It’s coming

Remember Sears? You should. There are lessons here.

Killed by bad management, competition and online retailers, the Canadian operation went down and took 18,000 jobs with it. Those people had spent years contributing to their  pension plan, which the company was also supposed to fund. It didn’t.

So when the end came the plan was $260 million short. Retirement benefits were gutted. It was a financial disaster for thousands of people who could not weather one. In fact, when promised health, life insurance and other promised benefits were added in, retirees claim Sears screwed them out of a collective $730 million.

Meanwhile, secured creditors – suppliers, banks – were paid. The residue came to $135 million. On Friday the former employees sued to get their hands on at least that amount before it could be handed off to the next tier of claimants.

So what?

Most of us don’t have secure pensions. Seven in ten lack defined-benefit plans, which provide an assured payout after a specific length of time. That’s why there’s so much pension envy for teachers, cops, civil servants, some bankers and a bevy of government workers. The rest, if lucky, are members of DC plans – basically glorified group RRSPs – funded partly by employees and the employer. There is no guaranteed benefit in retirement, since the money is invested (usually in mediocre insurance company mutual funds) and will be affected by market conditions. So, just hope you retire in the right year.

The Sears experience exposes a dirty little secret – that governments routinely allow companies to underfund pension plans, then put retirees at the back of the bus when a corporate failure occurs. Stelco and Nortel workers learned the same thing. So until this situation really changes (which may be never) don’t put a lot of faith in your company plan. It should not form the mainstay of any retirement strategy.

If you do have a DC plan with a bunch of lowlife insurance funds to choose from, pick a balanced one that will coordinate with your own investments. Don’t opt for an aggressive growth equity fund since fees and volatility will be higher. Don’t pick a bond fund now that interest rates are on the rise. And don’t go for just maple – try to find a fund which will give global diversity.

When you change employers (this is a gig economy, after all) don’t leave the accumulated pension contributions sitting with the old company’s pension plan. If you can move them into a self-directed RRSP or LIRA (locked-in retirement plan), do so. Then sell the mutual funds and replace them with lower-cost, efficient ETFs.

If lucky enough to have a defined-benefit plan that allows you to take the money out upon retirement, do that. This is called commuting the pension. Part of the funds will be rolled over tax-free into a registered vehicle (like an RRSP) and part will go to you as cash, which must be declared as income in the year you receive it. Yes, it’s taxable, but all pension money is. By paying the tax now and investing the rest you will probably be further ahead in the long run.

There are significant benefits to commuting. The funds can be invested to earn a better return than if left with the pension plan. You control your own retirement nestegg instead of leaving it to others (remember Sears). If you croak all of the money can be passed on to your family, or others, instead of having payments cut off. And it’s possible to reduce taxes by tailoring cash flow to your needs rather than getting a monthly cheque with tax withheld by the pension plan.

Over twenty years ago I wrote a book saying the Boomers would end up in a retirement crisis. Here we are. It’s a mess. But things will be even more dire for the Mills – a larger demographic without windfall real estate profits to cushion them. In fact, it’s the moisters who are busy financing the retirement of the wrinklies, taking on epic debt to buy their inflated houses. This transfer of wealth between generations is historic – from the young to the old, trading debt for equity. It’s shocking.

Here’s a prediction. Pensions will be the flash point of the future. Politicians will fail to face the issue. Do not fail yourself.

141 comments ↓

#1 Mondo on 07.23.18 at 5:41 pm

First?

#2 Old gringo on 07.23.18 at 5:47 pm

Starting to see many new Canucks and Americans coming down to Mexico and fueling out real estate boom.
Something is sending them here.
Any thoughts??

#3 Retired in Kelowna on 07.23.18 at 5:47 pm

I’m a bit nervous about present and future Federal Governments fiddling with RRSP’s and TFSA’s. There is just too much money sitting there for them not to go after some of it. Any comments Garth?

#4 Smoking Man on 07.23.18 at 5:55 pm

Shooter identified.

My personal policy never publicizes murders names. Why glorify them. T2 may be in deep dodo, found a facebook page resembling his face with his name.

Not good.

#5 The Greater Cauliflower on 07.23.18 at 5:58 pm

The wealth transfer will soon swing the other way from Old to Young when the wrinklies start to die off.

#6 Lucas on 07.23.18 at 6:00 pm

Hi Garth, I have a target benefit plan through MSPP, which I guess is somewhere between a defined benefit and defined contribution plan, any opinion on them?

#7 Hog on 07.23.18 at 6:06 pm

First

#8 Honey Dripper on 07.23.18 at 6:06 pm

“Youth is wasted on the young”
Time for a new book Garth, it’s been awhile and Canada’s youth needs to hear from you.

#9 Randy on 07.23.18 at 6:08 pm

Great article Garth. Thanx for the clarity.

#10 Tbone on 07.23.18 at 6:10 pm

I had a pension plan .
Company I work for sold the distribution portion of the business and
Pension was no more.That’s how they got out of the pension responsibilities . They did this across North America.
We could of left the cash in and collect a monthly income or take the lump sum . 90 % took the lump sum.
I own the cash in a locked in account at a bank invested in fidelity funds.
They started a new less lucrative plan at work which grew quite nicely in a mawer balanced fund . Better than nothing.
New hires get nothing .

#11 Jimbo on 07.23.18 at 6:13 pm

I believe the CAF offers to payout $500,000 today if you have your full 25 years. Most retire at the age of 45-50. You would clear that amount before age 64 if you left at 50. At 55 it is fully indexed to match inflation for the previous 5 years and matches each year after that. I can’t see how I could beat that pension in the market

#12 Leo Trollstoy on 07.23.18 at 6:25 pm

Youth is wasted on the young

Money is wasted on the old

Lol

#13 Smalltownsteve on 07.23.18 at 6:25 pm

I have about 820k in my pension through local 488, I’m 49 and can retire at 58 but if I wait until I’m 61 will get full benifits. So I’m hoping you are still here in 12 years so I can pull it all and invest it with you.

#14 Westcdn on 07.23.18 at 6:36 pm

#26 Stan Brooks on 07.21.18 at 4:57 pm

Thanks for your opinion. I did my homework and concluded a commercial mortgage from my RSP doesn’t work for me at this time. Canadian real estate are simply too high for my risk tolerance – I have missed many opportunities when it sounded too good to be true but I also missed many more disasters.

Italy is my favourite country to visit. The people treat me well, the country is bountiful and there is history of human endeavours to see. I would like to ride/walk the Appian Way – Romans where the best engineers of their day. They built things to last. I guess at the end of the day, the Roman Empire failed due to hubris, plagues and a push from fertile Germanic tribes. Payback can be a bitch. I initially found it weird that most public washrooms had a tip dependent attendant until I found water closets without. It reminded me of Newfoundland banning self-service gas stations to create “jobs”.

The chances of me leaving Canada is next to zero. My French heritage has been here almost four hundred years and my mother’s side even longer. I was born to survive our winters and make do when the sun is shining. Plus I get sunburn easily. It is in my genes to be an Albertan Canadian and you take that to the bank. The flag I march under does not matter if Alberta is respected.

In my opinion, debt markets drive the economy and in my mind interest rates matter. This is a tough read on rates
http://scottgrannis.blogspot.com/

What comes next? My guess – higher asset prices, inflation and higher interest rates in the short run until a recession that costs jobs. Deflation is a way down the road after a giddy period of fake growth.

#15 Paul on 07.23.18 at 6:37 pm

#4 Smoking Man

Shooter identified.

My personal policy never publicizes murders names. Why glorify them. T2 may be in deep dodo, found a facebook page resembling his face with his name.

Not good.
_____________________________________________

Why not just say it. This crypto talk is not you?

#16 Yanniel on 07.23.18 at 6:38 pm

“mediocre insurance company mutual funds) and will be affected by market conditions. So, just hope you retire in the right year.”

Can’t the same be said about any investment (even those with ETFS)? How are the market conditions affecting more the insurance company mutual funds than the ETFS?

#17 Joseph R. on 07.23.18 at 6:39 pm

“There is no guaranteed benefit in retirement, since the money is invested (usually in mediocre insurance company mutual funds) and will be affected by market conditions. ”

These same mediocre insurance companies also sell Segregated Funds, in which the principal funds are guaranteed (75-100%) if you hold your fund until the target date (usually 10 years). They come with higher fees for that protection.

It is a guarantee nobody needs, and is hideously expensive. Bad idea. – Garth

#18 Brian on 07.23.18 at 6:47 pm

Great timing on this for me. I just would like to know the actual commuted value of my DB pension in order to make the decision whether or not to take the job I have been offered, but unfortunately I can’t get this info unless I formally resign. I have a feeling this is by design. Is there a known formula to at least get a ball park estimate?

#19 Wrk.dover on 07.23.18 at 7:00 pm

Our plan A is to continue our ability to not need any more than CPP and lately OAS to stay afloat, as we have spent the last decade doing with a little substitute teaching on her part pre OAS.

Plan B is to continue enjoying half of the DBP income for travel and saving the other half for as long as the DBP lasts.

Plan C is to cut into the savings for care when plan B fails.

The financial engineers plans are to vaporise our savings sooner than later though. And the DBP.

#20 Willy on 07.23.18 at 7:01 pm

We need pension reform in the public sector ending cash-for-life defined benefit pensions and putting government workers on the hook for funding 50% of what is eventually paid out. Public sector workers retiring before the age of 60 should have their pension payouts clawed back accordingly.*

We need pension reform in the private sector regulating pension funding and moving pensioners to the front of the creditor line so as to protect workers should a Sears or Nortel event materialize. My Dad (ex-Nortel) experienced this disaster first hand, a 40% haircut.

As I have mentioned before on this God foresaken blog:

Only fool’s (like me and my wife) work in the private sector. If you are senior mgt or executive mgt you will retire comfortably. If not, your going to have to squirrel away $10K-$15K per year for 35 years to have what the average public sector worker is entitled to at 55.

Every young worker today should spend their first 5 years after graduation doing everything in their power to secure a full time government position. It’s really the only game in town today.

The current sitation is not just unfair, it’s unethical and immoral. Walmart Greeter’s are funding cash-for-life retirements for their public sector neighbour’s while the y will most likely spend their’s barely above the poverty line.

*These reforms will likely never occur. Ontario teacher’s (among the highest paid in the world!) have been on the hook for 12% of each pay to fund their plan. The unions simply fought for and eventually won massive pay increases to cover off the employee portion. Therefore your average teacher in Ontario earns $100K after ten years. Despite this, their pension fund is struggling to cope with retirements that last longer than the employee’s working life. That’s why only a few years ago a portion of special education budget was redirected to teacher’s salaries!

#21 Jungle on 07.23.18 at 7:06 pm

I have DC plan, every paycheque I contribute max amount and employer matches. Money is sent (almost) immediately to insurance company and invested when I check online.

Howcan I be sure employer is not underfunded and can they take this money back if something happens?

#22 FOUR FINGERS WATSON on 07.23.18 at 7:09 pm

I had the opportunity to commute my DB pension when I retired. I crunched the numbers I did NOT like the amount offered so i said no, just send me a cheque every month. I self direct my RRSP and my TFSA and my market account so I think I am well balanced. So far so good…….

#23 pay your taxes on 07.23.18 at 7:15 pm

There are significant benefits to commuting. The funds can be invested to earn a better return than if left with the pension plan. You control your own retirement nestegg instead of leaving it to others (remember Sears). If you croak all of the money can be passed on to your family, or others, instead of having payments cut off. And it’s possible to reduce taxes by tailoring cash flow to your needs rather than getting a monthly cheque with tax withheld by the pension plan.”

Our plan (BCPSPP) has 26 billion or so under management, is well governed and 108 percent funded. Last year it made 12% and will raise the lifetime benefit (while eliminating the bridge). I’d have to be high to commute from a plan like that. Commuting will allow someone to defer taxes but every penny inside a LIRA/RRSP is fully taxable.

Estate planning alone makes commuting a reasonable option. BTW, every pension payment you ever get will be taxable at source. There is no escape. – Garth

#24 LP on 07.23.18 at 7:15 pm

#4 Smoking Man on 07.23.18 at 5:55 pm
Shooter identified.

