Now what?

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  By Guest Blogger Sinan Terzioglu
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When departing an employer with a defined benefit pension the decision whether to leave your pension in place, transfer to another plan (if joining an employer offering a defined benefit pension) or take the commuted value can be very overwhelming. If you take the commuted value, a portion would be transferred on a tax-deferred basis to a Locked-In Retirement Account (LIRA) with the balance paid out in cash and added to income for the year (taxable). Adding to the confusion of the decision process are recent changes to the calculation of commuted pension values in Canada, as well as rising interest rates, leading to lower pension values.

Even with lower estimated pension values I believe most people who have the option to commute their pensions should seriously consider doing so. The advantages of having access to the funds, control and the ability to leave the assets to your loved ones outweigh the risks. That said, everyone’s goals and circumstances are different, so when it comes to whether you should commute your pension or not it’s important to keep in mind what makes sense for many others may not make sense for you.

There are many different pension plans and some have benefits that must be taken into consideration. For example, some have health benefits and some are indexed to inflation but many lack both benefits so all pensions are not equal. Some plans have death benefits so if you were to pass away the payments (often reduced) would continue for your spouse for a certain period of time. However, after you pass away many pension plans do not allow you assets to be left to loved ones.

Use RRSP room to nix tax on cash

Having control and access to the funds is one of the biggest advantages of commuting a defined benefit pension because it gives you the potential to earn a higher rate of return on the assets. The portion that would be paid out in cash and taxed in the year you receive the funds can be used to contribute to an RRSP, deferring taxes, but only there’s available contribution room. If commuting a pension is an option at some point in the future then it would be worth planning to accumulate RRSP contribution room.  Many have a tough time with the tax implications of commuting a pension but it’s important to understand this portion would never end up in your pocket anyway because pension income is fully taxable.

The portion transferred to a LIRA is locked-in until you are permitted to withdraw (usually beginning at the age of 55). A LIRA is very similar to a RRSP or RRIF because you can invest in a wide variety of assets such as diversified ETFs and the funds can grow tax deferred until withdrawn. To unlock a LIRA and have the ability to withdraw funds you are required to transfer them to a Locked-In Fund (LIF). There are minimum and maximum amounts that can be withdrawn annually from LIFs but if you don’t need the funds they can remain in the LIRA to grow tax deferred until you are required to withdraw them which is at the end of the year you turn 71 (just like with RRSPs and the requirement to convert them to RRIFs).

Some can unlock 50% of a commuted LIRA

A little-known advantage for those with federal LIRAs is that if you are 55 or older and transfer the funds to a LIF you have the opportunity to unlock up to 50% of the account value within 60 days of the transfer. The 50% maximum is determined based on the LIF account value on the date of the withdrawal so in order to have access to the maximum amount you would need to transfer the entire value of the LIRA to a LIF. Another big advantage is the option to take the unlocked portion in cash or contribute it to another registered retirement account, like your RRSP, and continue deferring taxes.  If you take the unlocked portion as cash you contribute funds to your TFSA and don’t own a home, you can contribute to a FHSA when they become available next year. Having this kind of control, flexibility and access can be very helpful later in life.

Leaving a pension in place is very enticing for many because of a guaranteed income for life, whereas if you commute a pension you take on investment risk as well as longevity risk. That said, pension plans estimate their future liabilities and invest very cautiously in mostly fixed income assets and as a result earn modest returns. By commuting you have the potential to earn a higher rate of return by investing in a balanced and globally diversified portfolio that has earned an average annual rate of ~7% over several decades and is very likely going to continue to earn a similar rate of return so over the next several decades. Compounded over many years this difference can make a very significant difference for your family’s wealth over time so for those that would like to leave behind as much as possible for their loved ones by not commuting your pension it can potentially turn out to be a very big opportunity cost.

Sinan Terzioglu, CFA, CIM, is a financial advisor with Turner Investments, Private Client Group, Raymond James Ltd.  He served as vice-president of RBC Capital markets in New York City and VP with Credit Suisse in Toronto.

 

77 comments ↓

#1 Faron on 09.16.22 at 1:49 pm

#144 Don Guillermo on 09.16.22 at 1:33 pm
#140 Faron on 09.16.22 at 12:50 pm

**********
It is actually. I’m currently reading Russka by Edward Rutherford. Yours sounds interesting though. I just went to the Kobo store and picked up Anna’s Putin’s Russia. Thanks for the tip.

Cool.

Love my kobo. Makes me think of the transition to digital cameras when the film die-hards, myself included, would complain about the lack of feel in the new tech. But, man, having the capacity for thousands of books on an e-ink screen beats feel any day of the week IMO. I’m only 15 years late.

#2 TurnerNation on 09.16.22 at 1:51 pm

Short the rallies or rally the shorts?

—-
Set ’em up, Knock ’em down.
You will own something and be unhappy/or you will own nothing and be happy.
The new King wants his cut, Settler.
So too do the Crown’s bankers — interest payments.
This is Crown Land never forget.

#AlbertaAdvantage right?

https://www.westernstandard.news/thomas-get-ready-for-massive-city-of-calgary-property-tax-increases/article_50fba7f4-351b-11ed-8f63-93b7de4fdd67.html
Get ready for massive City of Calgary property tax increases
“City manager intends 20% tax hike over four years to fund city ‘investments’

——- We should be so healthy by now? 3 years of extreme hygine practices and Rules.

https://www.dailyrecord.co.uk/lifestyle/heart-attack-symptoms-more-younger-27992138
Heart attacks are becoming increasingly more common in women under 50 and medical experts can’t figure out why.

