boring job that they hate for 30 plus years. I hear it almost every day at work. “oh I hate coming here. I’m so sick of this job. But I need to put in just another 5 more years to get my pension! ”
It is pathetic beyond belief.
If you have a defined benefit pension, save and invest and pretend you don’t have it. When you get sick of your job, take the commuted value as a cashout and move on to something else.

#191 BOOM! on 06.23.16 at 2:32 pm

Defined Benefit plans are nice to have, but they ARE history.

Demographics, and longevity risk killed them.

If your “defined benefit” plan insisted you would croak by the mortality tables used when it was established, say 1945-50, and the average age at death was 69-72 depending on whether you were male, or female, and benefits were ‘cut-off’ then, I think the plans would have been fine.

Medical science, life style changes, and productivity gains (worker attrition) all caused the death of the DB plans.

Only “slow” government, who ignored the voices of actuaries for years-now has the proverbial ‘shit storm’ from both workers adverse to adjustments (read: change) and tax payers, who correctly are NOT in a mood to pay “geezer fees” in the form of increased taxation.

In 1983 the US Federal Government changed their DB plan called CSRS “civil service retirement system” to a modified DB (much much smaller) along with a 401-K system with a company match up to 5%.

Existing Federal employees had the option of switching from CSRS to FERS in the early years, though all new Federal employees were FERS employees and subject to social security withholding!!

CSRS employees were not subject to social security taxes, and unless they worked a job outside of government, never paid into social security. Incidentally, the civil service dates back to 1883. The CSRS retirement system was created in 1920, as a lot of employee had been there for 37 years, and you either worked until death, or health issues caused you to leave your job. (OK, cold but quite effective). (CSRS deductions were significantly more than social security rates, and paid out a higher benefit as well).

Remember there was no social security until 1937. and the 1st checks issued in 1940.

So, as histories go, retirement histories, and actuarial histories are really not THAT long. So, give the employers who turfed their DB plans a break, as well as Canada Post.

This does not give them license to ignore the realities of today, nor the responsibilities to protect their own asses in retirement.

It is NOT any government, or taxpayer’s responsibility in MY opinion. A compromise for those with more years seems in order, those with fewer years on board will probably get little or, nothing from the present system, but will have more time to adapt to a defined contribution plan.

So, if they want to strike, let them. Perhaps Canada’s Taxpayers might consider doing the same… who wins??

I’ll never understand the slashing of the TFSA and the goosing of CPP. A double loser all around, but hey most politicians are economic imbeciles.


#192 westcdn on 06.23.16 at 2:40 pm

I watched the Rocky Horror Picture Show the other day. One of my favorite movies though it clocks behind the Godfather series. This Drew Carey episode/scene says in my mind – it was a TV series I loved.

I liked this scene too

As for Calgary, I think we are in for a cold winter. God, our politicians seem to think we, private sector workers, are made of money. They are gifted with public funds yet want us to pay more. Well I don’t think so.

#193 Shawn on 06.23.16 at 3:11 pm

Governments Need Not Pay Off their Debts

#184 Aggregator on 06.23.16 at 1:47 pm said (warned?):

No government throughout history has ever paid its debt other then Romania under Ceausescu’s regime.

I think the implicit and faulty assumption here is that governments SHOULD ever pay off all their debts and have no debt.

Governments and citizens find it beneficial for governments to have some debt. We kind of like having a roads and hospitals and all manner of things without first saving up all the money to acquire these things without debt. Citizens will always prefer government debt to the alternative – higher taxes.

Governments do not need to ever pay off all their debts primarily because governments can exist indefinitely. Countries do not die. If a country is absorbed into another country the combined country takes on the debt.

Corporations also need never pay off all their debt. General Electric has been part of the DOW Jones Industrial Average since inception of the DOW in, I believe, 1896. You can bet that GE has more debt now that it did decades ago.

The debt of Berkshire Hathaway increases every year. Yet it has one of the top credit ratings and has “Gibraltar-like financial strength”.

If no country but Romania has ever paid off all it’s debt do you think that maybe, just maybe, Romania was the place that got it wrong?

Worrying about government debt has been ongoing since governments borrowed their first dime. In most cases (certainly Britain and the United States) such a worry has been totally misplaced.

Faulty conclusions stem from faulty assumptions. Assuming that a country like Canada or the U.S. or the U.K. or Japan or Germany need EVER pay off all its debt is a completely false assumption.

#194 CJBob on 06.23.16 at 3:15 pm

#78 derric brannagan on 06.22.16 at 8:48 pm
Aren’t you forgetting that the $21.9 billion is also making a return of let’s say for arguments sake 7%….
He didn’t forget, he left that part out because the details sound scarier without that fact.

