Will Canadians Take A Pit Stop On The Road To Slavery?

[Teddy Ballgame]

- Four days before the January 23rd federal election I wrote the following column in a blog set up for the election.

- Given two of our more popular threads here - the one in which the lefties plead feverishly for us to hand over yet more billions of our hard earned incomes to the government for a prohibitively expensive child care program and the one in which the righties argue passionately for PM Harper to return more of our money to us in both income and sales tax reductions, I think and hope you find that my column affords some food for thought about the position of those including me who want to see - at least in the mid to long term - a real reversal of the insidious trend over the last several years for Canadian governments to confisticate ever more of our discretionary income.

- Enjoy and comment if you are so inclined:

- Next Monday, Canadians will reveal whether or not they are cognizant of, and opposed to, their increasing servitude to the State. If they are aware and aghast at how much their economic freedom has eroded under Liberal rule, they will throw the rascals out. And while all Harper can do in a first term, particularly with a minority government, will be to put the breaks on the federal appetite for relieving Canadians of more and more of their discretionary income - in effect, to ordain a pit stop on our road to serfdom - a second and subsequent Tory terms might well result in a reversal of this pattern of federal confistication during the past several decades.

- Let us compare what has happened in the government-citizen economic balance in the years since 1961 in Canada and in our closest neighbour, ally, partner and competitor, the USA. The Canadian GDP in 1961 was 85% of the US GDP and it has remained (2004 figures) at that level - albeit with numerous fluctuations - since those days of Diefenbaker.

- In aggregate personal income - our gross pre-tax income - we have done even better. Canadian pre-tax income in 1961 was 67% of US income per capita and by 2004 it had risen to 78% - a very significant advance of 11% vis-a-vis our American cousins.

- HOWEVER, our personal disposable income (PDI) - what is still left in our hands from our incomes including all government transfer payments AFTER the deduction of personal income taxes and social security taxes - also known as our honest-to-God income tells the real story of our increasing serfdom and loss of economic freedom. In 1961, Canadians' PDI stood at 70% of Americans' PDI. Through the 1960s and 70s, it rose steadily and peaked in 1981 at 90% which represented a spectacular closing of the gap of almost 20%! Then, the bills from Trudeau's profligate and wasteful social programs and payoffs to the public sector unions plus his huge deficit borrowing, hefty tax hikes and concomittant high interest rates began to come due!

- By the time Mulroney came to power in late 1984, our per capita PDI was in freefall! It levelled off during the Mulroney era and then resumed its precipitous decline during the past 12 Chretien-Martin years. At the end of 2004, Canadians' PDI stood at 65% of Americans' PDI - the lowest level in more than fifty years! If this trend line continues for another 25 years - which it would under successive Liberal administrations - Canadians would find themselves with precisely ONE-HALF the personal disposable incomes of Americans.

- Now there are many people who have no problem with this. One is Martin's Communications Director Scott Reid who opined that one of Harper's policies (the day care assistance rebate of $1200 per child under six) to return money to the people who earned it would only be "blown on popcorn and beer" instead of on an overpaid army of unionized uncivil non-servants. In the minds of Liberals like Reid, Big Brother government knows best, is best trusted with the peoples' hard earned money, and it matters little if at all if Canadians like the serfs of centuries ago have no personal disposable income but exist as vassals of and under the benevolence of the almighty landlord/government.

- But others including myself believe that we as people have needs separate and distinct from governments' needs, that we should have first claim on our own money, and that removing more and more of our incomes from our personal control takes us down the pernicious road to serfdom. They obviously understand this in the USA, in the UK since Maggie Thatcher set the economic agenda and launched the economic recovery there, and in almost all of the economies that are truly free, competitive, productive and prospering. But our Liberal masters have yet to get the message.

- Indeed, the huge and growing gap between the PDIs of the USA and Canada is even worse than these figures show. In Canada, we have much higher sales taxes, except in Alberta, and sales taxes are NOT computed in these PDI stats. So the real gap is even more dramatic in terms of what we really have left to spend on ourselves and our families.