#3 Franco on 09.16.22 at 2:22 pm

With markets going up and down like a yoyo and some in the know say this will be a sideway market for at least another 10 years, may be a good idea to leave the pension where it is and index for life.

#4 Squire on 09.16.22 at 2:35 pm

#2 TurnerNation on 09.16.22 at 1:51 pm
————————————————
Stress can do a lot to a one’s body and mind. Also, being put in a state of fear for so long with lockdowns due to a virus will take a toll on people. Only recently have all the studies shown that lockdowns did more harm than good. This is not an anti-vax comment for those of you that are big MRNA pumpers.

#5 an investor on 09.16.22 at 2:42 pm

We’re in the middle of the third bear market since 2018 and now the experts are warning us of a global recession.

Anyone with a DB pension would be foolish to commute the value when people like Biden and Trudeau are deliberately crashing the economy.

#6 enthalpy on 09.16.22 at 2:44 pm

would be curious to know many readers have a DB pension.

#7 Richard L on 09.16.22 at 2:48 pm

A very good column today thanks Sinan. Commuting a DB pension is well worth considering. I am a member of a DB plan and at the last AGM several of the union reps were arguing that the plan should prohibit the commuting option. I think the widest choice should be available to retirees. Commuting also helps the plan by removing the individual as a future liability.

#8 Andrewski on 09.16.22 at 2:52 pm

Great info Sinan, however there’s a percentage of people who will just stay the course and end up negatively affecting their future investment returns.

#9 Felix on 09.16.22 at 2:55 pm

Always best to commute early and spend the money on your cat, Sinan.

Happy Feline Friday!

Did you know:

A cat’s purr has self-healing properties. That’s because cats purr at a frequency between 25 and 150 Hertz, which is the same frequency at which bones and muscles repair themselves.

#10 ckat on 09.16.22 at 3:01 pm

I’m planning to work at my job until retirement and take my full pension, but after reading this I decided to look at my pension statement for curiosity sake.

Pension currently worth 40k per year in today’s dollars and if I left, it would be indexed to inflation until I am old enough to take the pension.

The transfer value includes a taxable and non taxable portion. Once I pay the tax on the taxable portion as I have no RRSP room I would be left with 275K in an RRSP and 125K in a taxable account. This totals 400K. If this grew at 7 percent a year for ten years I’d have 800K which would give me 32K a year using the 4% rule. That’s less than what the pension is today. Meanwhile the 40K pension with 2.5% inflation a year would grow to 51K over the ten years and this is conservative because inflation is 7% right now, so it might be even more. It also comes with a family dental/medical plan. With these numbers, keeping the money in the pension would be the better option.

#11 Quintilian on 09.16.22 at 3:25 pm

Hey, shouldn’t you B & D curmudgeon-aficionados be loading up on some Bitcoin now that it’s on sale?

#12 See No Evil... on 09.16.22 at 3:26 pm

Uh oh, I guess it wasn’t destined to stay “somebody else’s problem…

https://www.newsmax.com/newsfront/white-house-dhs-migrants/2022/09/16/id/1087793/

“The choices offered included flying migrants to the country’s northern border with Canada to alleviate overcrowding on the U.S.-Mexico border, according to NBC News sources.”

#13 john on 09.16.22 at 3:26 pm

Thank you for this info. Difficult to know if a company’s pension can weather the financial storms to come if choosing the pension for life. Also, can you beat the pension fund administrator’s performance and not have negative returns when it’s time to cash out?

#14 Caffeine Monkey on 09.16.22 at 3:27 pm

Defined benefit pension should always be written as “defined” benefit pension. They’re guaranteed only up until the point where the company says they’re not, or bankruptcy has a say in matter. (See: Sears)

#15 Dishonest Realtor on 09.16.22 at 3:27 pm

Great advice! Cash in those DB pensions, and invest the money in timeshare properties and pre-construction condo projects before the market soars again in a few months.

And if you can, please help me with my Audi lease…..

#16 Big Bucks on 09.16.22 at 3:40 pm

#6

Mostly just those in the Public Sector now have DB plans—so roughly 4 million people across the country at various levels of government.The private sector decided they couldn’t afford them years ago. Tax payers pick up a huge portion(for a great plan they don’t even have)of the DB plan in the public sector so it is one sweet deal.Talk to a couple real experts before going the commute route guaranteed indexed pensions shouldn’t be exited just willy nilly.

#17 Linda on 09.16.22 at 3:44 pm

Sinan, excellent post. One caveat I’d add regarding commuting: folks may leave the funds in place for that ‘guaranteed income for life’ but what folks need to think about is just how valid that guarantee may be. Sadly, examples abound of workplace pension plans that were underfunded & then gutted when the employer declared bankruptcy. Many employees lost all their years of contributions plus were informed they would receive a reduced or no pension benefit whatsoever; retirees possibly kept some of their retiree benefit(s) but in all too many cases, saw those benefits reduced with catastrophic financial impact upon the pensioner(s). Sears, Nortel, Enron, Air Canada – the list goes on. Even the much envied ‘safe’ government pension plans can be altered. For instance, changed from a DB to a DC plan. Current & former employees may or may not be permitted a choice regarding what kind of plan their pension contributions will belong to. Retirees are in general ‘grandfathered’ into whatever the plan was prior to any such change but that too may not occur.