My personal policy never publicizes murders names. Why glorify them?

Something we can fully agree on!!!

F71ON

#25 the Jaguar on 07.23.18 at 7:17 pm

Garth, what about the option of a copy cat annuity?

#26 mike from mtl on 07.23.18 at 7:17 pm

#16 Yanniel on 07.23.18 at 6:38 pm

Can’t the same be said about any investment (even those with ETFS)? How are the market conditions affecting more the insurance company mutual funds than the ETFS?

///////////////////////////////////////////////////////////////////////

Personally I’ve had few of these DC RRSP from a few employers, which I always transferred after leaving. They all were scrap to put it nicely. Even with ‘matching’ none could even muster 1%/yr. Today I always contribute the absolute minimum to these plans.

To your question, my experience is that active funds do far worse than passive / buy and hold. Example it never recovered from 08-09′ only my own contributions got me back years later. True market is the market no matter but these active funds take that control from me and you know tend to do worse anyway.

I’ll take my chances with ETFs and the ‘real’ market thanks.

#27 N on 07.23.18 at 7:18 pm

Got a letter from my DB firm today, Commuted value – 223K. Unfortunately too low to invest with Garth’s firm. If I remain with them they offer me 677$ a month in 11 years with a COLA.

To be accurate, there is no set minimum amount to be a client. If I can help somebody economically, I will. – Garth

#28 Tbone on 07.23.18 at 7:24 pm

# 18 Brian

This is how mine was calculated, not sure if it will be the same for you though.
Take the average of your last 5 years of salary .

Multiply this by .015 , then multiply by years of service less one year
As you need to work one year before you gain entry into the pension

Say you made 100k average and have 25 years of service
100000 x .015 x 24 = 36,000.00 per year

This was no secret , our human resources published the formula openly
and also did some calcs for you to show what you get at 60 in a booklet
They gave each of us yearly .
Guess I worked for a good company prior to being sold.

#29 Dominoes Lining Up on 07.23.18 at 7:25 pm

There will probably be a big increase in this pension envy as well, as more hit retirement age and home equity drifts lower, challenging the one back-up plan that too many have.

Pension envy is misguided and petty, financially illiterate jealousy at best. Most government workers contribute a huge chunk of cash to these plans, and contract negotiations routinely lower wages in exchange for keeping pensions more stable. Few in the private sector would make that sort of bargain, they just want all the money now. Good public sector pensions provide a bulwark against this natural, emotional type of money management. It’s like having your own investment advisor, like Garth’s firm, already in place, for most government workers.

For those who ever want to gamble on individual securities, take a look at what is being bought by the best managed public sector pension funds.

#30 Rainman on 07.23.18 at 7:30 pm

Maybe my DC plan is better than most? Since inception I have a PRR of 7.9%. This is since 2002. My IMF’s rival ETF’s with nothing over 1% and an index fund as low as .34%. Not always, but as of now I’m in a slightly more aggressive stance with a 70/30 split. If I had known earlier what I know now, the PRR would be much greater. I can see how on average these self directed plans don’t do well though.

#31 Dwilly on 07.23.18 at 7:30 pm

For those that have a DC pension, do you recommend treating it as a separate fund, or viewing it as just another part of your total portfolio (incl TFSA, RRSP, etc)?

Integrate it. — Garth

#32 Long-Time Lurker on 07.23.18 at 7:33 pm

#100 Smoking Man on 07.23.18 at 12:16 am

Disclosure is near. Keep watching the sky…

https://youtu.be/cC1OWShSpYc

>I watched some of that vid. If that’s real then at 40 sec to 1:30min: that thing’s right over the rooftops.

#33 Curtis Richardson on 07.23.18 at 7:35 pm

I retired back in 2010 at age 57. I was able to transfer my entire pension value of $560,000 into a LIRA. They are all in long term bonds, 4.77% average yield to maturity.

This plus my RRSP’s and TFSA’s worth now $185,000 generates a 3.5% GIC rate, $150,000 dividend paying ETF’s around 4.25% yield, my C.P.P, OAS, all interest from my RRSP, LIRA, cash investments all add up to an income of $61,000 a year. My cash reserve is 3 years of C.P.P, OAS equivalent around $56,000.

I have no debts, house worth $500,000 fully paid off and I rent a portion for extra income on top of my $61,000 income from financial, pension income earning me net after property taxes, insurance, expenses etc. $650 a month. This enables me to top up my TFSA each year and add another $1,300 a month in dividend paying ETF’s and $400 month into a 2.5% cash reserve savings account.

In 6.5 years I will easily add another $250,000 to my investments by RRIF time.

#34 Scott Buckle on 07.23.18 at 7:40 pm

While commuting a DB pension is sage advice for most people you should state that the person is walking away from fully or partially paid Health, Dental, Vision and Life Insurance retirement benefits offered by the employer. For someone with long term health problems at retirement they better see what coverage is going to cost them before they make that decision.

#35 Nonplused on 07.23.18 at 8:04 pm

Almost all companies fail at some point. Except maybe banks. But even some of them fail. Even Chrysler, GM and Ford had to be bailed out. So far about the only industries that has been enduring is the rail road and utility industries. But they usually have something other companies don’t: an exclusive right of way to build their tracks and pipelines.

Companies are like flowers, they have a season and then they die, to be replaced by other flowers later.

I instinctively knew this almost 30 years ago when I first entered the workforce full time after university. The company I worked for still offered a defined benefit plan, but the conversion tables if you left or got fired were horrible if you didn’t make it to 55. I and my friends had some experience what happened to our fathers and mothers during the crash of ’82, so we all went with defined contribution. That way whatever money you and the company had put in was going with you, not staying behind.

Incidentally that company I started with has a habit of periodically laying off anyone who is getting close to the number. There were a number of my coworkers who stayed with the company their whole careers only to be let go when they turned 50, with very little pension. So nobody I used to know is still there. What makes that whole affair smell even more putrid is that the company constantly preaches “loyalty” as a 2-way street. “We pay a little less, but we’re loyal”. Ya right. Only until you turn 50. Then you are gone. Hopefully they were all on the DC plan too.

I think we all sensed even back then that the world was moving to a “gig” economy. That’s certainly been my experience. The longest I’ve ever worked for the same organization was 9 years and then they sold the assets I was managing. Out the door I went with a nice severance. The shortest gig was several consulting gigs, where I went in to do a specific project and once it was done I was back on the street. That’s the weird thing about a consulting gig, especially if it’s contract related: There is no incentive to actually finish the project completely. That’s why you hire contractors based on a fixed price and not “cost-plus” when you do renovations. But my personality type doesn’t allow for over-billing so I always finished the work as quick as I could and ended up pounding the pavement again.

My former father-in-law worked 30 some years for the same company and had to move around the world to last that long, before he was forced to take early retirement. My own father never had a job after he was 25 and worked as a contractor/real estate speculator. I landed in the middle, but it was clear to me early on that no job lasts very long anymore. Or at least it is rare.

Right now, riding high on the hog, are companies like Google, Facebook, Apple, Microsoft, Tesla, etc. But you can’t have a technology company that endures. The technology changes too fast. These companies will be swept away at some point same as RIM (Blackberry) was. GoPro was another good example. Sure, everybody bought one of their $400 little cameras, but then we all found out we didn’t use them and didn’t buy another one.

There is no way around it. Technological change is now so fast that the job you have now probably won’t be there in 10 years. It’s been that way since the start of the industrial revolution. It’s only just gotten faster, that’s all. The millennials are not facing anything different than my generation did, or my father’s generation before me. The pace may be a bit quicker but that’s it.

So folks, keep this in mind: Unless you are part of the executive team, you won’t make it to full pension. And even if you are part of the executive team, your odds aren’t good.

So Garth, I will contradict you. These pensions are not underfunded. They never meant to pay out anybody but the executives in the first place. You are going to get laid off first. Anything someone promises you in 30 years is a lie, and you aren’t going to get it. Take the money now and put it in an RRSP. The market is nasty, but not nearly as nasty as your boss.

#36 TurnerNation on 07.23.18 at 8:08 pm

It’s still here. Massive inflationary price movement at Dollarama on a magnitude of 15-25% is evident since I visited last.

Time to replace that maple leaf center with a MJ leaf or Dollarama logo. That’s all we got.

#37 Damifino on 07.23.18 at 8:08 pm

#5 The Greater Cauliflower

The wealth transfer will soon swing the other way from Old to Young when the wrinklies start to die off.
——————————–

By ‘wrinklies’ I assume you mean the boomers. The ‘young’ will have a long wait ahead of them. I know of boomers still waiting to get their hands on the estates of their 90+ aged parents of the ‘silent’ generation. That is, the ‘really wrinklies’.

“God bless the child that’s got his own.” – Billie Holiday

#38 Paul on 07.23.18 at 8:10 pm

#24 London
#4 Smoking Man on 07.23.18 at 5:55 pm
Shooter identified.

My personal policy never publicizes murders names. Why glorify them?

Something we can fully agree on!!!

F71ON
————————————————————————————————
Call them out for cowardly bast*** he was.
It’s all over cp24 his address even the floor he lived.
If that’s glorifying please, turn the light of day on this.

#39 Jacko on 07.23.18 at 8:12 pm

Simply put, is not every government pension plan unsustainable?

#40 TRUMP on 07.23.18 at 8:14 pm

Invest in WEED and smoke up the profits.

Now that’s what I call livin the HIGH Life!!

You wont even worry about retirement anymore.

#41 Graphics Girl on 07.23.18 at 8:20 pm

What we need is financial education in high schools so we don’t need to depend on anyone.

#42 inOttawa on 07.23.18 at 8:26 pm

Should those with federal DB pensions also commute the value or is that a different situation? What about a family of 2 federal DB pensions – should one commute and the other retain?

#43 Willy on 07.23.18 at 8:26 pm

#24 Dominoes Lining Up on 07.23.18 at 7:25 pm

….
Pension envy is misguided and petty, financially illiterate jealousy at best. Most government workers contribute a huge chunk of cash to these plans, and contract negotiations routinely lower wages in exchange for keeping pensions more stable.
___ ___ ___ ___

Love to see some real world examples. I have yet to witness a single public sector collective agreement for teacher’s, police, fire-fighters, and hydro worker’s that resulted in lower wages to their save cash-for-life pensions.

Collective bargaining is more of a shell game.

Teacher’s contribute 12% of the salary in Ontario (which definitely near max). Their unions made up massive increases in employee contributions by bargaining salary increases that more than made up for their increased contributions.

Despite these changes, teacher’s pensions are still threatened as early retirement (by private sector standards) results in many teacher’s earning pensions longer than they actually worked!!!!! Just not sustainable.

Private sector workers can only dream about such a post-retirement scenario.

#44 Danny on 07.23.18 at 8:37 pm

Garth so true what you say “Politicians will fail to face the issue. Do not fail yourself.”

Also may I add that citizens fail at time of elections. If 60% of citizens vote and 40% of those elect the government….then 24% of citizens choose a government….so the leaders who practice
“tribal politics “only represent a small minority.

Obama was so right “Don’t Boo…..Vote”

And those 40% who don’t vote…..have no right to complain…..You get what you deserve.

Garth………Thanks for exposing more white collar crime.

I once witnessed a poor person steal an apple in the Zurich train station…..police were all over him….and yet white collar crime……Not easy to jump them…..with their layers of lawyers…..and the….”Injustice System “….just look at the Trump Family and Rudy Giuliani

#45 For those about to flop... on 07.23.18 at 8:40 pm

Pink Lemonade Stand in Vancouver.

These guys thought that it was a good idea to pay over a million dollars more than assessment in April 2017 for a hundred year old house,when the bloom was already off the detached rose.

Paid 5.48

Asking 4.98

Assessment 4.34

Have to be Houdini to get out of this one…

M44BC

2287 37TH AVE W VANCOUVER price: $4.980,000 bought on 17-Apr-2017 for 5.48 assessment $4,344,100

https://www.zolo.ca/vancouver-real-estate/2287-west-37th-avenue

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#46 will on 07.23.18 at 8:49 pm

#8 Honey Dripper

“Time for a new book Garth, it’s been awhile and Canada’s youth needs to hear from you.”