Garth is a very smart and persuasive guy and developed this writing style way back in the newspaper days. I used to pickup a copy of the Sun and flip to the business section first before the sports. Smart guy and he makes many really great points but it’s amazing to watch many of the commenters take everything he says as gospel. If you torture the data long enough it can tell you anything.

Talk like that risks a smiting. — Garth

#195 Smoking Man on 06.23.16 at 3:35 pm

Trump has a new website up

Apparently a lot of the voting stations at the Brexit only provided pencils. What could go wrong?

#196 Neil Armstrong on 06.23.16 at 3:47 pm

Email has been here for 20+ years, Canada Post has survived on parcel delivery (at monopolized/subsidized low rates as pointed out by an astute poster) until now. But guess what, CP is about to be left out of that loop very shortly as Amazon and others eat their lunch. You can have your products stocked, inventoried, packed and shipped, with your customers taken care of…all for less than the cost of shipping it out yourself. Game changer. DISRUPTION. CP is trying to do that with their Purolator division but predictably failing miserably. It’s all but over.

Now on to something I noticed that maybe some others can verify… A triple cameltoe forming in CNYCAD, CNYUSD, and CADUSD !!!???

#197 Aggregator on 06.23.16 at 3:58 pm

#193 Shawn  – I think the implicit and faulty assumption here is that governments SHOULD ever pay off all their debts and have no debt.

Look no further then Japan if you think governments should have no monetary restraint. It is mathematically certain that you will see Japan default or hyperinflate within your lifetime. This is the world's third largest economy not some banana republic.

And if you think China's capital outflows are a burden on Canada's economy, wait until Japan implodes.

#198 pensiondown on 06.23.16 at 4:06 pm

People move to canada and bring their old parents , grandparents and then start claiming retiring pension….and people having a pension should not be let work part time anywhere….this is a small part of the problem but should be address…..

#199 Ace Goodheart on 06.23.16 at 4:12 pm

RE: #193 Shawn:

“Faulty conclusions stem from faulty assumptions. Assuming that a country like Canada or the U.S. or the U.K. or Japan or Germany need EVER pay off all its debt is a completely false assumption.”

That’s not the point. What I am saying, is that our decade or so of ultra low interest rates, have resulted in a massive increase in government debt, which is currently serviceable ONLY because rates are so low.

If rates rise then governments will not be able to renew their debt and keep up with the interest. Ontario is particularly pickled in this respect. This Province cannot balance a budget, borrows billions each year, and has interest on its debt as one of its largest expenses.

And then there is the debt itself. Have a look here:

Do you know what a “syndicated bond” is? 79% of our Ontario public debt is syndicated. For a government, that means that there wasn’t enough interest in purchasing the debt, so the government sold it to banks instead, who underwrite it and promise to buy all of it, if there is not enough interest in selling it to the public. Now why would a group of banks want to do that? And why would a government use that type of debt for 79% of its total borrowing?

Have fun reading about it. Then come back and tell me that we’re not in deep trouble.

#200 Penny Henny on 06.23.16 at 4:20 pm

#194 CJBob on 06.23.16 at 3:15 pm
#78 derric brannagan on 06.22.16 at 8:48 pm
Aren’t you forgetting that the $21.9 billion is also making a return of let’s say for arguments sake 7%….
He didn’t forget, he left that part out because the details sound scarier without that fact.

Garth is a very smart and persuasive guy and developed this writing style way back in the newspaper days. I used to pickup a copy of the Sun and flip to the business section first before the sports. Smart guy and he makes many really great points but it’s amazing to watch many of the commenters take everything he says as gospel. If you torture the data long enough it can tell you anything.

Talk like that risks a smiting. — Garth

It’s not lying, it’s just leaving out some important details in order to make a more convincing argument.
Told you before Garth I would have hired you to manage my portfolio but I can’t find it in myself to trust you when you play fast and loose with the facts.

#201 Ole Doberman on 06.23.16 at 4:29 pm

#190 John on 06.23.16 at 2:11 pm

Defined benefit pensions are a great way to trap people into working the same boring job that they hate for 30 plus years. I hear it almost every day at work. “oh I hate coming here. I’m so sick of this job. But I need to put in just another 5 more years to get my pension! ”
It is pathetic beyond belief.
If you have a defined benefit pension, save and invest and pretend you don’t have it. When you get sick of your job, take the commuted value as a cashout and move on to something else.
80% of jobs out there aren’t exactly stimulating – but since most have to work with no ifs or buts about it then receiving a company pension is a huge perk, especially a DB.

