Canadian pensions

[Topaz]

The CPP itself grows every year at about 5 - 7% plus contributions from what I remember.

On the CPP website it said as of 2006, 4 Mil people were on CPP at 25 Bil yearly, and every 3 years the government looks at it for changes, if needed. It would surprise me that, with the loss in the stock market and in the increase numbers drawing it over the next ten years, the CPP contribution will have to increase like the EI.

[blueblood]

The CPP itself grows every year at about 5 - 7% plus contributions from what I remember.

I goofed, the CPP/OAS/Guaranteed income support pay 11k instead of 10k, still however peanuts.

My link

The problem is that there is this program that forcibly takes 2K from people every year, and only pays out 11K/year, and people are supposed to retire on that? Keep in mind that every Canadian contributes to that.

Or we have the RRSP's/TFSA's that you can put far more money into, that will pay out far more money in retirement.

Why would I want to invest 2K into something where I know I can get steady better returns elsewhere?

Do I want to retire on 50K/yr. or 11K/yr.? People still want to retire and still live enjoyable lives when they are young. The CPP throws a monkey wrench in that with its shotty returns.

[Topaz]

The following info. is what our politicians recieve in pensions and this does not count other pensions they have be recieving from other jobs they held and after reading you may say, I should been a politican! http://www.milliondollarjourney.com/federal-politician-salaries-higher-than-you-think.htm

[eyeball]

Bugs, you raise a good point. The CPP/OAP/GAINS are a basic minimum and as a civilized society, we can surely do this.

But beyond this, we cannot (should not) protect people from their own bad decisions.

People need protection from the bad decisions that fund managers and investment bankers and so on make with their money. Given the rattling of nerves and loss of faith in the wake of the huge losses in people's retirement funds its not surprising that public pension funds are a rising topic of interest. Society clearly needs viable alternatives to make up for the private sector's failures.

Beyond this public pension plans do not suck up as much as a third of the money they handle through fees, administration costs and fat cat bonus' to fat cats that should probably be out contributing something more productive to society.

Edited December 20, 2009 by eyeball

[blueblood]

People need protection from the bad decisions that fund managers and investment bankers and so on make with their money. Given the rattling of nerves and loss of faith in the wake of the huge losses in people's retirement funds its not surprising that public pension funds are a rising topic of interest. Society clearly needs viable alternatives to make up for the private sector's failures.

Beyond this public pension plans do not suck up as much as a third of the money they handle through fees, administration costs and fat cat bonus' to fat cats that should probably be out contributing something more productive to society.

The stock market's long term average rate of return is 10%, that is taking in account its massive swings up and down. If people are foolish enough to unload their retirement savings at the bottom of a recession, that's just madness.

People who bought stocks in March, have made a fortune right now.

Here's a thought, you live on 11000 dollars per year and tell me how that works out for you.

[eyeball]

The stock market's long term average rate of return is 10%, that is taking in account its massive swings up and down. If people are foolish enough to unload their retirement savings at the bottom of a recession, that's just madness.

People who bought stocks in March, have made a fortune right now.

Here's a thought, you live on 11000 dollars per year and tell me how that works out for you.

People didn't just unload their retirement savings at the bottom of some slump in the market, most simply woke up one day to find they'd evaporated. Are you saying they should be faulted for the inadequacies and failings of the official institutions of accountability that were supposed to guard their investments?

Tell me how it works out when society/government is faced with millions of people/voters with inadequate pensions and a real justifiable sense they've been ripped off.

[blueblood]

People didn't just unload their retirement savings at the bottom of some slump in the market, most simply woke up one day to find they'd evaporated. Are you saying they should be faulted for the inadequacies and failings of the official institutions of accountability that were supposed to guard their investments?

Tell me how it works out when society/government is faced with millions of people/voters with inadequate pensions and a real justifiable sense they've been ripped off.

If you sell at the bottom of a market cycle, that's your own fault. When playing the stock market as an average person its best to go long. That might mean putting off retirement due to a downturn. Historically the stock market offers solid returns over a prolonged period of time.

People ripped themselves off for not preparing for retirement and expecting the gov't to provide it. 11K per year just covers rent in some places.

[eyeball]

If you sell at the bottom of a market cycle, that's your own fault. When playing the stock market as an average person its best to go long. That might mean putting off retirement due to a downturn. Historically the stock market offers solid returns over a prolonged period of time.

And tough titty if your investments are suddenly wiped out overnight due to circumstances that were within the government's control?

People ripped themselves off for not preparing for retirement and expecting the gov't to provide it. 11K per year just covers rent in some places.

I guess so, but I think its probably more appropriate to say people will deserve what they get so long as their government remains far beyond their control.