Given that there is little to no pension protection offered in Canada – the only province that has any is Ontario & it is limited in scope – if someone is leaving a company I’d recommend they take the money with them. Better safe than sorry!

#18 Flop… on 09.16.22 at 3:51 pm

I’ve been trying to support my Mum lately by calling her once a week 13,000 kilometres away, and talking for an hour after the recent death of her husband, and my Dad.

After the first horrific phone call where she recounted details of my Dads last few days, the following phone calls I thought she was doing alright all things considered, alone, lost, but showing some fight.

Last weekend when I called, she had had a tough week doing paperwork regarding my Dads pension.

I don’t know or understand all the details, but from what she explained, one pension was through work, that is now gone, as they jointly decided upon retirement to take the fortnightly payment.

Now, she said that she’s try to prove she is the surviving spouse of his superannuation, and she said that if proven she will only be given 2/3rds of what he was receiving, which sounds dodgy to me, but different country, different rules.

Like I said, I can only go on what she said, but if you count the lost pension, and the other 3rd, that means she will be only receiving one third of the retirement income they had coming in from his side, with most of the same bills, except things like groceries and the like.

I’m obviously alarmed and worried for her.

No mortgage, but outrageous condo fees, or Australian version of them, is going to eat a fair chunk of the dwindling pile.

She has only just turned 68, crappy retirement so far, and I don’t seeing it getting any better, but I hope she lives a lot longer yet as long as not suffering too much.

She can’t travel or do much apparently, due to spinal fractures and rib problems, from when my Dad fell through the roof onto her when prepping their home in Tasmania for sale.

Bet they never saw this horror show coming, as they slaved away for 40 years saving for a modest retirement.

Did I mention that they had a crappy retirement?

If I had Roy Stacey’s (Boom) wife’s phone number I would probably pass it on to my Mum, because a similar thing happened to them, and she has walked many a mile in the same shoes.

We hear a lot about living longer, but from all I’ve seen, if you’re over 60, in good health, have a bit of wealth, and still get to see the people you love everyday, don’t take it for granted, because it’s not the norm…

M48BC

#19 Nonplused on 09.16.22 at 4:06 pm

Well, I don’t know what this guy was thinking. No battery lasts more than 10 years. 7 is actually pretty good. If you want to drive an electric vehicle (which is fine, knock your socks off), you have to budget for battery replacement. Same as you would for say tires.

https://www.foxbusiness.com/technology/canadian-man-says-tesla-locked-out-until-changes-battery?utm_source=substack

#20 Chris on 09.16.22 at 4:07 pm

Hey #4 Squire – if you’re gonna say something like “Only recently have all the studies shown that lockdowns did more harm than good.” then please post links to “all the studies”. Otherwise, it’s just your opinion, which is worth whatever weight people want to give it.

Also, remember that it’s easy to look back at something once it plays out and say ” this was clearly the right thing to do.” Much harder at the time. For example, where are you investing all your money right now? Will be pretty easy in a couple of years to know the best place, but a little trickier at the moment.

#21 Dogs Not Barking on 09.16.22 at 4:20 pm

DELETED (Conspiracy nut)

#22 Ponzius Pilatus on 09.16.22 at 4:20 pm

#4 Squire on 09.16.22 at 2:35 pm
#2 TurnerNation on 09.16.22 at 1:51 pm
————————————————
Stress can do a lot to a one’s body and mind. Also, being put in a state of fear for so long with lockdowns due to a virus will take a toll on people. Only recently have all the studies shown that lockdowns did more harm than good. This is not an anti-vax comment for those of you that are big MRNA pumpers.
———————-
Of course, stress is a killer.
But losing a loved one to a virus that can be prevented is very stressful, too.
But how stressful is it to get a shot and put a mask on?
And, about you’re studies, please elaborate.
How can they even quantify effects of the lockdown?
And it’s all 20/20.
And, what lock down? There was some in the beginning,
I don’t remember being locked up in my house.
You talking about China?
And, kids a learned a lesson that sometimes life is a bitch
Time to move on.

#23 Sinan Terzioglu on 09.16.22 at 4:31 pm

#3 Franco – Even if markets go sideways for a period of time a balanced and globally diversified portfolio will still generate consistent distributions which rise over time. A balanced portfolio has never had a negative 10 year return so if you are investing for 10+ years the odds are very good that a diversified portfolio will do very well.

#24 ogdoad on 09.16.22 at 4:32 pm

Must be nice to have a DBP…too bad you have to work 30+years for it to be worth it.

My father, for instance, is a retired teacher (full. dis. I have asked him whether, if he was my age with my investments, he would dump the career at my age? Answer: YES, without a stutter). G, there’s an interesting stat. How many working Canadians would ditch their crappy jobs (DP or not) just ’cause life is MUCH bigger?

OAN…two weeks ohne BB’s…little depressed about it…miss’em. Gonna toast’em out tonight…snuggle for certain…little oxy is what the Ogtor ordered. That’s what its for, right?

Happy Friday….

