# Good Pension Article



## sags (May 15, 2010)

This is a good article, that covers a lot of the OTTP fund, but also has some very good information on the lack of DB pensions for a lot of people, and what can be done about it.

Of note..........the experts who agree a reform and broadening of the CPP would be the best way to proceed.

Interesting that the OTTP has 125 Billion in total..........and returns on investment contributed 100 Billion of that amount. The government and employees contributed the other 25 Billion over the years. Also interesting the government of Ontario used to skim off all the contributions, but contributed a reserve fund of 20 Billion to get the pension fund going. 

According to the article, each teacher has $800,000 in assets in the plan.

The biggest opponent is...........the Harper government..........for purely ideological reasons. The belief is they don't want to upset Bay Street financiers by removing profits eminating from RRSP and DC pension accounts. Maybe it is the reason the government came up with the "pooled pension" idea as well.

If DB pensions are possible and desirable for everyone why isn't it being done forthwith? Times is a'wastin.

http://thewalrus.ca/pension-envy/


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## andrewf (Mar 1, 2010)

DB pensions aren't magic. Someone has to accept the risk if not the saver. If everyone has a DB pension, everyone is exposed to the risk of everyone else (particularly if there are gov't guarantees).


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## fraser (May 15, 2010)

I do not think that the lack of action in expanding CPP is purely a Bay Street issue. I suspect that there is a fear that voters will reject it. Not a fear of the plan being rejected in the House or Senate but a fear of the Government being defeated in the next election simply because of the increased payroll deductions. I do not think than many people give much thought to pensions and pension funding until they are in their late forties, early fifties. 

I do not think that a decrease in take home pay , even if attributable to enhanced CPP benefits down the road, will play well to a sector of the voting public. After all, the first priority of the Government is to get elected. The second is to take care and reward those who assisted in getting them elected. The public good comes further down that list of priorities. Think back sixteen years ago about how very unpopular Paul Martin's changes to the CPP plan were simply to put the CPP plan on a firm financial foundation.


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## sags (May 15, 2010)

DB pensions that are properly funded and managed, should expose much less risk to taxpayers, than the lack of DB pensions is likely to weigh on the taxpayers. Political pressure will mount on governments to enhance other social programs, such as the OAS and GIS, if pension reform is not undertaken. I don't believe the status quo is a option.

Public polls have consistently shown that Canadians would rather increase taxes than cut social programs, and I think this attitude would probably carry through to the DB pension debate as well.

I think when experts show the public how DB pension plans are sustainable, political pressure for reform will mount.


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## Four Pillars (Apr 5, 2009)

I like this article

http://www.theglobeandmail.com/comm...adians-can-afford-retirement/article13966847/

The problem with the whole 'pension crisis' is that it's not that easy to figure out what the problem is - poverty in the elderly? Already solved. Wealthy boomers who are retiring and didn't save enough to keep up their lifestyle? If that's the 'crisis' then I don't want to be part of or have to pay for the solution.


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## MoneyGal (Apr 24, 2009)

Um. Read the first page of your linked article again. Look at the phrased "phenomenal leverage that you won't get from your classic DB plan." 

See also the comments about how OTPP is "technically in the red" and has been for most of the last decade. Or what about the comment that "tough decisions have to be made" or the comment that "Early retirement [for teachers] “can’t go on. It’s not a question of if; it’s a question of when...Taxpayers can’t afford this arrangement anymore. Resolving this is going to be tough. In game theory terms, it’s no longer win-win. It’s win-lose, and no one wants to be a loser.”

I'm sorry, how is OTPP *in it's current form* a model of DB pensions for all workers? I spent less than 5 minutes harvesting those quotes which explicitly call into question the sustainability of OTPP without changing the payout formula. The experts *quoted in the article* say that OTPP isn't sustainable, full stop.


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## Daniel A. (Mar 20, 2011)

The only issue I have with the CPP is when its funding numbers are provided is it maximum payout funded or based on what it really pays.

If the average payout is 600.00 per person claimed that is a long way from the maximum possible of over 1000.00 .

I do believe CPP should be expanded, if they don't I'm fine with my DB pension but the 65% that don't have what I do will be in trouble.
I believe the standard of living in Canada will drop in the future mostly because people won't have the buying power they enjoy today.