I second the motion.

#47 Smoking Man on 07.23.18 at 8:52 pm

32 Long-Time Lurker on 07.23.18 at 7:33 pm
#100 Smoking Man on 07.23.18 at 12:16 am

Disclosure is near. Keep watching the sky…

https://youtu.be/cC1OWShSpYc

>I watched some of that vid. If that’s real then at 40 sec to 1:30min: that thing’s right over the rooftops…
…….

Everyone is going nuts about the one on one meeting with Trump and Putin.

The meeting was dominated with one big issue, both countries going Full UFO Disclosure. It’s what space force is all about.

It will officaly happen when Putin visits the White House in the fall.

#48 Red_falcon on 07.23.18 at 8:58 pm

http://theindependent.ca/2018/05/12/whats-behind-the-canadian-pension-crisis/

An interesting look at how governments didn’t protect company pensions. Also, how unions could not protect vertain DB pensions from switching to DC ones.

Red.

#49 For those about to flop... on 07.23.18 at 9:01 pm

Pink Lemonade Stand in Vancouver.

After that heavy hitter let’s look what these guys are up to at the more affordable end of the detached market.

They paid 1.61 in April 2017 ,and if they get full ask they might have enough leftover to buy a Mars bar.

Maybe a Snickers is more appropriate for some of these guys as they must be nuts…

M44BC

3276 2ND AVE E VANCOUVER price: $1,698,800, bought on 19-Apr-2017 for 1.61 assessment $1,589,700

https://www.zolo.ca/vancouver-real-estate/3276-east-2nd-avenue

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#50 Debtslavecreator on 07.23.18 at 9:06 pm

The public sector is getting away with financial murder.
The money govt workers contribute ALL comes from our tax dollars and simply taken from borrowed money since govts are running large deficits that will be exploding out of control over the next 10-15 years. Public sector boomers and those who’ve retired in the last 5-7 years have ran off with the piggy bank
They’ve paid nothing into their pensions and many will collect way more than they put in. Also they are most often entitled to full inflation protection and of course they paid nothing for their houses and education
And they accumulated this large pool of capital tax free during their work life
To add insult to injury, since about .70 cents of each tax dollar goes toward wages and benefits these older govt workers essentially got paid nice salaries and pension contributions from a loan on their kids and grandkids tab
The younger govt workers are getting the short end of the stick
But worse of all is the private sector who is being strip mined / looted to pay for this all along with special bailouts / tax benefits that mainly benefit about 10 large and often non Canadian corporations
This pension issue will be an ugly matter that will tear apart our society
Look to Illinois and New Jersey for what corrupt govts will do
And this is still the 2nd or 3rd inning
Public sector unions have been buying elections and large pensions / wages for about 15 years now
And they’ll come for our houses, their young workers in govt and eventually your RRSP / TFSA and a massive
Wealth tax in 5 -10 years
Add in the money printing and Canadian peso and what crumbs are left won’t buy more than a few cans of spam and day old fruit at no frills
Sorry just look at the charts and use your grade 7/8 math
I really hope I’m wrong

#51 Linda on 07.23.18 at 9:08 pm

Sadly the truth is that NO pension plan in Canada is secure, not even a DB government plan. There is very little legislation to protect pensions in Canada; Ontario apparently has some but insofar as I can make out it will not make much of a difference, as Sears/Nortel/Stelco workers in Ontario found out.

In Alberta, the former PC government was poised to change ‘da rules’ regarding public pensions via Bill 9 & since they were in the mood to do a thorough job of looting & pillaging they had also introduced Bill 10, which affected all non-public plans in Alberta. I’m not sure if the details of these two Bills are still readily available, but suffice it to say that the proposed changes under Bill 10 made Bill 9 look good in comparison. While Bill 9 was going to cap benefits, reduce benefits & have employees pay more into the plan even as benefits were reduced Bill 10 had such charming provisions as permitting a plan operator (employer) to change any DB plan to a DC plan unilaterally; give the plan operator (employer) the right to take & dispose of any plan surplus unilaterally & to ice the already less than fair cake the right to impose any of these changes retroactively w/o recourse from plan members or retirees. Argh, matey & hoist the Jolly Roger.

Both Bills & any other pending legislation died on the table the moment the provincial election was called. Lest one think this meant a change of heart think again. The PC’s fully expected to be re-elected. They had after all ruled Alberta for 40 years & were confident they would be awarded another mandate. Despite the election call the minister tasked with oversight of the impending pension legislation was instructed to continue the process of public consultation so that when the election was over & the rightful rulers of Alberta were back in the saddle for another term those Bills could be reintroduced along with any modifications they might have come up with during the hiatus.

What happened to Sears et al is a national disgrace & should never have been permitted to occur. As Garth rightly points out, the most valuable commodity is time & anyone who loses their pension benefit after contributing for decades has been doubly robbed – first of their promised benefits & second of any time to recover from the loss. Those robbed of those benefits will now need increased social assistance just to make ends meet or at least survive. Shame on our governments who have done nothing to stop this & in fact have actively colluded to allow it.

#52 Tony on 07.23.18 at 9:11 pm

Canadian pensions only lag American pensions by years. More and more states with go bankrupt. In Canada it will start with bank bail-ins then the pensions will be next. Don’t count on any pension plans existing when you retire.

#53 Reynolds531 on 07.23.18 at 9:13 pm

Sears had a DB pension, not a DC.

Also you’re overstating some things. Companies have to make up shortfalls over time via the solvency deficiency and going concern principals.

All plans are required to file form 7 schedule of contribution and they must follow it or their custodian reports them. In theory a DC plan couldn’t short you by more than sixty days. Most DC plans have good options which are carefully researched and low fees.

#54 NoName on 07.23.18 at 9:17 pm

#28 Tbone on 07.23.18 at 7:24 pm
# 18 Brian

This is how mine was calculated, not sure if it will be the same for you though.
Take the average of your last 5 years of salary .

Multiply this by .015 , then multiply by years of service less one year
As you need to work one year before you gain entry into the pension

Say you made 100k average and have 25 years of service
100000 x .015 x 24 = 36,000.00 per year

This was no secret , our human resources published the formula openly
and also did some calcs for you to show what you get at 60 in a booklet
They gave each of us yearly .
Guess I worked for a good company prior to being sold.

—-

Where ever you work db formula is no secret, but formula is just one part of it, my old employer had 5 best years (not 5 last years) and them formula vs age vs points. All depends on employer and plan. What was “problem” over there formula was made in a way if you are retiring younger that 65 and points don’t add up to certain number payout is significantly less. Person 55 yrs of age with full-service vs 65 under identical conditions would get significantly less per month.

I remember when employer canned DB in favor DC retiring at age of 65 my monthly payment went from 3700 to 700. Oh ya one more thing what they have if you die with in 2 yrs of retiring survivor benefits was next to nothing.

If you are looking at 30 yrs of service and out and think ING that can not or will not change think again.

#55 SoggyShorts on 07.23.18 at 9:27 pm

#45 Stone on 07.21.18 at 8:15 pm
#19 Penny Henny on 07.21.18 at 4:04 pm
My version of balanced and diversified is up 2.5% so far this year. I’m wondering how this compares to other balanced and diversifieds out there?

————

3.52%.
——–
Me 2.75%,
Wife 2.87%, and
Company 3.19%
allafter fees as of 23 days ago.

#56 Dolce Vita on 07.23.18 at 9:29 pm

#14 Westcdn

If you like the European experience, PQ is the place to be (e.g., the only place in Canada & the USA where you have to hunt for a lousy restaurant since the rest are all very good and their manner of dress and ways are very European which I love, Montreal and Quebec City 2 of my favorites in ALL of N. America…YVR for its scenic beauty in the summer, for the rest of the year you file like a continuously misted fern, moss, etc.).

Glad you were treated well in Italia. As a rule we can tell Canadians and Americans a mile away as to how they dress.

Difference:

Canadians quiet, polite and apologetic. Americans…almost the opposite…well, look who their President is (but they mean well). Both eat and drink here like there is no tomorrow, and we love it (our GDP needs a lot of help, so thank you Canada and the USA).

Canadians starting to dress up in Italia. They must have been reading my frequent rants here about the tourists that ply our millennia old streets.

If only they could invent quiet luggage wheels for cobblestone streets, that would be a plus.

It’s hot in Italia for sure. This week here in NE Italia all mid 30’s (no heat warnings). A few days ago low 40’s. If you sunburn easy, stay away from Italia in the Summer or adapt and dress like we do. I have adapted over the past few years (born in the ‘Chuck originally). To me now, 30 degrees is a nice summer day. I begin to feel the heat when it gets over 40 degrees.

Besides all the tourism, scenery, history, cuisine, the finer things in life that can be had in Italia, I like that it’s inexpensive to live here as long you do not go to live in tourist hot spots like Venezia (still La Serenissima but fast becoming an overcrowded Tourist Disneyland – they are now talking about limiting the number of tourist visits per year & cruise ships…I hope they do this), Verona, Firenze and Roma (even Milano).

With at least a €2,000/mo. net after tax pension, you can live like a king here. I bought a small 80 sq.m. condo in the downtown of a prosperous small 50K city in NE Italy for just under €100K (marble floors, granite and wood everywhere including hallways, foyer – normal here). Small place because I travel a lot.

It is dirt cheap to travel around Italia with either Trenitalia (if you are resident you can get their Over 60 card or Youth card, big discounts, Frecciarossa 1000 train at 320 kph) or Ryanair (Treviso to Napoli 1 hr. flight time, $78 round trip, Treviso to London Stansted 2 hr. flight time $194 round trip, both cheaper off season).

Got in a traffic accident last year on the highway, got rear ended. Their health care system here is awesome. Ferrari ambulance ride to the hospital (Italian race care spirit), X-Rays, CatScan, Blood Tests, bed in the back injury ward, visited by the Chief Surgeon all within 1.5 hours. Why they are #2 in the World. Left 3 days later with a back brace which I wore for 45 days, after that, feeling great. That was in S. Italy where the healthcare is supposedly inferior to that of the North.

Seen almost all I want to see in the EU (food & drink is bad everywhere else save France but they hose you thru the nose for food and drink there, especially Paris). Concentrating on Italia…3 lifetimes just to see Roma and area. It is a pint sized country, 1/3 the size of BC, that punches well above its land mass for sure.

And with the new Lega-M5S coalition Gov., they are starting to clean up the Mafia and deporting illegal migrants with ports closed like the rest of the EU has done for years (like Canada has been doing all along deporting migrants…quietly – they are slier about it in Canada than Italia, then again, Italia subject to EU scrutiny which Canada is not).

If you should ever change your mind about living in Italia, let me know and I can tell what to do before and then when you first get here as an ex-pat. If you are older, consider living here for their healthcare system alone, universal as in Canada and free. Drugs much cheaper than in Canada and many you do not need a prescription for, they look at you and exercise common sense.

And yes, my city has a marijuana dispensary, legal, and for quite some time minus the current Cdn. and US fanboys and girls…for once, we did something quietly.

#57 For those about to flop... on 07.23.18 at 9:48 pm

CONFIRMED PINK SNOW

We have confirmation of this failed Westside flip,let’s see what happened.

The details…

2135 w 37th ave,Vancouver.

Paid 5.75 April 2016

Sold 5.52 April 2018

Assessment 6.27

So in the big leagues you get punished big time when to numbers don’t overlap enough.

Close to 10% hit after expenses or roughly 500k,if you want to tag them with a little bit for opportunities lost it would be closer to a misstep.

They are now a comp for the other heavy hitter I put up tonight that has a Pink Lemonade Stand out front of their house.

Or do comps only matter on the way up?

Assessment watchers will notice it went for 12% less than City of Vancouver’s MRRP…

M44BC

https://www.zolo.ca/vancouver-real-estate/2135-w-37th-avenue

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#58 Dolce Vita on 07.23.18 at 9:54 pm

Well Garth, nothing new to me what you wrote about in terms of the state of Boomer pensioned retirees in Canada.

Realized back in the early 80’s that Boomer’s were not going to get a gold plated watch like my Dad did upon retirement. Resolved way back then to save money, invest (yes, even in RE) and then by blind dumb luck, fell into 1 of those DB pension plans. I never planned on an inheritance for my retirement planning, did it on my own.