Og

#25 Ponzius Pilatus on 09.16.22 at 4:37 pm

#17 Linda
Given that there is little to no pension protection offered in Canada – the only province that has any is Ontario & it is limited in scope – if someone is leaving a company I’d recommend they take the money with them. Better safe than sorry! Given that there is little to no pension protection offered in Canada – the only province that has any is Ontario & it is limited in scope – if someone is leaving a company I’d recommend they take the money with them. Better safe than sorry!
————————
Agree.
“Take the money and run” is a funny movie.
And also a good strategy that one should consider.

#26 Sinan Terzioglu on 09.16.22 at 4:40 pm

#5 an investor – Over the last several decades we have experienced many recessions and got through them all and will get through this period of difficulty too. Since inflation was last at these levels over 40 years ago the US equity market is up over 7,000% (with dividends reinvested). During that time period we experienced the crash of 1987, the Asian currency crisis in the late 90’s, the bursting of the tech bubble, 9/11 terrorist attacks, the 2008-2009 financial crisis and now the first pandemic of this generation. Markets rise over the long term because of corporate profit growth and they will continue to rise.

#27 Dragonfly58 on 09.16.22 at 4:43 pm

Regarding E readers. There are an awful lot of books not available as an e download.
I have a pretty good libary of specialist books on vintage sports and racing cars and race car technical design. Not coffee table books or something you see at Chapters.
Small print runs from specalized publishers. Normal retail is often $200.00 + a copy U.S. And once they go out of print the price starts going up.
I sometimes look for a particular title at a price I am willing to pay for years.
Good books / rare books, can be shockingly expensive. If only the solution was an e reader download. Instead it falls back on the old stand by , cash and lots of it.

#28 Snakehips on 09.16.22 at 4:47 pm

Definitely lots to consider. My current agreement with the company I work for allows commuting a pension however, I lose my health benefits for life by doing so. If I take the pension as is, I will have health benefits as will my spouse until death. A very huge perk if you ask me. About 12 years away from retiring so alot can change. Good topic today, I’m going to review the plan tonight as I plug away on the night shift…happy Friday all.

#29 Sinan Terzioglu on 09.16.22 at 4:48 pm

#10 ckat – Based on the numbers you provided and the medical + dental benefits it appears you have good pension. Although, I am confident you would be able to withdraw 5-6% a year from a balanced and globally diversified portfolio without pressuring the capital. Also, if your pension does not have death benefits (so that you can leave the assets to your estate) than I still think you should seriously consider commuting.

#30 Sinan Terzioglu on 09.16.22 at 4:51 pm

#13 john – There is no gaurantee with corporate pensions. Look at how it turned out for pensioners of Nortel Networks which was the most valuable company in Canada a little over 20 years ago

#31 Sinan Terzioglu on 09.16.22 at 4:53 pm

#17 Linda – Very good point that even government pensions can be altered.

#32 Linda on 09.16.22 at 5:13 pm

#18 ‘Flop’ – sorry to hear about your Dad’s death & your Mom’s subsequent troubles. About the 2/3rds deal – that is legit as I can testify. The workplace pension plan I belong to has an option that pays more, but the pension gets reduced to 2/3rds upon the death of either pension partner. A coworker of mine had retired & took that option, as the expectation based on family history was that both of the couple would live a long life. Then came a slip on ice with a broken hip for the partner, with the end result of an early death. Said coworker had been retired for less than 2 years.

I’ve no idea about what public pension(s) might be the norm in Australia, but if it is anything like Canada your Mom might or might not be able to get at least some of the pension funds being received by your Dad. CPP does have survivor benefits, but they only apply if the survivor isn’t already receiving ‘the maximum’ CPP benefit. If they are getting the maximum then the only benefit they may get is the one time ‘death benefit’ of $2,500 which is meant to help offset the cost of the funeral/burial. Insofar as I’m aware there are no OAS survivor benefits, so widows/widowers may indeed find that their finances have been reduced upon the death of a partner. Condolences.

#33 Faron on 09.16.22 at 5:19 pm

Seems relevant to recent bullying:

…the KGB preferred to wage it’s war against dissidence… by diagnosing everyone they could as mentally ill…

Putin’s Russia, Anna Politkovskaya

On a lighter note, the jam turned out great. Bit thick, but delicious. Picking the pear tree today before the wind gets it. Wet spring and a hot, dry summer make for almost painfully sweet fruit.

#34 Douglas on 09.16.22 at 5:31 pm

I never worked for an employer, boss that paid me a pension. I really did not want one. I kept hearing all the horror stories about pension cuts, pension problems with private companies. Government workers are protected until all goes to crap and nobody is okay.

The only thing I could do is put money in credit unions, banks, other Canadian financial institutions within deposit insurance limits that paid highest interest rates, longer term ones like GICs, term deposits paid the most. Stuck them in RRSPs, TFSAs to stave off tax bracket creep for my weekly paycheck, stayed out of debt and saved alot.

#35 Observer on 09.16.22 at 5:35 pm

#142 Faron on 09.16.22 at 1:08 pm

Uuuuh, I hate to admit it.

This is tough for me.

But… Crowdedelevatorfartz is right.

^^^^^^^^^^^^^^^^^^^^^

Don’t sweat it. Although he will deny it until the cows come home, CEF is actually a repressed wokester.

#36 Wrk.dover on 09.16.22 at 6:00 pm

#18 Flop… on 09.16.22 at 3:51 pm
____________________________________
NS teacher surviving spouses get 60%.

