# Where will it end



## Daniel A. (Mar 20, 2011)

Things almost get to a point with these companies where the real question is how do they manage to line their own pockets if the state of pension financing has not been met.
They blame low rates for deficit conditions, I think any company that wants more relief should agree that if there company goes bankrupt the pension plan is first in line. 

http://business.financialpost.com/2...-pension-fund-relief-amid-massive-shortfalls/


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## Square Root (Jan 30, 2010)

The company doesn't get to chose who is first in line. Bankruptcy law determines that. Ultimately up to parliament to change the laws if that is wha they think should happen.


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## Daniel A. (Mar 20, 2011)

I am well aware of that my point is should any company want a special deal their board should be willing to give up first rights.


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## HaroldCrump (Jun 10, 2009)

Following quote from Finance Minister Flaherty that I agree with 100% :

_At the end of the day, these are pension funds that need to be worked out between the employers and their employees. It’s a private matter_

From a tax payer perspective, that is exactly what the position of the govt. should be.

(Now if only they bring their own pension plan along the same lines as well, that'd be nice :rolleyes2: )

As for pension holders being "first in line", as long as the corporate bond yields rise adequately to reflect that, there shouldn't be any problem.
Right?


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## Daniel A. (Mar 20, 2011)

Exactly Harold would they gamble on the yield with their money being first rights.


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## Square Root (Jan 30, 2010)

Daniel A. said:


> I am well aware of that my point is should any company want a special deal their board should be willing to give up first rights.


i'm not sure what first rights you think the board can give up? Current bondholders or other lenders might be a little miffed? Any prospective borrowing costs could well be prohibitive if an insolvent pension scheme gets first call on the assets of a company that is not doing well? I think we can all sympathize with pensioners who get short changed, but the solution is complicated.


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## MoneyGal (Apr 24, 2009)

Two issues: 

- new accounting standards have dramatically changed how future pension obligations are calculated and reported. 

- persistent low interest rates have a huge (HUGE) impact on the present value of future pension obligations. 

These two factors explain virtually all of the rationale for the pension deficits we are seeing now. Put another way, in the absence of these two factors, we would not be seeing pension underfunding at anything like the current rates. 

So the question (to my mind) is not whether pension funds have been mismanaged, but instead is one of how people should think about pension valuation. All other factors held constant (i.e., with no changes to the funding ratios of pensions), were pensions in "better" shape when the accounting rules did not require the same mark-to-market accounting for future obligations as they do now? Were pensions in "better" shape in higher interest rate environments reduced the future cost of money?


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## Daniel A. (Mar 20, 2011)

MG I'm not clear on this thought.
So the question (to my mind) is not whether pension funds have been mismanaged, but instead is one of how people should think about pension valuation.

Even when yields were high the number of pensions running deficits stood around 65-70 % .


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## MoneyGal (Apr 24, 2009)

Yes, but yields have almost nothing to do with calculating the PBO (pension benefit obligation). Here is a very basic (Investopedia) article on the underlying mechanics of pension accounting: 

http://www.investopedia.com/university/financialstatements/financialstatements9.asp#axzz22sh7DZsy

Note that it starts with the phrase, "Pension fund accounting is complicated and the footnotes are often torturous in length."

W/r/t understanding how interest rates impact the PBO, read this paragraph from the link [NOTE: for pension accountants, "discount rate" = "interest rate"]: 

In regard to our first concern - the economic status of the liability - we want to look at the funded status that equals the fair value of plan assets minus the PBO. *The two key assumptions that impact the PBO are the discount rate and projected rate of salary increases*. A company can decrease its PBO (and therefore, increase its funded status) by either increasing the discount rate or lowering the projected rate of salary increases. You can see that PepsiCo's rate of salary increase is fairly stable at 4.4% but the discount rate dropped to 6.1%. This steady drop in the discount rate contributes significantly to the increased PBO and the resultant under-funded status.

/quote

In a nutshell: when interest rates are effectively zero, the PBO (present cost of future pension obligations) skyrockets. When discount rates increase, the future obligation, calculated on a present-value basis, decreases. This is a very basic mechanic of pension fund obligations, and is analogous to the relationship between bond prices and interest rates. 

Corollarary: if interest rates were to increase, the funded status of pension plans would "magically" improve, even with no other changes to any other component of the pension plans.


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## Cal (Jun 17, 2009)

So what happens when it is not a corporation that has the pension shortfall. 