Have not looked back since. Patience, perseverance are key and treating yourself along the way so as not to resign yourself to a life of misery being miserly.

Predicted what you wrote about today way back in the early 80’s. All I did was look at what my contemporaries were doing (they would tell me you have plenty of time, don’t worry about it, spending money on ego driven purchases to show off how well they were doing – spending money hand over fist).

Not rich like many that post here, but not poor either – I can pretty much pick up and do what I want, within reason. A nice place to be in life.

Thus, great advice today Garth, yet again.

I lived it since the early 80’s and glad for it now that I am retired (retired at 60).

MOISTERS and SERIOUSLY, take to heart what Garth advised you to do today. You will thank him decades from now and do not listen to your peers and/or engage in ego driven purchases to keep up with the proverbial Jones’s. 10 years from now, nobody will care that you had the latest and greatest iPhone or the most expensive granite counters.

Stick to your economic guns instead, be glad for it in the end and then you will have options upon retirement (e.g., enjoy La Dolce Vita and Il Bel Far Niente in Italia like me if you should so choose or freeze your banachas off in Toronto this December).

#59 Tyler Durden on 07.23.18 at 9:57 pm

Hey Garth, what if you have a DC plan with no lowlife insurance funds, but some decent balanced/diversified global portfolios available as options to pick from? And considering institutional pricing which costs like 30-40 bps, am I right in thinking I have a pretty sweet deal?

Just a thought; are you able to write a post highlighting pros and cons of DC and DB plans? I’m sure a lot of us avid readers would love to hear (see) your thoughts on them and how they compare and contrast. Thanks for all that you do!

#60 Dominoes Lining Up on 07.23.18 at 9:58 pm

The greatest threats to good pensions, public and private sector, has too often been conservative political stupidity.

Example:

In the 1990s stock market boom years, the OMERS pension was doing well, growing a lot and building future cash reserves and resiliency for whatever lay ahead.

The idiots in Mike Harris’s government saw this as a problem, that such pensions should not be seen to ‘get rich’, even though there were no increased costs to anyone to just let it keep chugging along, preparing for inevitable ups and downs.

So Mikey the unemployable failed teacher and ski bum (who spent his entire career hypocritically feeding off the public trough) rigged the regulations, requiring OMERS to stop taking more contributions in the ‘good years’ from its members. There was a ‘contribution holiday’ for several years. Nothing paid into the plan by anyone. Imagine that.

Of course, reality struck, with the 2001 recession and the following weaker years.

Result? OMERS lost a bundle, and since 2002 has been struggling to get back to balance, and is now just about there, with enough to fund future retirees fully for 2020 and beyond.

But stupid conservative politicians, guided only by pension envy and jealousy, almost wrecked it.

Only a conservative today would say that you should not build up your savings in the good times to prepare for the bad times. The last few decades have been clear and consistent on this – conservatives are toxic ideologues and incompetent financial managers who will bankrupt us all. Be careful who you vote for as you head into retirement.

(Oh, and about Highway 407, wasn’t that a great deal too…….)

#61 MF on 07.23.18 at 10:23 pm

#20 Willy on 07.23.18 at 7:01 p

A perfect example of a grade A BS comment.

The public sector is now all contract with not a lot of security. It’s been like this since about 1995.

Go tell all public sector employees about 35 year pensions when their 6 months contract is at risk of running out without renewal.

Btw, the money is better in the private sector. You are supposed to save for retirement.

MF

#62 Chaddywack on 07.23.18 at 10:28 pm

You know you’ve scraped the bottom of the barrel when THIS is the description….

https://www.realtor.ca/Residential/Single-Family/19645849/2458-YALE-STREET-Vancouver-British-Columbia-V5K1B8

My favourite for laughs….. “This house is for the most discriminatory purchaser”

#63 Doug in London on 07.23.18 at 10:43 pm

Does anyone here remember Harry S. Dent? He made a bunch of predictions in the last decade and most of them were rubbish. However, give him credit as he got one thing right. In 2006 he wrote an essay titled: The Death of Pensions.

#64 meslippery on 07.23.18 at 10:55 pm

Lets look at yesterdays blog. Took me this long to think of something to say.
Garth always talks about interest rates going up.
I have said here before who would benefit from higher rates ???
————-
More taxes just embellish government and impoverish citizens. Higher interest rates transfer further wealth from the middle to the top 1%.
————
Now if Garth could rethink unemployment and inflation stats churned out as being less than Frankin numbers.
Oh I will be speechless.

Thanks for what you do here with your blog Garth.

#65 Blacksheep on 07.23.18 at 11:19 pm

Dood # 150,

“146 Blacksheep on 07.23.18 at 3:50 pm

…..Not to mention the social stigma of being a renter…

__________________________

“Social stigma ??!!”
—————————-
You forgot to copy the whole sentence, let me help:

“Not to mention the social stigma of being a renter, 30 years ago.”

Yes, stigma….I remember growing up in my middle class hood as a kid. The neighbourhood kids new exactly who owned their homes and the very small number that didn’t.

Since you decided to respond (thanks) what say you address the point I made, which was they didn’t have $250K liquid to buy the S&P 30 years ago (what young family has $1.5 mill cash to do it know?) and even if they did, your stuck renting for 30 years at a cost, both financially and otherwise?

Seems to me, based on the math you’ve shown, your parents would have made out just fine with a measly 1.9 million $ tax free windfall to retire on…

As for your 30 something basement dwellers, they may be loving their sitch and that’s good them and you, but I for one have zero interest in ever living in someone else’s basement, regardless how much money it saves me.

#66 robert james on 07.23.18 at 11:26 pm

From a Vancouver realtor telling it like it is.. https://www.thestar.com/vancouver/2018/07/10/vancouvers-bubbly-real-estate-market-is-deflating-say-realtors.html

#67 viorelli on 07.24.18 at 12:08 am

Many negative things are happening all at once leading us down the road to more political instability, crime, and poverty.
1. Climate: it is changing and regular heat waves are becoming the new norm, also colder winters and not much in between. This results in more failed crops, increased water and electricity consumption, and higher energy / grocery bills for the regular folks
2. Automation: recently a company in NJ had let go all of their pharmacists due to a new robot which can read prescriptions, assemble medications, and charge you on the spot. This will only get worse and spread to additional sectors thus taking away more jobs.
3. Rapidly aging population and reduced tax payer base due to automation and death of many local industries (China / Trump), while increasing expenses on health care and palliative care.
4. More outsourcing: recently a friend just got back from PV (Halisco, MX), the local dentist’s room is full of Canadians and 4 months wait list now. Good luck to the remaining doctors in YVR, they cannot compete. Other industries will follow.
5. Reduced RE values country wide and thus a reduction in expected retirement profits (tax free for most), thus less spending in the economy and less jobs.
6. Increase in crime, opioid use, and eventually a war (its the only way for the govt to find the way out of all the upcoming mess), unless angry people decide to take out the govt first (see French and Russian revolution). History shows us there is only one way this is all going to go. It is just a matter of time.

#68 jane24 on 07.24.18 at 12:50 am

Rather shocked that an advanced financial economy like Canada dos not have the equivalent of the UK Pension insurance Corporation. All private pension providers in Britain have to pay a small amount into this each year to insure their pension liabilities in the event of them going bust. Boy they all scream about their contributions to it though.

If a company goes down the pan, the employee pension payments are secured but only to the 80-90% of what employees were expecting. Much better than nothing though. Pension rights must be the number one claim in a bankruptcy as these are human beings.

Ontario teachers are mafia. “Pay us twice what we are worth or we strike”, yet again. I am a retired teacher myself but NEVER went on strike. Margaret Thatcher outlawed closed shops. Everyone in Britain has the right to join or not join their work union. Striking and education children are not good partners. Kids come first.

#69 Steven Clayton on 07.24.18 at 1:15 am

You are still COOL GARTH!

#70 Longterm on 07.24.18 at 2:33 am

#20 Willy on 07.23.18 at 7:01 pm

Ontario teachers don’t make an average of 100k after ten years.

In Toronto no teacher does. For example, elementary teachers in Toronto cap out at at the absolute max of $98,550 with multiple degrees including a post graduate degree. Those with only a single degree cap out at $71,987 after ten years.

It’s all public so have a look for yourself.

https://www.ett.ca/salary-grid-for-tdsb-elementary-teachers/

And before you launch an ad hominen attack, no I’m not a teacher, I work in a small private sector company in BC. I just can’t stand hyperbole for the sake of driving a political position.

#71 Rates on 07.24.18 at 2:34 am

About those rates…


Tal pulls out the long-range crystal ball in answering “where will interest rates be in five years?”

“I don’t think they will be very different from where they are now,” he says. “I think they will go up and then they will go down because there will be a recession at one point.”

#72 conan on 07.24.18 at 2:35 am

It is a guarantee nobody needs, and is hideously expensive. Bad idea. – Garth

1999 to 2008 was a fantastic time to be in segregated funds. Dot com correction, 911, and the mortgage backed security fiasco
Segregated fund holders had their funds topped up to 100 %, then benefited from the market climb back

There are other benefits to seg funds. I will give you one right now. Don’t assume you have to be in them for a long period of time. You can purchase them when the market is risky, then transfer out when markets are less risky

#73 The Real Mark on 07.24.18 at 3:12 am

The really scary thing about pensions is that the past 30-40 years have represented severe outperformance of the bond component of pension funds, which is a significant component. What happens when bonds start to seriously underperform as interest rates rise? Sure, pension fund “liabilities” might fall if the payouts aren’t indexed, but those liabilities probably won’t fall as fast as assets. Hence, pension funds that are already under-funded will probably completely implode as interest rates go higher.

Yes, pension executives have been throwing out the excuse of ‘low rates’ for pension underperformance, but there is little evidence to suggest that low rates have been anything but highly beneficial to the assets held by pension funds, namely bonds, real estate, and stocks that are correlated highly to consumer consumption.

Not only will an era of higher interest rates (or alternatively, a deflationary collapse with defaults…pick your poison if you believe in deflation as I do!) expose pension insolvency, but the implications here are profound. Pensions are basically Ponzi schemes, having been looted by executives and by earlier pensioners paid unrealistically high returns on investment not justified by long-term sustainable growth in GDP.

Canadian pensions probably will fare better than, say, US pensions, because the TSX does truly contain some inversely correlated components. But it seems that Canadian pension funds are increasingly eschewing exposure to Canadian companies and the Canadian economy by pursuing what they often term “alternative’ strategies. Like the CPP buying student housing in the UK while Canadian students struggle to find affordable accommodations in Canada. And so on and so forth.

#74 Howard on 07.24.18 at 3:41 am

What kind of country is this where you have to practically be a PhD expert in obscure investment strategy in order to avoid starvation post-retirement?

Something very offputting about this whole situation.

#75 Howard on 07.24.18 at 3:46 am

#62 Chaddywack on 07.23.18 at 10:28 pm
You know you’ve scraped the bottom of the barrel when THIS is the description….

https://www.realtor.ca/Residential/Single-Family/19645849/2458-YALE-STREET-Vancouver-British-Columbia-V5K1B8

My favourite for laughs….. “This house is for the most discriminatory purchaser”

———————————————

Looks like that description was transcribed by a stenographer on meth.

#76 Howard on 07.24.18 at 3:48 am

#5 The Greater Cauliflower on 07.23.18 at 5:58 pm
The wealth transfer will soon swing the other way from Old to Young when the wrinklies start to die off.

——————————————–

No it will not.

The Boomers will spend every cent of their unearned wealth and will demand to be thanked for it.

#77 Oft deleted much maligned stock.picker on 07.24.18 at 3:51 am

My pension plan is the dividends of Fortis….Emera….TransCanada and ENB…..plus a few dozen responsible companies who have diversified out of Canada and it’s lunatic politics. TR Bank…Royal….BNS are like safer growth sticks than any ETF…..IMHO.

Sensible mgmt like that of Ford, Cisco, AT&T is far more reliable than that of the dipry ideals of the Groper-Butts regime.