Stupidest comment I’ve heard on this blog – doberman

#202 Ole Doberman on 06.23.16 at 4:31 pm

Bloomberg’s current odds: Leave 25%, Stay 75%. — Garth

Judging by the close of the DOW and gold, I think the market already knows.

Next up, Mr Trump….

#203 earthboundmisfit on 06.23.16 at 4:54 pm

“Reagan-ize” the f***ers. The inside workers are the laziest turds around.

#204 Herb on 06.23.16 at 5:04 pm

#185 Canadian Abroad,

why do you suppose the markets are way up to-day? They wouldn’t be if Britain had decided to screw itself. Smart people, even Brits, know that it wasn’t God that made “the Land of Hope and Glory” mighty, and that the Royal Navy and colonialism aren’t what they used to be.

#205 conan on 06.23.16 at 5:07 pm

Bloomberg’s current odds: Leave 25%, Stay 75%. — Garth

I am hearing it is a coin flip at best. Bloomberg’s methodology is terrible. For example, they assume ridings that voted “Scotland Stay” will also vote for Stexit. Two completely different arguments.

If I had to guess on the coin flip outcome it is Brexit. The older citizen that remember times before integration want out. They are also more likely to vote.

So up to the youth vote and no one can predict that.

The market’s sentiment at the close: Brexit is dead. — Garth

#206 conan on 06.23.16 at 5:52 pm

Brexit is dead. — Garth

Results start coming in at 7 pm our time. Should be a feisty evening. I think it is going to be close.
Not like I am shorting the Pound….or anything.
what does Smoking Man think? The World wants to know.

The latest poll (after voting ended) was 52-48. The pound surged. Update: the pound plunged. — Garth

#207 Entrepreneur on 06.23.16 at 6:01 pm

How do you think the party that is in get elected? They give rosy pensions to the public workers and guess who they will vote for.

Except for the private side where a business will go down and the pensions will disappear if did not collect in time. My dad collected early and in time but just in time but he said (RIP Dad) when the company folded a lot of the workers lost that DB plan. Early eighties.

Missing the point of life with Savings and Retirement Funds: We can only do what we can do at that time. It is called living and surviving. Not everyone can play that game with above example.

The Brits voting on the EU referendum, maybe leaving will give the people of Britain more spirit. Money sometimes is not the driver. Canada needs to bring back spirit, a Canadian spirit, as with the U.S.A.

#208 Julia on 06.23.16 at 6:22 pm

#193 Shawn
Except that GE and Berkshire do not lose money or run a deficit like the Government. They have the capacity to meet their debt obligations in the normal course.
They are just using leverage for the benefit of their business.
Not quite what the Government is doing.

#209 Ace Goodheart on 06.23.16 at 8:03 pm

Re: #207: “Canada needs to bring back spirit, a Canadian spirit, as with the U.S.A.”

We have never had spirit. What we have here is referred to as “obedience”.

It’s just history. The USA declared independence and everyone became very worried about their personal rights.

We did not do that. So we still have our “governor general” (like all former British Colonies that never officially declared independence) and we still have “The Crown” telling us what to do and controlling us.

The only difference is now “The Crown” is really a bunch of well connected civil servants.

When you get an elected government in your Province, elected on a mandate to change things, and they can’t even do that, because those representing “The Crown” have more power than they do, things are getting ridiculous. Americans would never put up with an arbitrary “Crown” composed of unelected persons, trumping an elected government.

That is how things are in Canada.

#210 John on 06.23.16 at 8:06 pm

#201 Ole Doberman

Suggesting people with pensions save money on the side is the “stupidest comment you have ever heard”?
Wow, Okay!

#211 csarichardo on 06.23.16 at 9:07 pm

Increased CPP is a forced savings plan…probably not a bad idea especially if the masses can not even save to put into TFSA !!??

It’s a three terr system … public pension (CPP), private pension (corporate) and self funded !!!

Forcing a more balanced or increased public is not a bad idea especially since the USA is your model because their social security is way ahead of our CPP !!!

#212 Greg on 06.23.16 at 9:40 pm

Maybe if governments and corps weren’t so quick to grab past DB pension surpluses things might look a little rosier now?

Wasn’t it Chreiten who scooped $30 bill out of the Canada Post DB?

#213 steerage steward on 06.24.16 at 12:15 am

England left EU, markets freaking out.

Does not change my long term financial plane. Just need to purchase another 500 rounds of ammo is all.

#214 Nick on 06.24.16 at 7:41 am

Must have been a long night for people who play the market. I slept soundly through it, bonus of having pisspoor 2% guaranteed investments.