# How Gov can take care of YOUR (promised) pension



## alingva (Aug 17, 2013)

http://www.zerohedge.com/news/2013-...private-pension-funds-cut-sovereign-debt-load


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## HaroldCrump (Jun 10, 2009)

Poland is not the first one.
Portugal already did this last year.

http://www.reuters.com/article/2013/05/22/portugal-bond-idUSL6N0E247H20130522

Many European governments leveraged their position in the Euro to create pension promises that they were not in a position to meet.
Being part of the Euro made it easy for them to access international debt markets at low rates, which they were unable to do prior to their membership of the Euro.
The birds are coming home to roost now.

It is not just the peripheral European countries, though.

We should look in the mirror first before we throw rocks at others (something about glass houses).
http://www.cfib-fcei.ca/english/art...funded-public-sector-pension-liabilities.html


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## OhGreatGuru (May 24, 2009)

Unlike the wonderfully sound private sector pension funds like those of Nortel & GM.:rolleyes2:


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## HaroldCrump (Jun 10, 2009)

OhGreatGuru said:


> Unlike the wonderfully sound private sector pension funds like those of Nortel & GM.:rolleyes2:


Yeah well, Nortel and GM do not have the mandate to increase taxes.
As long as there is an unlimited source of revenue, _any_ pension plan can be secure.


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## james4beach (Nov 15, 2012)

Wow !!!

My understanding from the article, and from this Reuters article, is that the government is specifically taking government bonds out of private pensions and transferring them onto the government balance sheet.

What this effectively does is cancel out some of the government debt. It's obvious why they would do this... reduces government debt and frees up room to issue new debt.

So what's to stop the Canadian government from doing this? Even the RRSP may not be safe. For example I have plenty of government bonds in my RRSP. The government may want to take them out of my RRSP (to help its own financing situation). I never thought of this possibility before. Thanks, Poland!


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## alingva (Aug 17, 2013)

Much smarter idea is to insist that the only investment you can do in your RRSP is to buy Gov bonds. You do not privatize anything but imagine how much money will be transferred from all other investments to buy Gov bonds, debt issue will be resolved. Answering your questions, what prevents Gov doing so is - nothing. Eventually it will happen.


james4beach said:


> Thanks, Poland!


 Are you referring to the country or the person?  I do not think Poland retirees will thank their Gov.


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## james4beach (Nov 15, 2012)

This is seriously a big story. Again I ask: why couldn't this happen in Canada too?

I think I've just learned a new downside to the RRSP. The government may nab your bonds in order to reduce their debt. Or as alingva says, force you to buy bonds.

Presumably non-registered accounts are an advantage in this respect because they're not "pensions" and thus can't be forcefully merged with government pensions.


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## james4beach (Nov 15, 2012)

I was thanking the nation of Poland for alerting me to a new threat to my investments that I wasn't aware of before


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## alingva (Aug 17, 2013)

If you think I was kidding when I said it would happen - your were mistaken. Look at this. http://www.zerohedge.com/sites/defa...imageroot/2013/01/Retirement inforgraphic.jpg People and Gov do not have money - someone has to pay the debt, either it will be by inflation or by you and me


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## james4beach (Nov 15, 2012)

But I don't want the party to end! Can't we just delay it another 65 years so that I don't have to deal with it during my life time?


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## alingva (Aug 17, 2013)

I would add fuel to the fire. Sorry, the party is over or about to be over very soon.
I would recommend to listen to this interview http://www.financialsense.com/finan...013/02/15/laurence-j-kotlikoff/fiscal-tsunami, L. Kotlikoff thinks the debt is 222 trillion, actually it does not matter if it is 222 or 187, the numbers are huge. And probably you know this cite too http://www.usdebtclock.org/ Already overwhelmed? This article explain interesting stuff about CPP http://www.benefitscanada.com/news/cpp-expansion-a-massive-gamble-c-d-howe-17686?print


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## sags (May 15, 2010)

The CD Howe Institute is a right wing lobby group, representing the financial industry.

Their recommendation of personal retirement accounts, managed by professionals, illustrates their intentions.

The financial industry desperately wants to hang onto the PPSP bone thrown to them from Finance Minister Flaherty, but the PPSP is a dead issue now. CD Howe and others are trying to change Canadians minds on the rejection to the PPSP idea.

The article contains misrepresentations of the CPP portfolio, benchmarks, and the actualized yearly returns.

People can worry about pensions...........but they need not worry about the CPP.

As to the Nortel and GM pensions.............it is true that Nortel went bankrupt, and GM required a cash loan to their pension fund................BUT neither of them was going to return nothing to their pensioners.

In the worst case scenario...........the pensioners would have received lower monthly benefits as a result of shortfalls.

It is quite likely, that if pensions have fallen dramatically............so have personal portfolios, so pensioners receiving less than expected from their pension, would be no different than individuals receiving less than expected from their portfolios.

60% of a good pension...........is better than none at all.


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## alingva (Aug 17, 2013)

sags said:


> People can worry about pensions...........but they need not worry about the CPP.


 Good luck with that


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## sags (May 15, 2010)

Why worry.........??

The CD Howe article states that "if" the CPP was to experience returns on investment equal to long term government bonds, they would have a shortfall.

The CPP probably would, but....huge BUT.........

The CPP doesn't invest all their money in long term government bonds at sub 2%.

The CPP benchmark for return on investment is 3% per year. They have been experiencing annual returns of 9% or more for many years. They have a greatly diversified portfolio, which given their large capital base, allows them to invest in highly profitable commercial real estate..........without the need to carry any debt on the properties, among other diversified income producing investments.

The CD Howe Institute will have to come up with a better argument to discredit expansion of the CPP, than the ones they are using.

The CEO of the CPP is retiring and will travel the country with other pension experts, discussing with Canadians the importance and value of DB pension plans.

Frustrating times ahead for those who stand in opposition to DB plans, as the media reports the message to Canadians.


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## alingva (Aug 17, 2013)

must watch
exactly the topic we discuss
http://broken-promise.caseyresearch.com/event


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> This is seriously a big story. Again I ask: why couldn't this happen in Canada too?
> 
> I think I've just learned a new downside to the RRSP. The government may nab your bonds in order to reduce their debt. Or as alingva says, force you to buy bonds.
> 
> Presumably non-registered accounts are an advantage in this respect because they're not "pensions" and thus can't be forcefully merged with government pensions.


If the gov't is desperate enough - what makes you think they can't do anything with non-registered accounts?


Cheers


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## Eclectic12 (Oct 20, 2010)

sags said:


> ... As to the Nortel and GM pensions.............it is true that Nortel went bankrupt, and GM required a cash loan to their pension fund................BUT neither of them was going to return nothing to their pensioners...


Bear in mind that according to the Detroit paper - the drop for the GM pension was in a surplus position before the 2008/2009 market crash. The market affect on investments only accounted for 1/3 of the shortfall. GM taking money out of the pension to pay for operations or early retirement buyouts etc. was the bigger hit.


Cheers


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