Any sensible person and corporation is leaving Canada….the race is on. Corporations are stripping hundreds of billions out of Canada…..you can’t get a seat on AA 1058 from Vancouver to Dallas FT Worth. You don’t hear this on CBC but educated Canadians and Immigrants are leaving Canada in huge numbers.

The Groper-Butt regime is a nasty incarnation of other blood suckers like Castro and Mao….good luck if you think otherwise.

#78 Han Wu on 07.24.18 at 4:46 am

Can provincial public service DB pension plan be considered as stable enough to substitute the bond ETF in one’s overall portofolio (Garth said 20% in bond)? The book “Four Pillars of investing”‘ and Ryan both have said yes but in only a few sentences. The yearly pension statement lists the contribution amount I have made so far and the estimate monthly payment if I work until age 55, 60, 65. Is there a formula to estimate the amount of bond this equivalent to?

Garth always recommends to commute when there is a chance. Anyone knows if there is a formula to estimate the commuting amount based on the information available on the pension statement?

Garth could you please consider write a article around the pension, like its role when constructing ones portfolio, commuting with tax consideration, etc? Seems quite a few of readers have the DB pension.

Appreciate it.

#79 MF on 07.24.18 at 6:59 am

#67 viorelli on 07.24.18 at 12:08 am

1. The climate is exactly the same as it was when I was growing up in the 80’s and 90’s.
2. Automation is affecting the entire world.
3. Rapidly aging populations are a threat to the entire western world.
4. Outsourcing is also an entire western world problem.
5. Canadian RE is not going anywhere. This blog is the only place where people think it has/is.
6. Total BS and hyperbole. The rest of the world has its own problems far worse than anything in Canada.

The war comment is a paranoid conspiracy theory and rubbish, just like your entire comment.

MF

#80 Bytor the Snow Dog on 07.24.18 at 7:20 am

#34 Scott Buckle on 07.23.18 at 7:40 pm sez:

“While commuting a DB pension is sage advice for most people you should state that the person is walking away from fully or partially paid Health, Dental, Vision and Life Insurance retirement benefits offered by the employer. For someone with long term health problems at retirement they better see what coverage is going to cost them before they make that decision.”

—————————————————–

Which is why Garth advised me NOT to commute my pension. It’s definitely not a one size fits all approach.

#81 Tater on 07.24.18 at 7:47 am

#5 The Greater Cauliflower on 07.23.18 at 5:58 pm
The wealth transfer will soon swing the other way from Old to Young when the wrinklies start to die off.
——————————————————————
Nah, most of that money will be spent by the wrinklies on home care and then retirement home costs. They’ll stay “independent” as long as possible, spending money on cleaning services, home health workers and professionals for all manner of household chores. Only when they are in dire health will they consider (more likely be forced) moving to a home. Then, that nest egg will be chipped away at 8-10k per month.

#82 TurnerNation on 07.24.18 at 8:08 am

Smoking man we can look to South America’s experience. Decades of man-made Coups, Debt and Currency crisis and of course roving death squads against citizenry. Sounding familiar?

It’s amazing, we are 35 hours after a major event yet yesterday people went on national TV and calmly gave long interviews about this guy. Who does that in reality?

#83 Reddy on 07.24.18 at 8:20 am

#62 Chaddywack on 07.23.18 at 10:28 pm
You know you’ve scraped the bottom of the barrel when THIS is the description….

https://www.realtor.ca/Residential/Single-Family/19645849/2458-YALE-STREET-Vancouver-British-Columbia-V5K1B8

Ya that’s a real BEATY! . (sic)

#84 crowdedelevatorfartz on 07.24.18 at 8:20 am

@#13 Smalltownsteve
“I have about 820k in my pension through local 488, …”
+++++

Hate to rain on your parade but that means nothing.
If the funds invested are crap the whole thing goes sideways….Ive seen may a Union member who recieves the “Dear Brother we regret to inform you that due to circumstances beyond our control….”

Pension cut by 25%, 50%…..and there was nothing they could do about it. If the money aint there…..it aint there.

#85 Remembrancer on 07.24.18 at 8:22 am

JUNGLE #21
How can I be sure employer is not underfunded and can they take this money back if something happens?

Jungle, get your DC plan’s information on when the company’s contribution is vested – the plan is in your name so its your money at that point; win lose or draw; grow or shrink – dependent on plan-specific terms, vesting rights and gov lock in regulations etc etc. YMMV

The point of DC is to limit the employer’s contribution and risk to whatever goes in each contribution period, so no over-funded nest egg to raid / under funded unlegislated liability with less rights then payment of the invoices from the contracted guys cutting grass at Corp HQ to defund…

#86 Remembrancer on 07.24.18 at 8:29 am

#29 Dominoes

Righto, a lot of posts here seem to think gov pensions are freebies – they are usually (can’t say all as I won’t claim to know and not going to argue contribution rates with anyone) paid for from salary just like private sector ones…

Now, the part where salaries are reduced voluntarily by public unions in exchange – gonna have to see some external citations for that :-)

#87 Remembrancer on 07.24.18 at 8:40 am

#80 TATER

Nah, most of that money will be spent by the wrinklies on home care and then retirement home costs. They’ll stay “independent” as long as possible, spending money on cleaning services, home health workers and professionals for all manner of household chores. Only when they are in dire health will they consider (more likely be forced) moving to a home. Then, that nest egg will be chipped away at 8-10k per month

—————————————————————–
All of which will be used to pay for food utilities, taxes, fees and attendant care salaries etc – that will be used to buy stuff like groceries, TVs, cars, bus passes, pay taxes etc – ie fund an economy – check out velocity of money definition for example…

#88 Remembrancer on 07.24.18 at 8:46 am

#75 Howard on 07.24.18 at 3:48 am

Great – spend away and thank you for contributing to the economy boomers – just don’t be jerks while doing it…

The only way to screw you (outside of boomer retirement spending spree inflation maybe) is to bury in the back yard and never spend it…

#89 crowdedelevatorfartz on 07.24.18 at 8:46 am

@#29 Dominos… a boring game
“Pension envy is misguided and petty, financially illiterate jealousy at best. Most government workers contribute a huge chunk of cash to these plans, and contract negotiations routinely lower wages ….
+++++
Pension “envy”?
You’re kidding right.
You’re mistaking fury with “Envy” .
Envy has nothing to do with it.
Fiscal sustainability has everythiing to do with it.
A govt employee pension plan that is “topped up” by private sector unpensioned taxpayers to the tune of 40-50% is outrageous and will , eventually be clawed back.

As for the statement,”Most Govt worker contribute a hug chunk of cash to these plans”.
And private sector workers dont????
Here’s a thought how about govt sector workers contribute 100% of the “huge chunk of cash” to their pensions instead of 50% without the other 50% gifted to them by taxpayers…..you know…..like these rest of the real world. ie The private sector.

And finally your ridiculous statement about the poor poor govt workers and their “contracts and lower wages”.
Careful your govt union “job for life” arrogance is showing.
Govt workers are untouchable. “Lazy, unproductive, surly, hacks that wouldnt last a week in the private sector. Tell me. When was the last time one of your co”workers” was actually suspended? Fired?
Two years ago? five? Ten? When was the last time one of you unproductive whiners said, ” I want higher wages, I’m quitting and going back to the real world of the private sector”
Please please dont toss out the “lower wages” crap.
Govt workers are well paid compared to the private sector. $30-40/hr to lean on a shovel and watch a backhoe dig a hole while you talk to ten of your co workers is a pretty damn good wage.
My personal experience with govt workers is summed up thus.
Overly educated, bored children that routinely waste everyone in the private sectors time with endless, ridiculous requests for information that no one needs, wants, or cares about.
My favourite experience with govt workers was the day they wanted to have a meeting to determine why they were having so many ….meetings.
Smashing one’s head against a brick wall would achieve more than the average govt worker

Heres a solution to balance every level of govts deficit budgets.
Fire 50% of govt “workers”.
No one other than the other 50% would notice.

#90 maxx on 07.24.18 at 8:48 am

I owe a ton to Vic Tanny. I made the error of buying a lifetime gym membership in my late teens, for which I paid a few hundred bucks or so.

At the time, that seemed like a lot of money.

Soon after, the company went belly up and I learned the invaluable lesson that large businesses fail and when they do, they also almost always fail the “little” guy. So, a few hundred hard-earned bucks flew into the ether.

Since that “investment” loss, I have done two things: kept my money well out of long-term anything, including subscriptions of any kind (telecom excepted) and been ruthless with retailers. All retailers.

Putting one’s fiscal fate into the hands of “solid” enterprises is a crap shoot, especially now and going forward. I was fortunate to marry someone who sees the use of money exactly the same way I do and we celebrate even the smallest of financial successes with bubbly.

No one can blame all of these poor souls who must now fend for themselves on a completely different level because of the failure of government to do the right thing. Pensions ought never to be trifled with. 30-40 years, or more (aka a lifetime) of toiling with a company under the black and white contract of pension payouts should be fulfilled. 100%. Every time. No exceptions.

Corporations simply push the envelope to the max allowed by law, authored by government.

Listen to Garth. Get the he// out of debt and create your own pension, whatever form that takes.

The earlier the better.

#91 Wrk.dover on 07.24.18 at 8:50 am

NS teacher P up 0.6% two years in a row.

The DBP’s are going to reverse compound into oblivion as fast as they become unfunded by a worker to beneficiary ratio of 1:1

Anyone that retires with any credit payment(s) present or future is toast.

Hence my arrangement to afford to live decades on CPP/OAS now. I consider the rest gravy for saving for final stage old age.

Realism means realistic expectations.

My 96 year old mother costs herself $3300/mo plus.

Money she still has now that she didn’t burn through at my age.

#92 20th Century Limited on 07.24.18 at 9:11 am

Garth –

I saw this coming as well, years ago. All those stories of boomers retiring and creating a labour shortage – I NEVER believed them. I am now past the age my father retired – and so are you. And, I suspect, so are many other boomers who worked decades in the private sector but don’t get a gold-plated, inflation-indexed DB pension plan courtesy of the government – which really means courtesy of the taxpayers.

This is an issue the CPC should take up, but won’t. The one guy who could, Maxime Bernier, is being gagged by leader Andrew Scheer. The Liberals will never do anything about it. The NDP? As if.

To me, an obvious near-term fix, given that so many boomers are now working into their ’70s, is to nix the requirement that RRSPs be cashed out at age 71, and allow workers to continue funding their RRSPs until 75 or 80 or, possibly, until they decide to collapse them.

This is something the CPC should consider but I am not holding my breath. so I’ll continue working – which isn’t so bad as I like what I do – saving my money and watching as the whole ponzi scheme finally unravels.

#93 Smoking Man on 07.24.18 at 9:41 am

TurnerNation on 07.24.18 at 8:08 am
Smoking man we can look to South America’s experience. Decades of man-made Coups, Debt and Currency crisis and of course roving death squads against citizenry. Sounding familiar?

It’s amazing, we are 35 hours after a major event yet yesterday people went on national TV and calmly gave long interviews about this guy. Who does that in reality?
…….
I’ve heard little about the victims. Absolutely disgusting the amount of air time the murder got. Most of it a spin leaning toward feeling sorry for him and his family.

That’s the MSM world we live in Today. Synchronized information narrative, decent branded as evil. No wonder Trump got elected.

#94 Penny Henny on 07.24.18 at 9:41 am

Here is a little example how home prices in some areas of Toronto are well off their March 2017 peak.

Witness exhibit A- https://www.realtor.ca/Residential/Single-Family/19614301/619-BERESFORD-AVE-Toronto-Ontario-M6S3C2-Runnymede-Bloor-West-Village

New build just a year old offered at $1.725M.

The attached house which is exactly the same sold in March 2017 for $2.05M.

Somebody (the builder) got greedy and as a result took a big hit.

Hey LP, didn’t you mention once that your Grandfather lived on this street.

#95 IHCTD9 on 07.24.18 at 9:46 am

One of the great things about slashing your tax remittance, is that it answers all the questions. Even the ones that haven’t been asked yet.

Don’t like the government giving 10 million to reformed terrorist murderers? Don’t like that our firefighters get paid to sleep at work while earning over 100K pr year and going months without a single serious fire to deal with? Don’t like Teachers, Cops, etc getting huge taxpayer funded DB pensions at 55 years old while you slave till 65+ to fund them – and have none yourself?