I could be mistaken, but I am pretty sure that is part of what the teachers unions are having to negotiate in regards to the TDSB wanting to reduce deficits and shortfalls. Should today's taxpayer be on the hook to cover the pension money shortfall, just because it had be previously agreed to with the teachers unions. (I am not against teachers or anything, just a semi current example that came to mind)


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## 1.5M (Apr 21, 2012)

I don't know why private companies are offering pension plans. At any time they could go bankrupt. They should offer rrsp matching. 

Anyway, any company that goes bankrupt should not be permitted to pay any pensions. Our gov anyway ensures retired people have more than enough for comfortable living, often better than working young people. And I hope it will stop taking more from young taxpayers to cover failed pension plans.

Honestly I don't think there should be any pension plans, private or public or CPP. This would allow an individual to manage his own money. If someone is reckless, the gov will then cover his basic living needs in retirement. It already does that.


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## jmarks (Feb 14, 2012)

1.5M said:


> I don't know why private companies are offering pension plans. At any time they could go bankrupt. They should offer rrsp matching.
> 
> Anyway, any company that goes bankrupt should not be permitted to pay any pensions. Our gov anyway ensures retired people have more than enough for comfortable living, often better than working young people. And I hope it will stop taking more from young taxpayers to cover failed pension plans.
> 
> Honestly I don't think there should be any pension plans, private or public or CPP. This would allow an individual to manage his own money. If someone is reckless, the gov will then cover his basic living needs in retirement. It already does that.


I think they call it a benefit or total compensation. 
You agree to do something for them and in turn they give you something back. It's an old concept that's been around for a while now. Problem is sometimes Companies don't want to give what they promised and instead waste the money that was agreed to be paid out. 
There wouldn't be any concern about bankruptcy if companies actually fulfilled their obligations, as pensions in this country are held by a third party.
How do you think Bond holders would feel if companies didn't pay them the interest owed?


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## 1.5M (Apr 21, 2012)

jmarks said:


> I think they call it a benefit or total compensation.
> You agree to do something for them and in turn they give you something back. It's an old concept that's been around for a while now. Problem is sometimes Companies don't want to give what they promised and instead waste the money that was agreed to be paid out.
> There wouldn't be any concern about bankruptcy if companies actually fulfilled their obligations, as pensions in this country are held by a third party.
> How do you think Bond holders would feel if companies didn't pay them the interest owed?


I argue that is not a good practice for a company/government to promise something for the distant future given that it cannot predict it's own distant future or how the economy will evolve in the distant future (decades away). Hence this socialist failure, pension plans, were a bad idea to solve retirement poverty. It's much simpler and better to just pay basic living expenses for all those who can't afford them and otherwise let people mind their own money and retirement planning.

For this concrete case (which anyone could have predicted if anyone would have thought a minute about it) I don't care if a company/unions are able to pay pensions or not. It should be a matter of priorities for failed companies/union plans. Just don't ask more money from taxpayers. The taxpayers are already paying basic living expenses for the retired people who can't afford them.

As far as I know, the bond holders don't get paid if a company goes bankrupt.


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## none (Jan 15, 2013)

Socialist failure? Countries that fall into the socialist category (which also Canada does but not to such an extent) generally have a better quality of life than more "capitalist' countries.

I would argue this is evidence of a capitalist failure and socialist win.

source: http://en.wikipedia.org/wiki/Quality-of-life_Index

It's very easy to have an arms length pension funded well into the future. I do it, why can't a company- that's silly.


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## sags (May 15, 2010)

From the news I have heard or read recently, it appears that pensions are doing much better these days, and some of them have already gone from a deficit to surpluses again. The HOOPP pension was featured on BNN. They have experienced a remarkable turnaround and are over 100% funded. The CPPIB is doing very well with their investments, as are the Teachers Pension from what I have heard.

The pension plans have learned that their scale gives them power. They don't have to restrict themselves to low interest bonds or the volatility of stock markets anymore. They are investing in large commercial real estate and infrastructure projects which throw off huge profits for decades into the future.

Perhaps in a couple years, we will learn all the angst against DB pensions was misplaced.


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## HaroldCrump (Jun 10, 2009)

The problem with DBPs is not the rate of return (or the lack, thereof).
It is that nearly 75% of the working population is excluded from defined benefit pension plans and yet are forced to pay for the DBPs of the other 25% (via taxation).
And speaking of _total compensation_, the TC of your average public sector employee is far, far higher than that of a similarly skilled private sector worker.