Could arrange for bigger cut, if pensioner takes less from the onset.

My wife wasn’t going to take less so I could live large with some bimbo, after her demise.

If I had had the funds, I would have made up the difference. Her gene pool doesn’t live as long as my own.

#37 Penny Henny on 09.16.22 at 6:26 pm

#69 Faron on 09.15.22 at 6:33 pm
OpEx, fragile markets, huge FX vol, weak VIX response (complacent). SPX near 3800 is unstable.
/////////////////

Funny that. The SPX just said you were unstable Faron.
Coincikdink

#38 Faron on 09.16.22 at 6:47 pm

#35 Observer on 09.16.22 at 5:35 pm

#142 Faron on 09.16.22 at 1:08 pm

Uuuuh, I hate to admit it. This is tough for me. But… Crowdedelevatorfartz is right.

^^^^^^^^^^^^^^^^^^^^^

Don’t sweat it. Although he will deny it until the cows come home, CEF is actually a repressed wokester

Yeah, It’s kind of endearing.

#39 Faron on 09.16.22 at 6:52 pm

#145 Covid Variant Math on 09.16.22 at 4:14 pm

Oh, hi there. Hey, the world has moved on from yesterday’s thread. Not unlike your feelings or beliefs about climate change.

Anyhow, you were mistaking my being doubled over in side-splitting laughter at your takes for discomfort at your line of questioning (that I do hope you will refresh me on).

Please, proceed.

#40 Government Shill on 09.16.22 at 6:53 pm

Hooray, someone reads my comments! Thanks!

#41 Penny Henny on 09.16.22 at 6:56 pm

#137 Faron on 09.16.22 at 12:15 pm
#125 Dharma Bum on 09.16.22 at 8:37 am

#122 ImGonnaBeSick

Ignore him…it drives him crazy. He’s an idiot anyway.

That’s weird, the forecast model output I looked at had the late August/early September heatwave nailed at least 10 days before it happened. I mentioned it here in fact.
//////////

10 days ahead you say!
Well that’s a first!
Congrats.

Wait 10 days???? Isn’t that weather not climate??

Maybe go back to IA. Internet Anonymous.

#42 Faron on 09.16.22 at 7:05 pm

#37 Penny Henny on 09.16.22 at 6:26 pm

Oh, hey, I’ll just add another mark next to your “name” on the list of ad hominem abusers. Sound good?

I for one use information to make money. Up 1.7% today long NASDAQ, about 14% this month alone (using long index, short index and VIX futures ETNs). Kind of a super SAGI TBH. Happy to post the trades.

Maybe, uh, try discussing ideas for once instead of vomiting out vapid gotchas?

Cheers

#43 Observer on 09.16.22 at 7:08 pm

#38 Faron on 09.16.22 at 6:47 pm
#35 Observer on 09.16.22 at 5:35 pm

#142 Faron on 09.16.22 at 1:08 pm

Uuuuh, I hate to admit it. This is tough for me. But… Crowdedelevatorfartz is right.

^^^^^^^^^^^^^^^^^^^^^

Don’t sweat it. Although he will deny it until the cows come home, CEF is actually a repressed wokester

Yeah, It’s kind of endearing.

^^^^^^^^^^^^^^^^

In a weird sort of way.

#44 tbone on 09.16.22 at 7:12 pm

Company i worked for was sold .
We had the option of commuting our pensions.
90 % took the money . ( 200 employees )
Lots of long term employees with 20 plus years of service.

#45 Steven Rowlandson on 09.16.22 at 7:17 pm

Don’t you hate it when your money can be messed with and sometimes legally?

#46 kommykim on 09.16.22 at 7:23 pm

RE: #11 Quintilian on 09.16.22 at 3:25 pm
Hey, shouldn’t you B & D curmudgeon-aficionados be loading up on some Bitcoin now that it’s on sale?

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

I think you’re confusing B&D with BDSM….

#47 conan on 09.16.22 at 7:25 pm

Commuting from the Feds should be put under the microscope before doing it. I think it makes sense in almost every other case except the Feds.
There are exceptions of course it would be something crazy, like it is Bill Gates needing money to start up Microsoft.

#48 Rita on 09.16.22 at 7:26 pm

Pensions were to convince workers to pay lower wages upfront. Remember, unions get a cut of that each year through union fees to manage the pensions plus union dues. They should of paid higher wages to workers but the problem is would enough people be disciplined and saved that money and have a big pile of money in 30 to 40 years. I remember all the media saying don’t just stick in your RRSP contribution in a savings account, GIC but that was better than saving little to nothing.

If more Canadians put the maximum in their RRSP which is going by average salaries $7,000 a year over say a 35 year working life span a even getting low rates 3% a year saved that tax refund each year, they would have a $425,000 RRSP and $70,000 cash account. They would not be with alot of money but be at least have decent savings to supplement their CPP, OAS coming in.

#49 Bezengy on 09.16.22 at 7:26 pm

While commuting your pension makes sense for most, I would caution anyone who needs the money for retirement to seek professional help on investing the money. It’s probably not the time to experiment with being a DIY investor with large sums of cash, despite how smart you may be or think you are. I’ve seen this end badly for some too many times. As far as [email protected], don’t expect any miracles here either, at least not from my experience. Even a simple process like converting a LIRA to a RIF can take months.