Solution: make sure you vote, and make sure you’re not paying one dime more in taxes than you absolutely need to. Work it, there’s lots of low hanging fruit.

I’m happy to watch my tax remittance plummet. I am happier overall knowing that if Canadians are dumb enough to vote in a doorknob like Trudeau, they’ll probably be dumb enough to even reduce their standard of living – just for the sake of funding their hero. That’s good, because you’re not going to get me on board with that kind of “charitable giving”.

They are welcome to make that kind of sacrifice for their ideologies. Me? I have a life to live outside social medial and leftwing social engineers.

Just don’t sign on to fund them no questions asked. Make ’em work for it. Most of your taxes simply fund big wages, big pensions, and big ideology. That’s about it – total waste of resources for zero societal gain.

If you’re not materialistic and fraught with insecurities about what other folks think of you – then you can do it too. Keep your money in your own pocket – you’re going to need a lot of it over the next 20 years -100% guaranteed.

#96 For those about to flop... on 07.24.18 at 9:49 am

O.k ,so as with all howmuch articles you really need to click on the link to take a quick look at the visualizations.

This one is a bit of a mother…

M44BC

“Is Cryptocurrency ‘The Mother of all Bubbles’? This Visualization Puts Things in Perspective.

The sheer magnitude of how much money there is in the world can be quite staggering—and hard to understand. What if you could visualize every market in the world as a bubble?

Earlier this year the total U.S. stock market cap surpassed $30 trillion. It then lost more than $1 trillion in a single month. Apple might very well become the first company worth over $1 trillion in the modern era. The U.S. national debt surpassed $21 trillion, and the deficit for next year is expected to add another $1 trillion. But just how big are these numbers? Can we get some perspective?

A trillion here, a trillion there—pretty soon you’re talking about real money.

We decided to clarify things with one simple and easy to understand visualization of bubbles. We found the total value of each major market in the world, everything from brand new cryptocurrencies to sovereign debt. We stacked ranked the combined total value of each category and called out interesting subsets. We color-coded each type and added a little narrative on the right for easy reference. Categorizing each asset as a “bubble” can make you wonder—what if one of these pops?

Our visualization can help keep things in perspective. The cryptocurrency market is certainly one of the fastest growing and most exciting assets in the world, and indeed it makes many people think of the 2000 dot-com bubble. Some even say it’s the biggest bubble of all time. You can find countless articles about bitcoin and ethereum on the Internet, including on this website. But for all the hype, the entire crypto market is worth only a tiny fraction of the gold market, which is itself only worth about 10% of the entire world’s stock markets. The good news? If the bubble has already popped, there’s potentially plenty of upside in cryptocurrencies.

Pundits also spill a lot of ink about the U.S. national debt, which is indeed staggering at $21.2T. The concept of a “trillion” is impossible to comprehend, let alone 21.2 trillion. But now consider all the debt in the world, counting everything like mortgages and municipal bonds. Don’t get us wrong, the U.S. debt seems out of control, but it’s still less than 10% of the world’s total debt load. That being said, a lot of pundits see the massive accumulation of debt as itself a bubble. It would take more than 3 times the value of all the stock markets in the world to pay off the world’s debts. Is that sustainable?”

https://howmuch.net/articles/visualizing-the-biggest-economic-bubbles

#97 crowdedelevatorfartz on 07.24.18 at 9:58 am

Govt workers part deux

My other ‘pet peve” is the endless amount of govt workers that seem to have figured out the “strees Leave” merrygoround.
You know,
Its where a govt worker is “too stressed” with the daily “grind” at their govt job (which raises another question…. If govt work is so hard….why are most of them obese?).
I have watched friends and business associates that work for govt jump on the “stress leave” gravy train year after year after year.
The HR depts. in these organizations have enabled their employees to abuse the syatem and its “ALLLLL ABOARRRRD” the govt worker union gravy train….

But that like all govt largess shall come to an end…..

:)

#98 Penny Henny on 07.24.18 at 10:10 am

#62 Chaddywack on 07.23.18 at 10:28 pm
You know you’ve scraped the bottom of the barrel when THIS is the description….

https://www.realtor.ca/Residential/Single-Family/19645849/2458-YALE-STREET-Vancouver-British-Columbia-V5K1B8

My favourite for laughs….. “This house is for the most discriminatory purchaser”
/////////////////////

Amazing! That write up had to have had at least 50 spelling mistakes

#99 Linda on 07.24.18 at 10:26 am

#90: ah, the argument that since public sector workers are paid out of tax revenues that they are essentially living tax free. So what do you suggest? That these people work for free? Would you work for free? Or is your suggestion that these people not have any pension plan or benefits whatsoever? Would that ‘level the playing field’ enough for you?

Regarding the endless shriek that it isn’t fair that government workers have a DB (or, apparently, any pension plan whatsoever) what is the solution? That those who are currently members of such a plan be stripped of it? If that is the solution (I can hear the cries of YES!! YES!!! from the envious & embittered even as I type this) then to ‘level the playing field’ right back the following must be done: 1) all pension plan contributions paid by the employee be returned to them with interest. Doesn’t matter if those contributions were paid ‘out of taxpayer dollars’. Still was taken off the salary, therefore must be given back. Plus interest at historic rates over the years the employee contributed. 2) all RRSP tax room restored that was denied due to the pension adjustment that applies to anyone who has a pension plan. As those years of contributions will not have had the benefit of growth over that period that everyone else had the benefit of, the RRSP tax room should at the very least be funded from the employer paid contributions from the former pension plan – plus interest paid at historic averages over the associated time period to compensate at least in part for the loss of time/growth.

The end result will be the end of public pension plans & thus the end of taxpayers being ‘on the hook’ to fund those plans. If you advocate stripping the plan away without any measures being taken to compensate for employee contributions (however funded) or loss of interest/time to allow the funds to grow then all you are advocating is theft – the exact kind of theft experienced by Sears/Nortel/Stelco et. al. As for the apparent crime of being paid from taxpayer dollars, make sure you have never worked for an industry that was subsidized or granted government funds or a contract because that would mean you were paid out of ‘taxpayer dollars’ & therefore are guilty of receiving an ‘unfair’ benefit. Nope, being ‘at arms length’ does not get you off the hook here. If the government funded the work you performed, you too have had salary/benefits/possible pension plan contributions funded out of taxpayer dollars.

#100 Smoking Man on 07.24.18 at 10:32 am

One small step for people, a giant leap for people kind…ah….no this dosent work.

Wishing Buzz a happy 49th year anniversary. Back then. Men where Men.

#101 IHCTD9 on 07.24.18 at 10:32 am

#29 Dominoes Lining Up on 07.23.18 at 7:25 pm
There will probably be a big increase in this pension envy as well, as more hit retirement age and home equity drifts lower, challenging the one back-up plan that too many have.

Pension envy is misguided and petty, financially illiterate jealousy at best. Most government workers contribute a huge chunk of cash to these plans, and contract negotiations routinely lower wages in exchange for keeping pensions more stable. Few in the private sector would make that sort of bargain, they just want all the money now.
_____

^What a load of horse shit.

#102 IHCTD9 on 07.24.18 at 10:41 am

#96 crowdedelevatorfartz on 07.24.18 at 9:58 am
Govt workers part deux

My other ‘pet peve” is the endless amount of govt workers that seem to have figured out the “strees Leave” merrygoround.
_________

Yep. My wife works for the gov – 2-3 people on “sick leave” at any given time.

Over a year in some cases.

They all just voted an increase in these benefits which they all now have to pay for every week. It seems sort of… preemptive.

Just about the entire employer is 30-40 something Women – these folks are MAJOR offenders on this “sick/stress” bullshit. I can’t remember a time where there was not at least one of them on some kind of (paid) leave – if it’s even ever happened at all.

#103 IHCTD9 on 07.24.18 at 10:48 am

#98 Linda on 07.24.18 at 10:26 am

#90: ah, the argument that since public sector workers are paid out of tax revenues that they are essentially living tax free.
_____

Ah…

Wrk.dover did not say one single thing about tax free living by government workers.

Like, not a single one.

#104 IHCTD9 on 07.24.18 at 11:08 am

#88 crowdedelevatorfartz on 07.24.18 at 8:46 am

Heres a solution to balance every level of govts deficit budgets.

Fire 50% of govt “workers”.
No one other than the other 50% would notice.
______

This whole situation with public servants is one reason why I hoped Wynne would get another majority. Might as well just blow it out of the water and get it over with. DF will try to fix things, but he won’t get the time and power to actually make a meaningful difference due to the voting habits of the Ontario Citizenry.

A quick end to all of this with no recourse for anyone is what’s needed. We’re on the way, but DF will only delay the inevitable.

#105 vocelli on 07.24.18 at 11:17 am

#67 viorelli on 07.24.18 at 12:08 am

Some valid observations.

All indicators point towards an eventual global reset, towards a one world digital currency, a single unified managing body/govt, and human microchipping. An Orwellian nightmare. Much civil unrest first.

The greater seasonal extremes are due to a tilt in the earth’s axis. Many Inuit have confirmed – sun sets further north where it once did. Planet could be in a wobble. Cause not established, possibly melting ice sheets changing weight distribution or external planetary/gravitational forces

As others have mentioned here, the promise of a pension 30 years from now is nothing less than lip service

Who left the moat bridge down? – Garth

#106 Oft deleted much maligned stock.picker on 07.24.18 at 11:18 am

Buffet and others say “Diversification is ignorance”. What say you?

https://www.forbes.com/sites/karlkaufman/2018/07/24/heres-why-warren-buffett-and-other-great-investors-dont-diversify/#676c34ef4795

Buffet is one of the most diversified investors in the world. – Garth

#107 Ace Goodheart on 07.24.18 at 11:20 am

Best pension is a pension you build yourself, in your own direct investing account or numbered corporation. Anything else contains risk. I have purchased cheap real estate from retirees whose pensions have failed, leaving them high and dry with 15K per year in CPP and OAS and mortgages they couldn’t service anymore. Coming in with cash to take their large, unpayable mortgages off their hands after their pensions collapsed, I am like the fox in the chicken coop. They are sitting ducks.

An interesting thing is about to happen in the USA regarding pensioners. Trumpster has taxed 51 billion US dollars worth of the estimated 505 billion dollars worth of cheap Chinese goods that enter the USA each year.

His goal is to replace the Chinese good consumption with goods made in American factories.

Say wha?

Go to Walmart, Costco, Home Depot, any large big box store and have a look at what is being sold and who is buying. You will find two groups of people:

1. The young and the underpaid.

2. The old folks with fixed incomes and pensions.

So, Trump’s solution is to block this 505 billion dollars worth of cheap Chinese imports, and replace it with goods manufactured in the USA.

Think about this for a second. It costs pennies per hour to produce in China. The workers are paid next to nothing. Most of them are indentured slave labour, unable to leave until they fulfill their contracts with their employers.

Trump proposes replacing the goods manufactured by the Chinese, with union made American products. Union labour in the States earns about $30.00 US per hour, with pension and benefits on top of that.

So if you produce all the cheap furniture, clothing and consumer items sold in Walmart and places like that, in the USA, you are essentially making Walmart into the equivalent of The Pottery Barn.

Consumer goods are going to get very, very expensive. That $30.00 Chinese made coffee table you picked up at Costco last week? Try $1500.00 for the same American Union made product. I am not joking. American labour is massively expensive. The cost of labour in the USA is the main reason why everything is produced in China.

Canada might get a lot of American financial refugees, coming up here to purchase items in their own discount store chains, and then smuggle them back across the border.

It will be interesting to see how the American public reacts to having their Walmarts and their Costcos taken away from them and replaced by stores selling high cost, American union made products only.

I think that Trump might get run out of Washington by angry mobs if that ever happens.

#108 AB Boxster on 07.24.18 at 12:14 pm

#100 IHCTD9 on 07.24.18 at 10:32 am

What a load of horse shit.
——————————————–
Really?

The majority of people who get pensions in the public sector will get a pension based upon the following formula.

Average salary for highest 5 years x .015 X years worked.