- And there is another gap that is worrisome and illustrative - it concerns personal disposable income as a percentage of personal income (i.e. real income as a percentage of illusionary income). In 1961, Americans' PDI stood at 89% of their aggregate incomes. And at the end of 2004, the figure was the same 89%! In other words, the USA has preserved the same relative importance of the citizen versus the state for over half a century.

- But not so in Liberal Party dominated Canada! In 1961, our PDI stood at 90% of our aggregate incomes - a full percentage point ABOVE the American figure. By 2004, our PDI had declined to just 75% of aggregate incomes - an incredible fall of 15 percentage points and part of a trend in big government Canada. So it is obvious that the Canadian trend is to steadily diminish the relative importance and the economic freedom of the citizen at the hands of the State.

- Now a person with steadily declining personal disposable income is increasingly a serf or vassal of the State. And the comparative savings and debt data are not much more comforting. By the end of 2004, the US personal savings rate had declined to one of its lowest levels in history, a picayune 2%. But the effective Canadian savings rate had declined to ZERO after peaking in the later Mulroney years in double digits. In terms of personal debt, the average Canadian worker now owes 113% of his personal disposable income which is roughly DOUBLE what his American counterpart owes.

- For those who still haven't grasped the total picture, lets try to sum up. Canadians have comparatively much lower personal disposable incomes, lower savings and higher personal debts than the Americans AND THESE DESTRUCTIVE TRENDS CONTINUE.

- Meanwhile, in Fat City, aka Ottawa, aka Ennui on the Rideau, the government is positively awash in cash. Through robbing Canadians of their incomes by several years of gross over-taxation, the federal Liberals have accumulated massive surpluses that will add up to well over $100 billion for the decade ending in FY 2007/8. The provinces, while having to spend more time than they would like on their knees going cap in hand to Captain Dithers to procure various one off and side deals in yet another form of Liberal money laundering, are not doing that badly either, at least compared with the actual citizens of the country.

- In the USA, of course, where the people still count for more than the governments, it is the governments that are increasingly cash poor and indebted while it is the people who are thriving in relative terms.

- Maybe this is the quintessential difference between Americans and Canadians. Americans believe that the people should have first claim on the money they have earned and should keep governments on a tight fiscal leash. Canadians - or at least the morons who habitually vote Liberal - believe that governments should have first claim on the peoples' money and should keep the people on a tight fiscal leash.

- I know what approach I prefer. Next Monday, we'll see how many others agree with me

[August1991]

Teddy,

You don't provide a link to the data you quote so it is hard to know what it means exactly. International comparisons are difficult since currencies change in value, and I was somewhat surprised to read that personal disposable income excludes sales taxes (it dopesn't). Moreover, our EI and CPP contributions, and the relative fiscal positions of the US and Canadian governments make for difficult comparisons. Health care is another difference between the two countries.

As usual, you put in a dig at Trudeau when Mulroney was just as guilty and indeed the problem is international.

With all those caveats, I agree with your basic argument.

Let me quote myself from another thread:

The best table I have ever seen on this general topic was prepared by the Fraser Institute. It shows combined government expenditures on goods and services & investments rising from 9.6% of GDP in 1926 to 20.7% in 1996. (The table wisely skips over the war years when government took a large part of GDP.) This growth is partly due to the fact that services in general represent a larger share of GDP, and governments in general offer services.

Link

Government will always require more resources since some politicians and bureaucrats will always think up new ways for government to do something. Worse, the internal signals of the government bureaucracy function so badly that government takes more and more resources just to accomplish the same tasks as before.

Margaret Thatcher, Ronald Reagan and Mike Harris in Ontario all haved reputations for having "slashed government spending". They barely put a brake on this juggernaut (although Thatcher did the most).

This is a trend that is unsustainable. I don't know how government will evolve in this new century but it clearly won't be how it evolved in the past century.

[Biblio Bibuli]

Teddy,

Let me quote myself from another thread:

I saw an article in the paper this week on Mulroney's first big outing since "the illness". In this article ... he told us that he was "quoting himself". At the time I thought ... what in hell is happening? Does he think he is Voltaire and should be "quoting" hinself? Just say what you have to say Brian ... and you don't have to remind us that you said it before ... we obviously didn't care then & probably won't now. It wasn't quotable if you have to quote yourself.