#50 ogdoad on 09.16.22 at 7:38 pm

Sigs not home….snuggle time is waining…this SUCKS!

Just out of curiosity, how much do I need, following the 4% rule, to retire, until I croak, in Canada…better yet, in Van/Vic, Tor/SWO, Nova/Newf, and preserve capital…three different senarios….um, yah…I’d do it myself but, um…minds on som’em else right now..

Og

#51 Ponzius Pilatus on 09.16.22 at 7:49 pm

38 Faron on 09.16.22 at 6:47 pm
#35 Observer on 09.16.22 at 5:35 pm

#142 Faron on 09.16.22 at 1:08 pm

Uuuuh, I hate to admit it. This is tough for me. But… Crowdedelevatorfartz is right.

^^^^^^^^^^^^^^^^^^^^^

Don’t sweat it. Although he will deny it until the cows come home, CEF is actually a repressed wokester

Yeah, It’s kind of endearing.
——————————
He’s hypothesizing that the Bow River may dry out permanently due to “Global Warming”.
Welcome on “Board” Furz.
A step at a time.

#52 cuke and tomato picker on 09.16.22 at 7:56 pm

How high will the Fed go?

#53 Flop… on 09.16.22 at 8:04 pm

From the Globe and Mail.

“Unions begin negotiating work-from-home clauses into collective agreements.

As the employer-led push to return to the office grows, unions are weighing into the debate, aiming to give their members more leverage in determining how and where they work.”

Is this a transition from the collective bargaining agreement, to the collecting the garbage can while supposed to be working agreement…

M48BC

#54 Flop… on 09.16.22 at 8:07 pm

#36 Wrk.dover on 09.16.22 at 6:00 pm
#18 Flop… on 09.16.22 at 3:51 pm
____________________________________
NS teacher surviving spouses get 60%.
Could arrange for bigger cut, if pensioner takes less from the onset.

My wife wasn’t going to take less so I could live large with some bimbo, after her demise.

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

What about if you agreed to find a classy lady…

M48BC

#55 Suddenly and unexpectedly on 09.16.22 at 8:09 pm

#2 TurnerNation on 09.16.22 at 1:51 pm

https://www.dailyrecord.co.uk/lifestyle/heart-attack-symptoms-more-younger-27992138
Heart attacks are becoming increasingly more common in women under 50 and medical experts can’t figure out why

—————–

“experts”

Gee, I wonder if it might have something to do with, you know, the thing that can’t be mentioned? Naaaaaaaw.

#56 Faron on 09.16.22 at 8:59 pm

#51 Ponzius Pilatus on 09.16.22 at 7:49 pm
38 Faron on 09.16.22 at 6:47 pm
#35 Observer on 09.16.22 at 5:35 pm
#142 Faron on 09.16.22 at 1:08 pm

He’s hypothesizing that the Bow River may dry out permanently

Hate to make an example of you Ponz, but there’s a huge difference between your word “permanently” and fartz’s. The conservatives are right to note that the media can overhype climate stories and this is what it looks like. The reality of water resources in the west may look not good, but there’s no permanent drying of the Bow AFAIK.

#57 Victor Llearna on 09.16.22 at 9:05 pm

I thought commuting was for sheep. But I guess thats just commuting to Toronto on the GO train.

#58 dosouth on 09.16.22 at 9:10 pm

Wife is 57 and has 60k locked up in a pension she transferred to ING from the province. They say she can’t access it until she is 75. Any suggestions..?

#59 crowdedelevatorfartz on 09.16.22 at 9:16 pm

@#51 petulant Ponzie’s preamble

I just woke up.
Did you say something?

Why listen to Furz
Here it is from your beloved CBC.

Alberta future water shortages.

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwju04G405r6AhW5ITQIHYviCGoQFnoECAoQAQ&url=https%3A%2F%2Fwww.cbc.ca%2Fnews%2Fcanada%2Fcalgary%2Foldman-river-climate-change-jason-nixon-lethbridge-alberta-1.6214380&usg=AOvVaw09cFuhpbGlO3kxfOhTLBpd

#60 Flop… on 09.16.22 at 9:30 pm

Speaking of classy ladies.

Aunty Linda, you’re my second Aunt Linda I’ve had on here, the other one posted under the handle LP, she was kind and considerate too.

Sometimes I wonder why sane, rational people like yourself, hang around the rabble, like myself, in the Loco Quarter of the Blogoshere.

Anyway, I’m glad you do, you’re a classy lady…

M48BC

#61 Ponzius Pilatus on 09.16.22 at 9:34 pm

#56 Faron on 09.16.22 at 8:59 pm
#51 Ponzius Pilatus on 09.16.22 at 7:49 pm
38 Faron on 09.16.22 at 6:47 pm
#35 Observer on 09.16.22 at 5:35 pm
#142 Faron on 09.16.22 at 1:08 pm

He’s hypothesizing that the Bow River may dry out permanently

Hate to make an example of you Ponz, but there’s a huge difference between your word “permanently” and fartz’s. The conservatives are right to note that the media can overhype climate stories and this is what it looks like. The reality of water resources in the west may look not good, but there’s no permanent drying of the Bow AFAIK
—————-
Faron,
Don’t you worry about making an example of me.
I think sometimes you take comments a little to literally.
You and I and everyone else really does not know how “Global Warming” will eventually play out.
As a Financial Accountant for a very large CU, I was entrusted with providing forecasts for up to 5 years.
For that I was looking a different scenarios, and the most important one was the worst case scenario.
At meetings with the Board the first thing they always asked was: what’s the worst case scenario?
Will the company be still solvent 5 years from now.?
Anyway, all is good.
Enjoy your books.
Coincidently, I just took out “War and Peace” from the Library.
Call me old fashioned.