So a worker making $50k in their best 5 years will get a pension of 50,000 x .015 x 30 years. (assuming that a worker actually works 30 years in the same job, which is highly unlikely these days)

So an annual pension of $22,500.

whoopdydoo.
These folks certainly retire rich!

To get these massive pensions, these workers have to give up pretty much all of their RRSP contribution room over their 30 years, so their RRSP benefit is pretty much nil.

To compare.

Take a private sector worker starting work 30 years ago at salary of 28K.

This worker, staying in the same job, with no merit increases other than cost of living at 2% per year, will be making about 50K after 30 years.

If, over these 30 years, they contribute 10% of their gross salary to their RRSP and assuming:

-RRSP Tax savings of 10% is reinvested back into the RRSP
-6% average RRSP return over 25 years

After 30 years of investment and grow this RRSP portfolio will have about 320k.

That worker, then retiring with 320K, and assuming the following:

– Draw down of $320k portfolio to zero over 25 years
– RRSP investment rate of 5% over the 25 years

Well guess what?
The annual draw rate for this portfolio is $21,000.

So, in reality, a private sector worker, if they actually used their RRSP the way it was meant to be used, could easily have the same pension benefits that an average public sector worker will have.

The fact is that public sector workers are forced to contribute to a pension plan, so they have a forced retirement savings.

Private sector workers are not forced to save 10% of their salary to their RRSP, and so they don’t.

Are public sector employees at fault for this?

And don’t forget. If a public sector worker dies after 10 years of retirement, their estate does not get anything. Pensions end with death. Nothing goes to the estate.
Those with RRSP’s as their retirement plans will have the balance available to their heirs.

The real problem with public sector today is not the actual pension itself. The real problem is that many employees in the public sector make now make far more than their private sector equivelants.

Should a public school teacher make 100k after 10 years of employment?
100K at age 33, for a 5 year teaching degree?
Should a fire fighter or policeman make 100+ after 10 years of employment?
100 K at age 30?

The problem with the public sector is that while for the past 10 years the global economy has been in the tank, and private sector workers have either been laid off, or taken huge pay cuts, and real wage growth for most private workers has been negative, the public sector just runs merrily along , with no impact to their wage growth or growth or the public sector.

The public blowback against the public sector is warranted when it comes to wages of certain and specific groups. And when these people retire, their pensions are then unreasonably high due to the high levels of their salaries.

This is a problem with public sector wages and not a problem with public sector pensions.

#109 FloridaMan on 07.24.18 at 12:31 pm

#32 Long-Time Lurker

It’s not, apparently:

https://www.snopes.com/fact-check/ufo-spotted-malaysia/

#110 Duke on 07.24.18 at 12:48 pm

#69 Longterm on 07.24.18 at 2:33 am
#20 Willy on 07.23.18 at 7:01 pm

Ontario teachers don’t make an average of 100k after ten years.

In Toronto no teacher does. For example, elementary teachers in Toronto cap out at at the absolute max of $98,550 with multiple degrees including a post graduate degree. Those with only a single degree cap out at $71,987 after ten years.

It’s all public so have a look for yourself.

https://www.ett.ca/salary-grid-for-tdsb-elementary-teachers/

And before you launch an ad hominen attack, no I’m not a teacher, I work in a small private sector company in BC. I just can’t stand hyperbole for the sake of driving a political position.

==================

Working only 9 months a year, $72k is very high.

#111 Duke on 07.24.18 at 1:10 pm

#45 For those about to flop… on 07.23.18 at 8:40 pm

Have to be Houdini to get out of this one…

M44BC

2287 37TH AVE W VANCOUVER price: $4.980,000 bought on 17-Apr-2017 for 5.48 assessment $4,344,100

https://www.zolo.ca/vancouver-real-estate/2287-west-37th-avenue

====================

Wow, this crappy old house for $5mil? Is this real, or are they taking monopoly money? Just wow.

#112 Ubul on 07.24.18 at 1:15 pm

#109 Duke on 07.24.18 at 12:48 pm
Working only 9 months a year, $72k is very high.

You should try if you find it attractive.

#113 TheDood on 07.24.18 at 1:20 pm

#65 Blacksheep on 07.23.18 at 11:19 pm

Dood # 150,

“146 Blacksheep on 07.23.18 at 3:50 pm

…..Not to mention the social stigma of being a renter…

__________________________

“Social stigma ??!!”
—————————-
You forgot to copy the whole sentence, let me help:

“Not to mention the social stigma of being a renter, 30 years ago.”

Yes, stigma….I remember growing up in my middle class hood as a kid. The neighbourhood kids new exactly who owned their homes and the very small number that didn’t.

_________________________

My question to this point is – why would renter vs homeowner even matter? Especially for kids? This mentality is one of many reasons why the “keeping up with the Jones’s” mindset has taken hold and driven large numbers towards financial debt and ruin.

_________________________

Since you decided to respond (thanks) what say you address the point I made, which was they didn’t have $250K liquid to buy the S&P 30 years ago (what young family has $1.5 mill cash to do it know?) and even if they did, your stuck renting for 30 years at a cost, both financially and otherwise?

_________________________

Stuck renting at a cost, both financially and otherwise? If you’re a homeowner good on you. Just so you know, there is nothing wrong with renting either, stop making it sound like it’s a bad thing. Statements like this are what creates stigmas in the first place.

#114 Linda on 07.24.18 at 1:23 pm

#102 – you are correct. I had meant to respond to post #50 but typed #90 in error. Should have typed ‘Debtslavecreator’ instead…..

#115 jess on 07.24.18 at 1:23 pm

we’re sorry they say: public trust

Hundreds of thousands of vaccines provided for Chinese children have been found to be faulty, inciting widespread fury and prompting the country’s President, Xi Jinping, to describe the incident as “vile and shocking.”

https://www.cnn.com/2018/07/23/asia/faulty-vaccine-china-intl/index.html

#116 MF on 07.24.18 at 1:29 pm

109 Duke on 07.24.18 at 12:48 pm

Did you count all the unpaid classroom and lesson prep in that analysis?

MF

#117 Gotta Get Out of Calgary on 07.24.18 at 1:35 pm

#34 Scott Buckle on 07.23.18 at 7:40 pm

While commuting a DB pension is sage advice for most people you should state that the person is walking away from fully or partially paid Health, Dental, Vision and Life Insurance retirement benefits offered by the employer.

—————————————————————-

Not always true. Not all DB pension plans provide medical and insurance benefit coverage.

I have a small non-indexed B pension from a private sector company that I worked with for five years. The plan will only provide pension payments. No insurance, no medical or health benefits are provided to the retirees.

It is up to the particular employer if they choose to offer additional benefits in their pension program.

#118 DD on 07.24.18 at 1:57 pm

I wouldn’t count on left leaning politicians doing nothing to address the Millennial gap. E.g. capital gains tax on principle residences, higher cap gains inclusion rate (affects owners of both real estate and financial investments), wealth holding tax (again both real estate and investments), inheritance taxes, etc. These threats are right around the corner with the NDP, but may be a matter of time before it goes Liberal mainstream.

Impossible with a serious financial reversal that such measures would bring. Then everyone suffers. – Garth

#119 Doug in London on 07.24.18 at 2:04 pm

@Ace Goodheart, post #106:
There’s one upside to stores selling high cost, American union made products only. It will be like in days gone by when, if something breaks or stops working, more Americans will try to repair it themselves or take it to a shop to have it repaired. That could produce more jobs and reduce material going to landfill, and reduce the stream of electronic waste also. Hey, why buy a new smart phone if the old one still works just fine?

#120 Linda on 07.24.18 at 2:05 pm

AB Boxter: a good public vs private pension comparison analysis. The key as you state is setting aside the funds for future retirement. ‘Pay yourself first’ as touted by many investment how-to’s. The problem is that most people will not do this. They need (or believe they need) that money now. Or they think that they will start to save later in life when their income is higher, or the house is paid off, or the kids leave home etc. Funny thing is, when incomes increase the things one can spend that money on increase as well. For most, the only way they ‘save’ is via mandatory deductions such as CPP & if available a workplace pension plan where joining the plan is a condition of employment – no opting out allowed.

One comment regarding the firefighter example you used: firefighters, like police & EMS have challenging working conditions. Firefighters have to stay in top physical condition so they can carry/drag someone’s unconscious carcass out of a burning structure. Firefighters have extremely high rates of cancer, various breathing disorders & are apparently #1 for number of heart attacks in any given profession – that adrenaline hit every time they jump to their feet to answer a call is thought to be the cause despite their excellent physical condition. The cancer is due to exposure to toxins/chemicals released during fires – breathing apparatus can only do so much to protect someone – which is also why breath related disorders tend to occur later in life. Which not surprisingly shortens their overall life expectancy.

My thought is that given the hazards $100K after 10 years is a bargain. Considering that elite sports stars make tens of millions to compensate for the fact they might be sidelined after an injury at a young age it is tres cheap. Unlike firefighters, those elite sports stars are not likely to ever face the hazard of being roasted like a chicken when they step out onto the playing field.

#121 BillM on 07.24.18 at 2:12 pm

Look very closely into how Seg funds really work before buying into the salesperson’s smoke and mirrors. From my understanding (and experience with an estate) you pay high fees for a guarantee that you do not really need. The guarantee % also gets reduced with age (depending on the company). You cannot just transfer out and move somewhere else. The amount you will receive will be the real return on your contributions less withdrawals and fees, not the puffed up number on the statement (that you can draw max 5%/year from for example.) That will also be the amount that your estate will see. It’s an insurance product and may give some sort of peace of mind. If you live long enough you might be the winner but more likely it will be the insurance company and the salesperson. (And if they get your phone number(s) they will bug you which says a lot about the commissions.) Sorry just my experience.

#122 Linda on 07.24.18 at 2:23 pm

Gotta Get Out of Calgary – too true. What post retirement benefits for health or life insurance varies depending on the plan. Even when offered many have an expiry date – my own pension plan offers retiree health care coverage but only until age 65. Obviously if you retire aged 65+ that card is no longer on the table. The deal is costs are split 50/50 between retiree & employer which is still a good deal. I’d also add that should a pension plan run into difficulties the usual first thing done is to reduce or cancel any health care or other extraneous benefits before reducing the actual pension benefit itself.

#123 SoggyShorts on 07.24.18 at 2:24 pm

#115 MF on 07.24.18 at 1:29 pm
109 Duke on 07.24.18 at 12:48 pm

Did you count all the unpaid classroom and lesson prep in that analysis?

MF
**************************
School days are only 7h long,
72K for 9 months is $57 per hour.
Even if you do prep for 3h a day at home, it’s still $40/h.

I only taught for 2 years, and just ESL, but I can say that my prep time was down to a few minutes per class towards the end.

#124 IHCTD9 on 07.24.18 at 2:45 pm

#107 AB Boxster on 07.24.18 at 12:14 pm
#100 IHCTD9 on 07.24.18 at 10:32 am

What a load of horse shit.
——————————————–
Really?

etc…
________

I don’t have time to read all that – but yes really.

#125 jess on 07.24.18 at 2:48 pm

share your home platforms :uniting the old with young

cheaper rent /help around the house /home cooked meals less lonely beats the overpriced sky boxes.

=======
Can ‘climate kids’ take on governments and win?

#126 crowdedelevatorfartz on 07.24.18 at 2:54 pm

#@107 AB Boxter
“The fact is that public sector workers are forced to contribute to a pension plan, so they have a forced retirement savings.”

+++++
Well, like most stubborn , obstinate govt workers….
You’re avoiding the argument.
Listen closely.
Your forced savings don’t cover the entire amount of your generous pension payments.
TAXPAYERS make up the shortfall difference to the tune of BILLIONS of dollars per year.
Municipal, provincial and federal govt employee pensions are not collecting enough money to be sustainable and its getting worse.

Stop whining about how jealous the unpensioned, over taxed general population is about your defined benefit pensions.
Jealousy has nothing to do with it.
I couldn’t care less IF YOU ACTUALLY PAID FOR IT ALL INSTEAD OF RETIRING ON THE BACKS OF TAXPAYERS FORCED (through hire and hire taxes) TO PAY FOR YOUR PENSION SHORTFALLS.
Fair? No.
The only thing “forced” are the ever rising taxes we, the great unwashed, are forced to pay to keep you lazy pricks in money that I dare say you govt “workers” , for the most part, do not deserve….
But why waste my time.
You’ve drank the union govt employee koolaid as to why you’re entitled to your entitlements……

If Hogs at the trough could only grunt and squeal so loud.