Now here we go again. You are "quoting yourself".

When did modesty stop being a virtue? We're all Yogi Berra now, or what?

Bartlett's take note!!!

[Michael Hardner]

Martin didn't do a bad job of watching the dollars and cents, and was on track to cut tax rates.

Auguste1991 - what needs to happen is that politicians need to prioritize management over their newspaper coverage.

God knows they can't manage anything themselves, so they need to find somebody who can. The first prime minister to achieve this in a government (and it's not as hard as it sounds) will garner superstar status.

Link:Expenditures as % of GDP

[August1991]

Now here we go again. You are "quoting yourself".

When did modesty stop being a virtue? We're all Yogi Berra now, or what?

Hey, it was my way of making fun of you quoting yourself (and I at least provided a link, although that might be interpreted as being even more pompous).

Then again, when people named "August1991" and "Teddy Ballgame" go around quoting themselves in public, they can hardly be accused of being self-promoters.

And now I'm thoroughly confused which probably means the jokes on me.

Martin didn't do a bad job of watching the dollars and cents, and was on track to cut tax rates.

I have to agree that Martin (and Chretien) made an effort to control federal spending at the start of their mandate, and to reduce the size of the federal civil service.

I don't trust the table of your link. Measuring government spending is very hard, and I simply don't believe Finance would do anything contrary to the wishes of the Minister.

[margrace]

Interesting topic, I am wondering where the following stories fit into this scenario. Do politicians even care what happens to ordinary Canadians. While you are arguing taxes maybe we need a human side to it.

Stelco of Hamilton is going broke, by permission of what ever OnT government was in power some year s ago they were allowed to take the company pension money out of protection and invest it in the market. They lost the money, now thousands of former employees are in danger of losting everything they worked for over the last 40 years.

In the New Brunswick an American company set up Pulp mill, St Anne - Nacawitch, for nearly 40 years people had a good living and were paying into their pension for a good retirement. Several years ago the company went to the New Brunswick gov't for more money, they did this several times, they also asked to be able to use the pension funds. One day when the people came for work they were sent home and said the company was bankrupt after the New Brunswick Gov't refused to buy the company out at I think 50 Million dollars. The company president had set up a second company which became the secured creditor, they got all the money. Now these people have nothing, of course according to Mr. Harper they are lazy Maritimers. The younger ones are out in the oil patch in Alberta working but a lot of these people are older and not able to do that.

Is there now way we can stop moaning about our taxes and our social programs that you have to pay into and protectect these people a little better. You too could be in the same boat.

[Renegade]

Is there now way we can stop moaning about our taxes and our social programs that you have to pay into and protectect these people a little better. You too could be in the same boat.

Yes there is an excellent way to protect people from the negligence of government and company decisions. Abandon defined-benefit pension plans like many companies are doing. Turn over the pension money to the workers each year in the form of a defined-contribution pension plan. That way if the plan goes broke, it will be due to the negligence of the worker not the company or government.

[KrustyKidd]

That way if the plan goes broke, it will be due to the negligence of the worker not the company or government.

That would be in line with personal responsibility and liablility. A concept that will take a generation or so to morph back into the Liberally trained sheeple.

[margrace]

I don't think it is a liberal sheeples idea, it is a fact of human life. There are very few people posting on here, I would think the majority of people are incapable of managing the investment and saving of money. Not putting people down but just from my observations of how people act.

Hi Krusty Kid still trucking? Everytime I see your name I remember your kindness when my grandson was killed. Hope I have the right person

[Renegade]

I would think the majority of people are incapable of managing the investment and saving of money. Not putting people down but just from my observations of how people act.

If they are incapable of managing their own money, they should at least have the good sense to hire a trusted investment advisor. In any case the decision is entirely in their hands, if they aren't up to accepting resposibilty for their fate then they deserve the fate they get. They shoudl be the last ones complaining when government or companies mismanage their money, when they are not even up to the job themselves.