[blueblood]

And tough titty if your investments are suddenly wiped out overnight due to circumstances that were within the government's control?

I guess so, but I think its probably more appropriate to say people will deserve what they get so long as their government remains far beyond their control.

People's investments aren't "wiped out". They're only "wiped out" if they decide to cash in at the bottom of the cycle. If you held on to your investments and still have them now, they mostly came back in value. That being said, the value of people's investments today is more than they put in 20 yrs. ago. The stock market has been generating solid returns recession and all.

I'm saying the gov't should stay out of matters such as this and let the markets decide where things go.

[eyeball]

People's investments aren't "wiped out". They're only "wiped out" if they decide to cash in at the bottom of the cycle. If you held on to your investments and still have them now, they mostly came back in value. That being said, the value of people's investments today is more than they put in 20 yrs. ago. The stock market has been generating solid returns recession and all.

I'm saying the gov't should stay out of matters such as this and let the markets decide where things go.

So this last recession was just the bottom of a cycle and the loss of millions of people's pension portfolio's were entirely the fault of the people who owned them? You don't see any link whatsoever between this and the renewed pressure that is now building for a publicly funded pension plan?

[blueblood]

So this last recession was just the bottom of a cycle and the loss of millions of people's pension portfolio's were entirely the fault of the people who owned them? You don't see any link whatsoever between this and the renewed pressure that is now building for a publicly funded pension plan?

A publicly funded pension plan would be insanity. There are not enough taxpayers to cover the baby boomers. Taxes/deductions would go through the roof. Something like that would be a low blow for our economy.

People only take a loss when they cash out their portfolio's. Even then, they are still better off than when they signed up 20 years ago. Nobody is holding a gun to your head to cash out.

[eyeball]

We're obviously not on the same thread.

[Alta4ever]

We're obviously not on the same thread.

no you just haven't seen an andex chart and fail to understand that losses aren't realized until you sell the investment. If you don't sell you haven't lost anything.

[Wilber]

If you sell at the bottom of a market cycle, that's your own fault. When playing the stock market as an average person its best to go long. That might mean putting off retirement due to a downturn. Historically the stock market offers solid returns over a prolonged period of time.

People ripped themselves off for not preparing for retirement and expecting the gov't to provide it. 11K per year just covers rent in some places.

People who are retired are depending on income from their investments to live on. They are in a cash flow mode, not a savings mode. If the market goes in the dumpster when interest rates are at record low levels, they are stuck with having to sell investments at depreciated values just to live on. Hopefully they are getting a whacking great dividend yield on some of their depreciated stocks to cushion the blow a bit, but maybe not. They can't wait another ten years for the market to recover. It is not always as simple as not having prepared for retirement.

[Alta4ever]

People who are retired are depending on income from their investments to live on. They are in a cash flow mode, not a savings mode. If the market goes in the dumpster when interest rates are at record low levels, they are stuck with having to sell investments at depreciated values just to live on. Hopefully they are getting a whacking great dividend yield on some of their depreciated stocks to cushion the blow a bit, but maybe not. They can't wait another ten years for the market to recover. It is not always as simple as not having prepared for retirement.

If they lost that much value they were in the wrong funds to begin with when you get close to retirement you should minimizing your risk to the market, in other words moving assets from equity funds to more conservative ones like bonds.

[Wilber]

If they lost that much value they were in the wrong funds to begin with when you get close to retirement you should minimizing your risk to the market, in other words moving assets from equity funds to more conservative ones like bonds.

Not so, have you checked out the interest rates for GIC's and the prices of good quality corporate bonds lately? If you had everything in one year GIC's, they all came due tomorrow and you wanted to turn them over into new one years, you would take around a 25% hit in income. Good corporate bonds have been bid up so high that their yields also suck and if interest rates go up, their value will drop and you will be screwed double. If you get locked in to "secure" investments and interest rates take a big jump, your screwed. If the market drops at the same time as interest rates, you got a problem no matter what you are invested in. This is a dangerous time for investors period.

Yes you should minimize risk when it comes to loosing your wealth but that wealth still has to generate enough income for you to live next week or next month or you end up burning the candle at both ends.

[Alta4ever]

Not so, have you checked out the interest rates for GIC's and the prices of good quality corporate bonds lately? If you had everything in one year GIC's, they all came due tomorrow and you wanted to turn them over into new one years, you would take around a 25% hit in income. Good corporate bonds have been bid up so high that their yields also suck and if interest rates go up, their value will drop and you will be screwed double. If you get locked in to "secure" investments and interest rates take a big jump, your screwed. If the market drops at the same time as interest rates, you got a problem no matter what you are invested in. This is a dangerous time for investors period.