It is all pretty for HOOPP to tout its rate of return, when the fact is that it is funded by the most expensive public sector in the country.
It is a sector that is recession proof, and is increasing its staffing every year.
This sector has the first claim on tax revenues.

CPP is a DBP plan indeed (sorta) but does not compare at all to the 70% income replacement DBP available in public sector plans.

We have a two-tier employment situation - the haves and have-nots.
The have-nots are forced to pay for the haves - like the medieval robber baron days.

*@none* - As for a high quality of life under socialism, please feel free to move to Greece or Spain or Cyprus.
Quite a range of choice for you, actually. There is even Cuba, North Korea, and Venezuela.


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## fraser (May 15, 2010)

There are a few differences in DB pensions

I have a DB pension (now closed) that was fully paid for by my employer...I did not have to contribute one red cent to it. Mind you, it is 1 pecent per year, with no indexing. I would have gladly contributed to increase the rate but it was not an option.

My friend is a teacher in BC. She currently pays just under 12 percent of her salary towards her DB plan.

That is a a significant difference.

I do not have pension envy vis a vis the various public service pensions. I think the real challenge is to increase the total percentage lifetime contributions by those who have public service DB plans. I do not know if this is happening in the federal plan but it is happening with a number of the provincial and municipal plans.


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## HaroldCrump (Jun 10, 2009)

fraser said:


> My friend is a teacher in BC. She currently pays just under 12 percent of her salary towards her DB plan.


And how much does the employer (i.e. tax payer) contributes to that plan?
The HOOPP plan was mentioned above...I believe the taxpayers of Ontario kick in 125% of all employee contributions in that case.



> I think the real challenge is to increase the total percentage lifetime contributions by those who have public service DB plans.


It should be no less than the % contribution required for CPP - for the same level of benefit (in terms of income replacement %).
Other features are very similar to CPP, such as inflation indexation, govt. guarantee, etc.
And oh BTW, those obnoxious bridge benefits and pension buybacks in public sector plans have simply got to go. It is outrageous.

In fact, I see no reason for these plans to exist.
CPP should be the one and only socialized pension plan for all workers, regardless of private or public sector.

Expanding or not expanding CPP is a different conversation.

Private corporations (i.e. those that receive no govt. funding or guarantees) are free to provide whatever type of DBP plan to their employees, over and above CPP.


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## fraser (May 15, 2010)

I certainly do not have an issue with bridge benefits or with offering pension buyouts instead of a pension annuity stream. Many private sector DB plans offer these. Indeed, my former employer encourages people to take a buyout vs. the annuity stream. 

GM in the US recently offered buyouts to their white collar workers-those who are eligible and those who were currently receiving pensions. Blue collar workers were not included in the buy out proposal because they have a statistically lower life span and hence will receive less pension annuity dollars over their lifetime.

As long as all the costs associated with the plan are included in the total, and that total is shared by the employee in a fair way then I have no issue with it. Pensions are just a component of overall remuneration. 

I worked in a sector where the government actually had challenges in attracting staff because their pay scales (not total compensation...just actual pay) were, from time to time, considerably less than the private sector. As a result, they could not attract the best candidates and often had to settle for lower levels of qualifications, abilities, and experience. Not common, but it does happen and it is a function of the vocational job market at any given point in time.


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## Eclectic12 (Oct 20, 2010)

1.5M said:


> ... As far as I know, the bond holders don't get paid if a company goes bankrupt.


As Nortel bondholders found out, it depends on how much the remaining assets can be liquidated for.



> Even Nortel's investment bankers have admitted that the $4.5-billion (U.S.) Canada's one-time star reaped in its patent auction "was higher than any of us would have expected."
> 
> Because there has been so much surprise on the upside, bondholders now not only expect to get their full value, but also what is known as post-petition interest, or the interest that they would have earned since the bankruptcy filing.


http://www.theglobeandmail.com/repo...rs-must-be-sporting-big-smiles/article615831/


That's why there are investors who buy bankrupt company bonds if they figure the selling price is below what the underlying assets are likely to fetch.

http://www.businessweek.com/magazine/content/09_25/b4136063169698.htm
http://books.google.ca/books/about/..._Profit_from.html?id=LOYRN3-uIt8C&redir_esc=y


I'm sure that in the vast majority of bankruptcies, the bond holders from prior to the event aren't getting their full dollar plus interest plus post-petition interest. At the same time - if there's a whole section of the investing world, spinning off "how-to" books, it seems pretty clear that the "get paid nothing" scenario can't be the norm.