So margrace, you point out in your examples that there is a risk in companies or government managing workers retirement funds, and you say that most workers can't manage their own money. So, who exactly do you think should be in charge of their funds?

[Michael Hardner]

That would be in line with personal responsibility and liablility.

What about the stupid, the naive and the gullible ? It sounds very positive to promote personal reponsibility, but you could also say you support scams and rip-offs as many of these people are not bright enough and will be cheated out of their money.

That is why many pensions lack an 'opt-out' feature. People need to be protected from making bad decisions that would end up costing all of us.

[scribblet]

That way if the plan goes broke, it will be due to the negligence of the worker not the company or government.

That would be in line with personal responsibility and liablility. A concept that will take a generation or so to morph back into the Liberally trained sheeple.

Exactly !!! Why do some people think the the government should be entirely responsible for all our actions, do we not have some responsible for ourselves, the government is not nor should it be a babysitter.

Margrace: you still havn't provided a link for your comments re: government allowing Stelco to ..... whatever.

I know Stelco was given an exemption from making pension contributions when it declared bankruptcy, which has since been revoked, is thist what you are reverring to?

http://findarticles.com/p/articles/mi_m3MK...113/ai_n9775841

Essentially, Stelco was granted a pension holiday in 1996 that permitted it to stop funding its pension plans on a solvency basis. Instead, it could fund them on a going-concern basis and pay into the province-wide Pension Benefits Guarantee Fund.

http://www.stelco.com/investorCentre_artic...eleaseId=673118

The Ontario Government amended Regulation 909 under the Pension Benefits Act in 1992 (was that David Peterson then? ) to allow a pension plan with over $500 million in assets to elect to cease funding the plan on a solvency basis. Pension Plans that have taken the 5.1 election are exempt under the Regulation from making special payments to fund a solvency deficiency. These plans, however, must continue to be funded on a going concern basis, and pay higher Pension Benefit Guarantee Fund premiums in accordance with the Pension Benefits Act.

[Renegade]

That would be in line with personal responsibility and liablility.

What about the stupid, the naive and the gullible ? It sounds very positive to promote personal reponsibility, but you could also say you support scams and rip-offs as many of these people are not bright enough and will be cheated out of their money.

That is why many pensions lack an 'opt-out' feature. People need to be protected from making bad decisions that would end up costing all of us.

Well, Michael, the fact that pension plans run by companies with government collusion proves that even if you don't trust people with their own money there is no guarantee that they won't get scammed and ripped off.

Given the choice of government, the company, or people managing their own money, I would choose people. Why? because they have the most vested stake and therfore will be most careful with the money. Also they will suffer the consequences of their own actions.

It is an interesting question on if "People need to be protected from making bad decisions"? In my view, no they shouldn't be protected from their own bad decisions. What should be done is minimize the impact of their bad decisions on the rest of society. One possible remedy to protect people from themselves, is to force people to save for retirement. This is the model in Australia. Personally even though I already save for retirement, I don't like this coercion, but I could live with a minimium amount.

[Michael Hardner]

Well, Michael, the fact that pension plans run by companies with government collusion proves that even if you don't trust people with their own money there is no guarantee that they won't get scammed and ripped off.

Given the choice of government, the company, or people managing their own money, I would choose people. Why? because they have the most vested stake and therfore will be most careful with the money. Also they will suffer the consequences of their own actions.

This hasn't worked in the past. The Stelco case is an exception and should be examined to see what went wrong but it's not reason enough to throw out that approach to pensions.

It is an interesting question on if "People need to be protected from making bad decisions"? In my view, no they shouldn't be protected from their own bad decisions. What should be done is minimize the impact of their bad decisions on the rest of society. One possible remedy to protect people from themselves, is to force people to save for retirement. This is the model in Australia. Personally even though I already save for retirement, I don't like this coercion, but I could live with a minimium amount.

Well, that's what a company pension plan effectively does, as well as what CPP is supposed to do.

If you don't protect people from bad decisions at least to a certain degree, then you will have individuals who are devastated and destroyed by predatory organizations.