#62 Shawn on 09.16.22 at 9:47 pm

Different Strokes for different folks.

That said, everyone’s goals and circumstances are different, so when it comes to whether you should commute your pension or not it’s important to keep in mind what makes sense for many others may not make sense for you.

*****************************
Amen to that. Single or married? Government DB versus weak corporate DB? health benefits. Your health and that of your spouse if applicable. Requirement in some cases to quit work at 55 in order to commute (That’s the case for the Alberta government DBs). Investment ability or access to professional help. Amount you already have outside the pension. Whether you are male and your wife is insane enough to let you do this. Your years away form retirement age.

What we probably see is people who saved little in RRSPs or TFSAs and therefore have very little investment experience are probably the first ones to commute, convinced that beating the market is easy.

This is a complicated irreversible decision. The last person you should ask is the person who will be investing your funds if you do commute. Get unbiased advice.

#63 Geraldo on 09.16.22 at 9:47 pm

“ never end up in your pocket anyway as it’s taxed away”.

What a sad state of affairs it is when government designs to keep its citizens poor.

#64 crowdedelevatorfartz on 09.16.22 at 10:10 pm

Have the Trudeau Wokesters so brainwashed the population Royal Canadian Mounted Police are too embarrassed to name themselves in a recruitment advertisement?

This ad is from 2021.

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjbipvL3Zr6AhVuHjQIHW9RA38QtwJ6BAgkEAI&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DYq-h23uGMuQ&usg=AOvVaw3vKDhTGPe9ZWVJVG43lOcs

The latest ad in 2022 ( I can’t find it on Youtube) barely even acknowledges the RCMP….

National Police Federation.

Apparently “Royal Canadian Mounted Police” is a misogynist, racist, colonialist anachronism?

The endless watering down and rewriting (“white washing”)of our history and heritage will end up with a bickering country of angry groups hating each other…..

Oh wait.
We’re already there.
Trudeau won.

#65 JM on 09.16.22 at 10:15 pm

I did the transfer into a lira, and took the rest and put in the rrsp in 1998. Main factor was dodgy company in an unstable cyclical industry and I was pretty young. Didn’t trust the company or the pension plan management. Looking back it was a difficult decision, but I’m glad now that I did it. Nice to have control.

#66 Randy on 09.16.22 at 11:49 pm

I commuted my teaching pension years ago. More red tape now, but if you are comfortable with the initial hit from taxes managing your own assets gives you a great deal of freedom. Leaving assets for your family is a reward in itself.

#67 SoggyShorts on 09.17.22 at 12:31 am

#2 TurnerNation on 09.16.22 at 1:51 pm

https://www.dailyrecord.co.uk/lifestyle/heart-attack-symptoms-more-younger-27992138
Heart attacks are becoming increasingly more common in women under 50 and medical experts can’t figure out why.

*****************************
Clickbait for conspiracy nuts
“Experts can’t figure out!”
“Scientists can’t explain!”

As always they do actually have a really good idea why, but can’t state anything with 100% certainty so your type translates a 99% to “They have no idea!”

I mean you don’t even have to be an “expert” to link
“people are getting fatter”
and
“people are having more heart attacks”.

Or maybe it is our lizard robot overlords and the microchip update from boostershots…

#68 Nonplused on 09.17.22 at 1:27 am

Nonplused reframes the argument:

Yes, climate change is real. Is it caused by human CO2 emissions? Probably. There is a convincing correlation between fossil fuel industrialization, measured CO2 in the atmosphere, and observable warming. You can’t really blame a person for looking at those graphs and seeing a connection.

Solar and wind are fine where they are economic. Subsidies are not good, but if someone wants to put solar on their roof and pay for it themselves, I am ok with that. Why not? We need more energy. Prices are too high.

Electric cars are fine. A Tesla is too expensive for my blood, but hey, if you can afford one knock yourself out. It’s no different than someone buying a Porsche.

Even if we could somehow prove that fossil fuels don’t cause global warming, we still want to get off of them over time. They are by definition “non-renewable”, so they will run out. and too many of them are located in Russia and Saudi Arabia.

But we aren’t going to get where we need to go based on wind and solar alone. We aren’t even building enough of it right now to keep up with demand growth for electricity. And the efficiency can’t be improved beyond a certain limit. The sun only shines down so much energy per square meter, so even if you could capture all of it (which you can’t, thermodynamics is a law not a suggestion), it just isn’t going to be enough.

The solution is nuclear. It runs day and night, there is lots of fuel available, we don’t need the Russians or the Saudis for it in any way, you can put the plant where the demand is so you don’t need to worry about the grid, it will charge electric cars and run the air conditioner at night, it doesn’t chop up birds or pave over huge tracts of land or fill up the landfills, and it solves the climate problem. On the whole, the old 60’s technology was pretty safe, but what we have now is way better. It can charge up cars, it runs trains (look at Europe or the North East transportation corridor, or the LRT or subway for that matter), and it runs large ships. It can free up natural gas for fertilizer and oil for other uses. And for the most part we know how to do it. Safely.