Its like talking to a wall.

#127 TorontoBull on 07.24.18 at 3:00 pm

@ 107
“Pensions end with death. Nothing goes to the estate”
A great analysis. My only comment is that upon death the spouse usually gets 2/3 rds off the pension

Hardly. Depends on the plan. – Garth

#128 NoName on 07.24.18 at 3:08 pm

#122 SoggyShorts on 07.24.18 at 2:24 pm
#115 MF on 07.24.18 at 1:29 pm
109 Duke on 07.24.18 at 12:48 pm

Did you count all the unpaid classroom and lesson prep in that analysis?

MF
**************************
School days are only 7h long,
72K for 9 months is $57 per hour.
Even if you do prep for 3h a day at home, it’s still $40/h.

I only taught for 2 years, and just ESL, but I can say that my prep time was down to a few minutes per class towards the end.

esl, you are probably my esl tacher, i many post here to prove that.

#129 TorontoBull on 07.24.18 at 3:08 pm

@107
actually over the past 5 or so years public union increases have been below the private sector increases. If you separate police then the gap between public and private employment growth is even bigger.

#130 jess on 07.24.18 at 3:14 pm

increase in wrinkle crimes? guess the car needed gas

Police are looking for the man who robbed an Elmira bank in broad daylight Saturday afternoon.

The suspect, believed to be in his 60s, entered the bank at around 2 p.m. and handed a note to one of the tellers, demanding money.

According to a Waterloo regional police report, “no weapon was used or seen” during the interaction.

The teller gave the man “an undisclosed amount of money,” and he then left the bank and fled the area, possibly in a black Lincoln MKS vehicle.

#131 MF on 07.24.18 at 3:22 pm

122 SoggyShorts on 07.24.18 at 2:24 p

One of my parents taught for 30, and it was grade 12 science.

The prep was far far more than the 3 minutes for esl.

Did you count the time spent prepping on the weekends? Marking tests/exams?

Calling parents to talk about little Johnny?

No you didn’t.

MF

#132 Duke on 07.24.18 at 3:37 pm

#115 MF on 07.24.18 at 1:29 pm
109 Duke on 07.24.18 at 12:48 pm

Did you count all the unpaid classroom and lesson prep in that analysis?

MF

======================

Sure. As an IT professional, I usually spend more than 20 extra hours a week to keep up with the current technologies. That type of extra work is required in many occupations. Why do they have to be treated differently? I highly doubt they spend more than 5 hours a week for class prep. Also, their work hours are from 8am to 3:30pm, and I rarely see any teacher working more than 40 hours a week including class preps and test markings. They get paid more than what they deserve.

#133 SoggyShorts on 07.24.18 at 4:03 pm

#130 MF on 07.24.18 at 3:22 pm
122 SoggyShorts on 07.24.18 at 2:24 p

There’s a pretty obvious trick for marking tests/exams: Mark class A’s tests while class B is writing the test.
Especially in a class where there are right and wrong answers (unlike an English essay for example)

Sorry, but if your parent was still doing 15+ hours of prep per week after 30 years, they might have been doing it wrong. Or, to be fair, they may have been an amazing teacher who went way above and beyond, setting up experiments and making entirely new classroom materials instead of re-using last years etc.

Teachers get a full 1h lunch, and work 6h a day. It’s really not a bad gig.

#134 Blacksheep on 07.24.18 at 4:42 pm

Dood # 112,

“My question to this point is – why would renter vs homeowner even matter? Especially for kids? This mentality is one of many reasons why the “keeping up with the Jones’s” mindset has taken hold and driven large numbers towards financial debt and ruin.”

“Stuck renting at a cost, both financially and otherwise? If you’re a homeowner good on you. Just so you know, there is nothing wrong with renting either, stop making it sound like it’s a bad thing. Statements like this are what creates stigmas in the first place.”
—————————————-
This has nothing to do with my owning, or not.

There is no “mentality” involved with my comment, It is fact. One can ignore it, or try to rise above it, but it is still there on the periphery with the majority of Canadian adults. Don’t get me wrong, I was a renter from 2008 to 2013 so know first hand of what I speak and I even own a successful small business.

Why is there still, so much social pressure to own a home?

Why do some own expensive cars? Expensive lifestyle? Bling jewelry?

To display their wealth and attract a mate. A renter with a large portfolio does not impress their new potential new partner like a big expensive house would.

Why do humans behave this way, even once married?

It’s about social hierarchy.

Read some Dr. Jordan Peterson for insights to the human condition.

It’s all about your lobster rating, are you a 1 or a 10? The answer to this question will impact every aspect of your life, you just don’t know it yet.

Why do kids care?

Because kids can be pretty mean and will use any perceived edge to put down other kids in an attempt for them to rise up in the pecking order of the hood.

Don’t kid : ) yourself, our capitalist, dog eat dog society starts young, at least this is how it was in my hood made up of middle plus class, business owning families.

#135 Headhunter on 07.24.18 at 4:46 pm

I feel sorry for teachers and all the people in the education system as employee’s. Internet is killing you.

Why does my kid need to go to a “school?” want to learn math? Pipe me in to the Salman Khan academy for lessons from the lady that invented math.

Get 5-6 families near by with the same age kids and its math at mary’s english and franks you get where im going. Its already in motion. be lots of useless buildings.

#136 IHCTD9 on 07.24.18 at 5:43 pm

#133 Blacksheep on 07.24.18 at 4:42 pm
————-

It’s scary out there today, there’s more than just genes and evolution at work here.

Go to any marriage forum, and flip over to the financial sub-forum. Horror stories galore. Married couples who keep separate finances and keep them secret from each other. Couples who don’t even know what their spouse makes in a year. Husbands and Wives finding out their partner has kept hidden tens and even hundreds of thousands worth of debt throughout their courtship, only for it to be revealed after the ring was on. Credit card debts continually being racked up by one in secret, and then begrudgingly paid off by the other – over and over until divorce.

As Garth says, stay single or stay married (ie or face potential financial ruin). If I were in the dating pool these days, I’d seriously put obtaining financial character intel near the top of my to do list regarding any potential mate.

#137 Original Observer on 07.24.18 at 7:30 pm

#20 Willie, and others,

I’m tired of the whining and complaining about how Government employees have a nice pension. I have worked in the technology industry for 40 years, the first part of my career in the private sector, the second half for a post secondary institution. Yes, a government job. For the last twenty years I have been the subject of ridicule from my colleagues who either work in the private sector or who are self employed. That is because they have earned up to 3 times the annual income that I have enjoyed. Oh how they laughed at me. They have big beautiful houses, expensive cars, and vacation much better than I ever could. Funny thing though, now that we’re all nearing retirement, they, like many on this pathetic blog, are belly-aching about how great my pension is. What they forget is we all had a choice. I chose a job that paid less, but had some benefits that the young ignore in favour of the big annual salary. They had a choice with what to do with that extra money they were making for all those years. Yes, my salary was considerably lower than my counterparts, and yes I couldn’t buy the lavish trinkets they could. But I knew my kids would have the opportunity to go to university, and I wouldn’t have to worry about my retirement. Government jobs are not hard to get. The problem is they’re not all high paying as posters here make them out to be, so people look elsewhere. Life is about choices, stop belly-aching.

#138 Lex_the _kid on 07.24.18 at 7:49 pm

So many comments, so little time.

I work for a DC plan, don’t hold it against me.

1. Read your DC plan documents and collective agreement carefully. In our plan, deposits from the employee and employer are immediately vested and cannot be returned to the employer. Look for this wording in your documents.
2. Look for a plan that is well managed and has a low MER. Ours is historically around 1% of total plan assets. Also look at target ROR, and actual performance. Our annualized ROR (after fees) for 2017 was 7.5%.
3. You can contribute a maximum amount of 18% of earned income to a pension plan (to the max CRA money purchase limit for the year); however, this amount reduces the contribution room in your RRSP.
4. Many employer sponsored plans offer matching. THIS IS FREE MONEY. Often the wording in a collective agreement will say something like ‘The employer agrees to contribute a mandatory amount of 2% and if the employee agrees to contribute an additional 2% the employer will match it’ This results in an overall contribution of 6%, if you don’t sign up for the match, you don’t get the extra money.
5. You can’t contribute after tax dollars to a DC plan but you can add funds to your plan if it is a good investment by transferring funds from another registered plan such as an RSP. Not all plans allow this, you need to confirm with your plan.
6. If you leave your employer, once the funds are vested, the entire amount in your DC plan is yours to either cash out or transfer. The ‘locking-in’ amount this year is $11,180 at which point you don’t have an option to receive the funds as a lump sum cash payment.
6. It’s true, no plan is completely secure. A DB plan can be underfunded resulting in the plan not being able to fund pensions (Stelco is an example). A DC plan can lose money through it’s investments, affecting each plan members total market value (again, look for a well managed plan)
7. Each plan has provincial or federal legislation that applies to how and when you can access your funds. Read and understand the information that applies to you carefully. (Those under SK are out of luck, sorry!)

I’m proud to work for a plan that I consider to be one of the ‘good’ ones, but ultimately it’s up to each plan member to read, research and understand the benefits and limitations of any plan offered to them. Commenters seem to be holding up the DB plan as the ‘holy grail’ but they have their failings too. And for those jealous of the government DB plan, my hubs has a crown corporation DB plan, seriously underfunded, can’t be commuted and he pays more into it than the corporation does. So maybe don’t be so jealous.

Also, a little comment for the teacher haters. I have two children, almost done with school, and their teachers deserve every penny and then some. Anyone who’s been closely involved with an elementary or secondary school should agree with me. Let’s not be like the US and value our teachers less than our local Starbuck’s barista.

#139 Mary Schmidt on 07.24.18 at 8:53 pm

Hey, all you government workers. We made lot of money as a real estate agents. Retired in 2016 before the market slowed. All our investments generate us $100,000 a year and we paid almost no taxes.

#140 Jimers on 07.25.18 at 2:24 am

#20 Willy on 07.23.18 at 7:01 pm

The Canadian Education system needs to be replaced by Youtube(ie Khan College) and a bunch of baby sitters for those who cant study from home. Cisco already has the solution. Those who want their kids to have a traditional education can pay for it themselves at private schools.

#141 Linda on 07.25.18 at 12:31 pm

#139 Jimers – most Canadian provinces do not specify an age when younger children can be left home alone, but in general the recommended minimum is age 10. Children left alone who are younger than age 10 are generally deemed ‘at risk’ & if social services get involved, the children may be placed in care while the custodial parent/guardian is investigated. Traumatizing to say the least & expensive, too.

Teaching via online courses has been around for quite a while, usually targeting adults who wish to upgrade their education/change careers. The problem with moving children to this method of teaching is that they still need adult supervision at least until the age of 10 – I am fairly certain the courts would not consider leaving a child under age 10 alone for more than 8 hours a day ‘reasonable’. So who provides that supervision? ‘a bunch of baby sitters’? Have you looked at how much child care costs? You can be sure that those providing these services are not going to take on the task of ensuring your child is accessing/learning/completing their education without increasing their fees – always supposing that they even were willing or qualified to do this in the first place. What happens when the child has questions regarding lesson comprehension or problem solving? Will those who receive their education this way be disadvantaged later on when it comes to attending university or being employed? Let us be honest – those who have diplomas from Harvard, Yale, MIT, Queen’s & other ‘first rate’ educational institutions often have an advantage over someone whose diploma is from ‘Frank & Mary’s’ home based school program.

I do think that there is a future in online learning for children & that it will eventually replace our current system. I just do not think it will be as simple & easy to implement as your comment indicates. As for private schools, the public school system is & continues to be one of the ways people can advance themselves. In the ‘good old days’ one of the ways those in power were able to hold onto it was that they had the education, money & connections. Lack of access to education due to lack of funds will merely enhance the gap between the ‘haves’ & ‘have nots’.