[Renegade]

This hasn't worked in the past. The Stelco case is an exception and should be examined to see what went wrong but it's not reason enough to throw out that approach to pensions.

What examples are you referring to when you state that it hasn't worked in the past? While Stelco may be an extreme example, the incidence of pension plan underfunding is not. See: DB plans surprisingly underfunded: report

Many other pension and benefit plans end up being funded by current workers so much so that it is a huge drain on companies and affects their ability to compete or even survive.(eg GM)

Well, that's what a company pension plan effectively does, as well as what CPP is supposed to do.

If you don't protect people from bad decisions at least to a certain degree, then you will have individuals who are devastated and destroyed by predatory organizations.

The problem is that with both company pension plan and CPP, control is effectively out of the hands of the worker to manage their own retirment destiny. Most people I know who do not have company defined-benefit pension plans, have RRSPs. They are free to persue an investment strategy which is in line with their tolerance for risk. I am completely for protecting investors from unscrupulous advisors, but in those cases we are discussing protecting against criminal actions, not simple bad decision. Ultimately the fact is anyone can make bad decisions, the person themselves, their advisor, the company, the government. In my view a person should have the ultimate power to designate who should manage their retirement funds. To protect people against themselves means to take away individual freedom of choice, and in my view it is an unacceptable trade-off.

Besides that, if CPP is our "forced savings" plan, why not let people a measure of their own freedom of choice for their company pension plan.

Many companies are realizing that they shouldn't be accepting pension plan risk, as they haven't proved themselves great at predicting future liabilities and at predicting investment returns. Thus you see the wholesale exodus of companys toward DC plans.

It is a fundamental requrement for people to function in society that they be able to manage money. That is true whether they are managing day-to-day expenses, saving for a house, or planning a retirement. Those who do not, will not, or can not, should suffer the consequences.

[Michael Hardner]

The reason why companies restrict or even disallow individuals from opting out or taking their pensions elsewhere is that if it goes wrong for the individual, it could look bad for the company, ie. the fact that person 'x' worked their whole career at company 'y' and is now destitute.

I am completely for protecting investors from unscrupulous advisors, but in those cases we are discussing protecting against criminal actions, not simple bad decision. Ultimately the fact is anyone can make bad decisions, the person themselves, their advisor, the company, the government.

It's almost impossible to get people charged with fraud, let alone investing an individual's life savings in something extremely risky without their full understanding.

Yes, anyone can make bad decisions but an institutional investment manager is far less likely to gamble than an individual is and there are supposed to be safeguards in place against that.

[margrace]

I would think the majority of people are incapable of managing the investment and saving of money. Not putting people down but just from my observations of how people act.

If they are incapable of managing their own money, they should at least have the good sense to hire a trusted investment advisor. In any case the decision is entirely in their hands, if they aren't up to accepting resposibilty for their fate then they deserve the fate they get. They shoudl be the last ones complaining when government or companies mismanage their money, when they are not even up to the job themselves.

So margrace, you point out in your examples that there is a risk in companies or government managing workers retirement funds, and you say that most workers can't manage their own money. So, who exactly do you think should be in charge of their funds?

Who do I think should manage the money? Simple question no answer. In a parallel idea it seems to me that the so called religious churches wouldn't be able to conrol people so easily if there were a simple answer to your question. A lot of people want to be looked after, they cannot or willnot look after themselves. How do you change such a large part of human nature, I don't know do you.

[Renegade]

The reason why companies restrict or even disallow individuals from opting out or taking their pensions elsewhere is that if it goes wrong for the individual, it could look bad for the company, ie. the fact that person 'x' worked their whole career at company 'y' and is now destitute.

That would be all the more reason to put the pension control in the hands of the workers. For example, my company makes partial contributions to my RRSP. If I make bad choices and my RRSP value falls to zero, do you think that looks bad on the company? I think any reasonable person would say it reflects on me, and not the company. They company has done its part by contributing to the plan. If individual investors screw up, it hardly reflects on the company, however if the company pension plan fails, that has a much worse impact on the company image. The risk is far less to a company to let workers manage their own plans.

It's almost impossible to get people charged with fraud, let alone investing an individual's life savings in something extremely risky without their full understanding.