Yes you should minimize risk when it comes to loosing your wealth but that wealth still has to generate enough income for you to live next week or next month or you end up burning the candle at both ends.

All I am saying is that yhour retirement plan should have this result factored into it. To thnk that a recession won't happen during your retirement is silly. Most people will have a least 25 years of living beyond retirment, in that lenghth of time odds are you are going to see at least one recession.

[Wilber]

All I am saying is that yhour retirement plan should have this result factored into it. To think that a recession won't happen during your retirement is silly. Most people will have a least 25 years of living beyond retirment, in that lenghth of time odds are you are going to see at least one recession.

There is only so much you can do no matter how you are invested but you seem to think the average schmuck retiree should have been smarter than all the pro's out there who didn't see this coming.

[Alta4ever]

There is only so much you can do no matter how you are invested but you seem to think the average schmuck retiree should have been smarter than all the pro's out there who didn't see this coming.

What I am saying is that recessions aren't unexpected, they should be part of the retirement plan. The pros the real pros, don't put retirees money into risky ventures, I know quite a few people including myself that saw less then a 5% decrease in total portfolio.

You don't have to be a pro to know that markets go booming up and come crashing down, those that got burned got greedy, and invested to heavily in very risky funds.

[Wilber]

What I am saying is that recessions aren't unexpected, they should be part of the retirement plan. The pros the real pros, don't put retirees money into risky ventures, I know quite a few people including myself that saw less then a 5% decrease in total portfolio.

You don't have to be a pro to know that markets go booming up and come crashing down, those that got burned got greedy, and invested to heavily in very risky funds.

You don't have to be in risky ventures. You seem to have a problem understanding the difference between investing and providing yourself with an investment income. But you're the pro. If the market tanks and interest rates hit record lows, where is your income going to come from other than eating up your principle?

[William Ashley]

Are any of you aware that the Finance Minister is holding talks about pensions for Canadians and what can or should be done to help Canadians that don't have a pension plan? In Ontario, a lot of the layed off workers are having to dip into their RRSP's to keep their head above water, especially if they are on EI and can't find work or are being trained. I think the government should make a law that all businesses that pay into pension plan are force to make sure the pensions are there for the workers. In other words , whatever the politicans get I see only fair for Canadians to get also. http://www.theglobeandmail.com/report-on-business/ottawa-provinces-ready-to-face-off-on-pensions/article1404728/

It is a serious issue, social security is really only it... and any cpp, what the hell do you think people pay into it for. None the less, the real issue is private pensions of bankrupt and companies that defraud their former employees by promising and then not delivering, packing it in, and leaving the former employees high and dry. Governments should force any company that offers pension payments to pay into a secure bank account that cannot be accessed, and is held in trust in the name of the employee by the company, which is transfered when applicable to the contract.

[Wilber]

It is a serious issue, social security is really only it... and any cpp, what the hell do you think people pay into it for. None the less, the real issue is private pensions of bankrupt and companies that defraud their former employees by promising and then not delivering, packing it in, and leaving the former employees high and dry. Governments should force any company that offers pension payments to pay into a secure bank account that cannot be accessed, and is held in trust in the name of the employee by the company, which is transfered when applicable to the contract.

Companies in Canada cannot access their employees pension plans nor can they administer them. The problem is the funding regulations, not fraud.

[Alta4ever]

You don't have to be in risky ventures. You seem to have a problem understanding the difference between investing and providing yourself with an investment income. But you're the pro. If the market tanks and interest rates hit record lows, where is your income going to come from other than eating up your principle?

You eat up the principle, not many retirees retire on the the interest, captial gains and dividends alone.

[William Ashley]

Companies in Canada cannot access their employees pension plans nor can they administer them. The problem is the funding regulations, not fraud.

Lie, they only have to maintain like a 10% level on the pensions... and that practice is government sanctioned fraud.

10% of someones promised retirement funds is a fraud.

[Wilber]

You eat up the principle, not many retirees retire on the the interest, captial gains and dividends alone.

Eventually you want to eat up the principle (you can't take it with you and the government will get a big chunk of what is left) but seeing as you don't know when you are going to croak and can't foresee inflation rates, how the market will perform over the rest of your life or what your own personal needs may be as you age, timing when you are going to run out is no simple matter. If your interest, capital gains and dividend income is all of a sudden cut in half, your principle is going to disappear at a much greater rate meaning your fund's ability to generate income when times improve will be much less.

Registered pension plans are subject to strict rules when it comes to the amount of risk they can take. All those plans that went from 100% funded to 70% funded in the space of nine months are not run by amateurs.