There. Several world crises solved at once. It’s alright, you can thank me, I won’t blush.

#69 Berry Banter on 09.17.22 at 4:11 am

Weren’t you paying attention? Lithium is up some 600% and rising while replacement battery in your Tesla costs $27,000 !!!

Oh sure, we’ll line up for that. Are you excited about the transition. I remember driving the kids to Disneyland, a new EV Volkswagen has a 250 km range. It’s going be a two week trip , and don’t think about recharging at night in California. Hahahaha. If you’re not paying attention you’re in for it.

#70 Wrk.dover on 09.17.22 at 6:10 am

#54 Flop… on 09.16.22 at 8:07 pm
What about if you agreed to find a classy lady…
__________________________

Visualize me….

#71 Steven Rowlandson on 09.17.22 at 8:57 am

“What a sad state of affairs it is when government designs to keep its citizens poor.”

That is how government, and its bosses and allies maintain their socio-economic dominance and fight inflation which they caused by borrowing and promoting a real-life monopoly game involving real estate investing.
In Canada a man without land is deemed to be nothing.

#72 Dharma Bum on 09.17.22 at 9:28 am

Why would anyone trust their hard earned money to be managed by a corrupt, greedy corporation or their chosen pension managers when they treat their employees like numbers and cattle?

The risk of allowing a third party to manage and control everything you’ve worked for your entire life seems a tad risky to me, not to mention uncomfortable.

Too many stories of bankruptcies, misappropriation, embezzlement, and hanky-panky.

I never got a pension, or even a dental plan for that matter, so I learned to manage my own financial affairs and healthcare early on. I wouldn’t trust any of those corporate carpet baggers anyway when it comes to employee welfare.

It’s your money. Look after it yourself. Like a hawk. Don’t trust the pension managers.

#73 Gravy Train on 09.17.22 at 9:31 am

#69 Nonplused on 09.17.22 at 1:27 am
Yes, climate change is real. Is it caused by human CO2 emissions? Probably. There is a convincing correlation between fossil fuel industrialization, measured CO2 in the atmosphere, and observable warming. You can’t really blame a person for looking at those graphs and seeing a connection.

Wow, have you ever come around from your original “clean coal” position! Now maybe have a nice long chat with Covid Variant Math because he’s at the exact same stage of development you were five years ago. Good luck trying to educate him. Faron has become apoplectic. :)

The solution is nuclear.[…]

You still fail to understand that making things (cement, steel and plastic) emits 31%* of the 51 billion tons of greenhouse gases each year. Growing things (like plants and animals) causes 19% of the emissions.

Even if you removed every car, truck, bus, tractor, ATV, plane and cargo ship in the world, you’d just stop 16% of the worldwide emissions.

The other emissions come from:
• plugging in (electricity): 27%
• keeping warm and cool: 7%.

Any solution must include:
• zero-carbon cement and steel (as well as fertilizer and plastics)
• hydrogen produced without emitting carbon
• electrofuels
• grid-scale electricity storage that can last a full season
• next-generation nuclear fission, and nuclear fusion
• carbon capture (both direct air capture and point capture)

Back to the drawing board, my friend.

*Bill Gates, How to Avoid a Climate Disaster: The Solutions We Have and the Breakthroughs We Need (New York: Alfred A. Knopf, 2021), 55.

There. Several world crises solved at once. It’s alright, you can thank me, I won’t blush.

You’re not even close to a solution, my friend. How will you deal with cow burps and farts? :)

#74 Gruff403 on 09.17.22 at 9:57 am

My DB pension pays the equivalent of 1.1 million saved but I only contributed 250K lifetime. Partially adjusted to inflation, 98% fully funded, pension tax credit for both of us before age 65 due to pension splitting, 100% payout with no reduction upon either death and has an effective tax rate of about 8-10 %. I came close to commuting but the tax rate on cash value would have exceeded 45% (MTR) and then the RRSP and LIRA are still taxable.
You had better know exactly how healthy your pension is and how it works before making this decision. By commuting you take on inflation risk, sequence of return risks, investment decision risk and so on.
I would commute under the following circumstances:
Two DB pensions in a family so commute one and keep one.
Unhealthy pension with high unfunded liability.
Single and dying.
Married rich or won the lottery.
Have only paid into pension a few years.
If running out of money is a retirees greatest fear, why put your DB pension money at risk? The kids can have the house and TFSA as my goal in life isn’t to make my kids wealthy.

#75 James on 09.17.22 at 1:57 pm

#64 crowdedelevatorfartz on 09.16.22 at 10:10 pm

Omg, are you a complete dinosaur twit?

What is possibly wrong with promoting the concept of humanizing the role of a police officer in the context of a democratic and diverse society, and treating everyone as equal human beings?

Having some white older male anxiety, are we?

#76 FerrisWheel on 09.17.22 at 3:19 pm

IMHO, the 7% average portfolio return mentioned in the article is gone. We are entering a new era that will destroy wealth globally. This equity downturn will last at least 9 more months and bring us lower than we ever thought.

Good Luck!

#77 Randy on 09.18.22 at 8:46 am

CPP is the ultimate Pension Ponzi HOAX….You are forced to join and they want you to die when you turn 65 and they only have to give your estate $2500 and it’s taxable. What a JOKE.