If there is anywhere to focus efforts it is in making investment managers accountable and putting sufficient deterrence in place to prevent fraud. It is not by discounting the approach which lets individual investors make their own decisions.

Virtually all large financial transactions involve risk. When buying a house there is risk, which is why we rely on expertise from real estate agents and home inspectors. We let even stupid and naive people buy houses. The situation is no different for retirement. I fail to see a convincing case where the coercion of the company or government is worth any added security.

If individuals lack the understanding and want the security, they are free to direct their investments to GICs, Money Market Funds, T-Bills and Government Bonds.

Yes, anyone can make bad decisions but an institutional investment manager is far less likely to gamble than an individual is and there are supposed to be safeguards in place against that.

I know quite a few people who make their own investment decisons. There are some who would gamble and there are others who are very conservative. The point is they choose their own investmetn profile. It is not left to the investment manager to decide. You would like to take away the ability of people to choose risky investments for the retirement pension. I believe it is unacceptable that people shouldn't be allowed to choose what they do with their investment funds. Stupidity deserves what stupidity gets, and government shouldn't intervene. We are not talking about 4 year old kids here, we are taking about adults who have the power and obligation to make their own decisions.

[margrace]

Essentially, Stelco was granted a pension holiday in 1996 that permitted it to stop funding its pension plans on a solvency basis. Instead, it could fund them on a going-concern basis and pay into the province-wide Pension Benefits Guarantee Fund.

http://www.stelco.com/investorCentre_artic...eleaseId=673118

The Ontario Government amended Regulation 909 under the Pension Benefits Act in 1992 (was that David Peterson then? ) to allow a pension plan with over $500 million in assets to elect to cease funding the plan on a solvency basis. Pension Plans that have taken the 5.1 election are exempt under the Regulation from making special payments to fund a solvency deficiency. These plans, however, must continue to be funded on a going concern basis, and pay higher Pension Benefit Guarantee Fund premiums in accordance with the Pension Benefits Act.

Pretty hard to provide a link when you hear it sitting around talking to people who are going to lose their pensions. I can only tell you what they told me.

The other one was on Land and Sea on Sunday.

[Renegade]

Who do I think should manage the money? Simple question no answer. In a parallel idea it seems to me that the so called religious churches wouldn't be able to conrol people so easily if there were a simple answer to your question. A lot of people want to be looked after, they cannot or willnot look after themselves. How do you change such a large part of human nature, I don't know do you.

Yes I think I do. People who don't want to look after their own affairs are like birds who refuse to leave the nest. They are used to the parents looking after their every need, so why would they leave? The answer is at some point they need to be pushed.

It is clear that some people will always be looking for a "nanny" to look after them, and will feel a sense of entitlement to the services the "nanny" offers. They are also generally the same people who whine and complain when the "nanny" fails to provide for their every need. It is clear for those people, they need to be forced into the water to sink or swim.

[scribblet]

I would think the majority of people are incapable of managing the investment and saving of money. Not putting people down but just from my observations of how people act.

If they are incapable of managing their own money, they should at least have the good sense to hire a trusted investment advisor. In any case the decision is entirely in their hands, if they aren't up to accepting resposibilty for their fate then they deserve the fate they get. They shoudl be the last ones complaining when government or companies mismanage their money, when they are not even up to the job themselves.

So margrace, you point out in your examples that there is a risk in companies or government managing workers retirement funds, and you say that most workers can't manage their own money. So, who exactly do you think should be in charge of their funds?

Who do I think should manage the money? Simple question no answer. In a parallel idea it seems to me that the so called religious churches wouldn't be able to conrol people so easily if there were a simple answer to your question. A lot of people want to be looked after, they cannot or willnot look after themselves. How do you change such a large part of human nature, I don't know do you.

Not sure what religious churches (are there any non religious churches ?) or if and how they control people relates to this thread.

However, the link you provided in another post is the same one I posted earlier. The gov't of the day (liberal) allowed Stelco to do that because they were insolvent. if they hadn't, Stelco would have closed and all jobs and thel pension funds would have gone out of the door. It was a temporary measure to save jobs.