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## MoneyGal (Apr 24, 2009)

But the average payout figures from CPP aren't some kind of swindle or unfair dealings - they represent the value accrued by workers over time. 

Because CPP ensures workers who earn a minimum of $3500 per year, I'm sure the "average" includes a lot of very small payments stemming from people who aren't working full-time. I made my first payments into CPP as a high-school student earning less than $5/hour.


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## Four Pillars (Apr 5, 2009)

Daniel A. said:


> I'm fine with my DB pension but the 65% that don't have what I do will be in trouble.


But that just isn't true. That's the thing - lots of people get by just fine without any kind of pension outside of CPP & OAS.


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## fraser (May 15, 2010)

Lots of people do get by on CPP and OAS. But they may be people who own their own homes, car, etc. and have no consumer debt. 

Many people do not have those assets.


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## Daniel A. (Mar 20, 2011)

MoneyGal said:


> Because CPP ensures workers who earn a minimum of $3500 per year, I'm sure the "average" includes a lot of very small payments stemming from people who aren't working full-time. I made my first payments into CPP as a high-school student earning less than $5/hour.



My first was as a fulltime worker making 1.75 per hour.


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## MoneyGal (Apr 24, 2009)

So do we "solve the 'pension crisis'" by encouraging people to engage more deeply in the paid labour force, such that their CPP-pensionable earnings are maximized? [shrug]


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## Daniel A. (Mar 20, 2011)

Four Pillars said:


> But that just isn't true. That's the thing - lots of people get by just fine without any kind of pension outside of CPP & OAS.



Then they have assets and are not dependent solely on CPP & OAS.
The folks I know that didn't have any other pensions but owned their homes took reverse mortgages.


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## MoneyGal (Apr 24, 2009)

OK, so they don't have sustainable spending levels, or they have no financial legacy motive, and they have access to credit. Still not really seeing a problem here, at least not one I have to help solve.

Edit: the people taking reverse mortgages, that is. Or it's possible they just can't math very well.


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## Daniel A. (Mar 20, 2011)

MoneyGal said:


> So do we "solve the 'pension crisis'" by encouraging people to engage more deeply in the paid labour force, such that their CPP-pensionable earnings are maximized? [shrug]


I think we are already at a point where people will have less of an option but to work till they are 65 which will give the maximum or later.
We are already seeing the retirement age rise.

When I consider that things like GIS and medical costs are not something that anyone over 65 has to worry about paying for it will be downloaded on everyone else.


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## sags (May 15, 2010)

The Globe article authors used a Stats Canada report on the retirement outlook for people aged 60-64 only, as support for their thesis on the future retirement of much younger generations of Canadians. The Stats Canada report has absolutely nothing to do with the retirement outlook for people aged 18-59.


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## sags (May 15, 2010)

The business lobby claim CPP, OAS, and GIS are enough to support low income people in their retirement, while also lamenting higher corporate taxes to support OAS and GIS.


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## MoneyGal (Apr 24, 2009)

These are not contradictory positions. 

You can make the argument that people should be able to eat healthfully by following the Canada Food Rainbow while bemoaning the fact that the cost of food keeps rising.


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## sags (May 15, 2010)

We could double the CPP and fund it through the legalization of marijuana.

No lose solution.........we get double pensions...........or we smoke a bowl and don't care.


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## HaroldCrump (Jun 10, 2009)

sags said:


> The business lobby claim CPP, OAS, and GIS are enough to support low income people in their retirement, while also lamenting higher corporate taxes to support OAS and GIS.


Any "lobby" that claims that CPP + OAS are enough to support a comfortable retirement at age 67 ought to also explain why it is ok for public sector workers to retire starting at age 52 with full pension (with bridge benefits) with nearly 70% of their _highest_ salary as lifelong pension.

This is pension apartheid.

Of course, there is no retirement crisis - unless you consider this huge apartheid between pensioned govt. workers and non pensioned private sector workers as a crisis.


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## sprocket1200 (Aug 21, 2009)

andrewf said:


> DB pensions aren't magic. Someone has to accept the risk if not the saver. If everyone has a DB pension, everyone is exposed to the risk of everyone else (particularly if there are gov't guarantees).


Yeah and the other non magic is there is no early retirement. You MUST work until the numbers add up. Brutal!
My neighbour has only another 20 years, the he gets stuck with a tax problem.. Sucker!


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