If a any company allowed their employees to opt out of a group benefit the cost of that benefit, in this case pensions, would go up for those left contributing. Pension payouts are based on a certain amount of money and all employees paying into them, lots of calculations go into it.

Maybe the best option is for employees to pay into their own RRSP type plan and manage it themselves (I think its something like a 400k U.S. plan ). Problem there, is what happens to the employer matching portion, that amount is not paid out to an employee if that employee quits.

Same with a life insurance benefit, most employees including retirees don't have the option to opt out. If people did opt out, the premiums would be considerably higher for the company. This is particularly hard on retirees as they are paying tax on an employer paid benefit which they might not want or need. Personally I have to pay tax on around $1,800.00 for a life insurance benefit I don't particularly want, cannot opt out of.

[Renegade]

If a any company allowed their employees to opt out of a group benefit the cost of that benefit, in this case pensions, would go up for those left contributing. Pension payouts are based on a certain amount of money and all employees paying into them, lots of calculations go into it.

Maybe the best option is for employees to pay into their own RRSP type plan and manage it themselves (I think its something like a 400k U.S. plan ). Problem there, is what happens to the employer matching portion, that amount is not paid out to an employee if that employee quits.

Yes, managing a pension or beneifts plan is not easy, nor is it the core business of a company. That is why most companies let insurance companies manage their benefit plans. The suggestion that employees and employers pay into an RRSP scheme makes the most sense. Employees should keep all funds (both employee contributions and employer contributions) once the employee quits, afterall it is their money.

Same with a life insurance benefit, most employees including retirees don't have the option to opt out. If people did opt out, the premiums would be considerably higher for the company. This is particularly hard on retirees as they are paying tax on an employer paid benefit which they might not want or need. Personally I have to pay tax on around $1,800.00 for a life insurance benefit I don't particularly want, cannot opt out of.

Yet another reason why a company should not be providing this benefit. The company should just provide employment income and the worker can buy life insurance if they so choose.

[Michael Hardner]

Virtually all large financial transactions involve risk.

There is some risk in buying a house, it's true, but I would say it's harder to lose everything buying a house than it is investing your money yourself. The idea that people should be responsible for their own lives is basically a good one, except for the case of people who don't have what it takes to get by in the world.

Do we all have to suffer because of these people ? To a degree, we do. Should we ? There's no way to protect people without treating everybody the same, unfortunately. That applies to many aspects of the mass society.

[Renegade]

Virtually all large financial transactions involve risk.

There is some risk in buying a house, it's true, but I would say it's harder to lose everything buying a house than it is investing your money yourself. The idea that people should be responsible for their own lives is basically a good one, except for the case of people who don't have what it takes to get by in the world.

Do we all have to suffer because of these people ? To a degree, we do. Should we ? There's no way to protect people without treating everybody the same, unfortunately. That applies to many aspects of the mass society.

I'm not suggesting that everyone manage their money themselves. I understand that some may not have that skill, however if they don't have that skill or apptitude, they should use an investment manager. There are plenty of competent managers out there.

No we don't all have to suffer because of these people. Let them bear the consequences of their ineptitude, not society.

I think your basic argument is that some people don't have the aptitiude, or knowledge to manage their own retirement, and we can't even trust them to delegate that authority to someone competent. There are many precedents in society where we acknowledge this, however don't compeletely remove the choice of the individual.

It is interesting that in society we allow people to have RRSPs which are voluntary contribution, and completely discretionary in the investment choices. On the other extreme, we have defined-benefit pension plans which are forced contribution and no individual investmetn choice. So we trust even the stupid and naive with RRSPs, but if you happened to be in a DB Pension plan, well trust is out of the question no matter how capable you are.

[Renegade]

There is some risk in buying a house, it's true, but I would say it's harder to lose everything buying a house than it is investing your money yourself.

Actually it is not that hard to lose everything buying a house. People are buying houses at inflated prices with 5% down. All it takes is a downturn in prices and an increase in interest rates. Can't happen? Happened in Toronto between 89-96. Lots of people lost everything.