Cheers


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## HaroldCrump (Jun 10, 2009)

fraser said:


> I certainly do not have an issue with bridge benefits or with offering pension buyouts instead of a pension annuity stream.


I meant a pension buy_back_, not a buy_out_.
By buyout, you mean encashing the commuted value, I believe.
Buyback allows a current employee to "buy" additional pensionable years of service.



> As long as all the costs associated with the plan are included in the total, and that total is shared by the employee in a fair way then I have no issue with it.


Yes, of course, no one will argue with that.
The question is : what is fair?
Where most private sector employers are not able to afford any pension plan whatsoever, some offer group RRSPs with matches usually capped at 2% or 3% of gross pay, is it really fair for the tax payers to top up public sector plans 100% or more of the employee contributions?



> I worked in a sector where the government actually had challenges in attracting staff because their pay scales (not total compensation...just actual pay)


That is purely a compensation structure problem.
They could have increased the present benefits (salary, bonuses) and reduce the deferred benefits (pensions) to tweak the balance.

What has ended up happening over the years (mostly as a result of militant public sector unions) is that the deferred compensation has stayed same _and_ present compensation has been increased.
As a result, total compensation is now totally out of whack with market realities, and unaffordable for society as a whole.


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## kcowan (Jul 1, 2010)

We have to just suck it up. It is what it is! Is it fair? Why does that matter?


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## CanadianCapitalist (Mar 31, 2009)

HaroldCrump said:


> Buyback allows a current employee to "buy" additional pensionable years of service.


I'm curious. How does a current PS employee "buy" additional pensionable years of service?


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## Four Pillars (Apr 5, 2009)

kcowan said:


> We have to just suck it up. It is what it is! Is it fair? Why does that matter?


Exactly.

Harold, complaining endlessly about this on a money forum is a waste of time. If you feel strongly enough about it (and I know you do), why don't you try to make your voice heard where it might make a difference?

One way to start is to write to federal/provincial politicians and express your views. I think any change has to come from politicians and they are more likely to act if they think they are representing the people. 

I'm sure there are other things you can do as well. Harold for PM? 

Preaching to the choir might be fun, but it is unlikely to promote change.


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## HaroldCrump (Jun 10, 2009)

CanadianCapitalist said:


> I'm curious. How does a current PS employee "buy" additional pensionable years of service?


Through the pension buyback programs administered by the pension plan.
For instance, since HOOPP was mentioned above, following is the guide from HOOPP about its buyback program:
http://hoopp.com/WorkArea/DownloadAsset.aspx?id=615

Probably not all pension plans have buybacks, but most of the public sector ones do.


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## CanadianCapitalist (Mar 31, 2009)

HaroldCrump said:


> Through the pension buyback programs administered by the pension plan.
> For instance, since HOOPP was mentioned above, following is the guide from HOOPP about its buyback program:
> http://hoopp.com/WorkArea/DownloadAsset.aspx?id=615
> 
> Probably not all pension plans have buybacks, but most of the public sector ones do.


Ok thanks. But a cursory reading shows the HOOPP buyback program is limited. I can't just get a job with a HOOPP employer from the private sector and buy say 15 years of pensions.


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## HaroldCrump (Jun 10, 2009)

CanadianCapitalist said:


> I can't just get a job with a HOOPP employer from the private sector and buy say 15 years of pensions.


Right, that's probably not a supported scenario.
There has to be some sort of portability between the organizations/employers in question.

But what it does allow a civil servant to do is get pensionable years for gaps in employment due to unpaid leave, strikes/lockouts, etc.
Also, "buying in advance" is allowed, which then enables the worker to retire earlier.

When combined with the bridge benefits, the combination of both programs allows for a very early retirement with full pension.

Here is a brief summary of the benefits from the Public Works pension website:
http://www.tpsgc-pwgsc.gc.ca/pension/act/rachat-buyback/avantages-advantages-eng.html



> •The completion of 35 years of pensionable service at an earlier date,
> •The possibility of retiring earlier.


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## sags (May 15, 2010)

The employee must pay BOTH the employer and employee costs to the pension plan to buy back pension time, including the intervening investment returns.

Qualified pension time must have been earned with a previous employer enrolled in HOOPP. 

It is an option for some people..........but hardly a gift.

A few years ago, the HOOPP plan was underfunded by quite a large sum. They addressed the problem, as responsible pension plan administrators and members should, by increasing contributions, eliminating a "transition" benefit left over from when the hospitals were laying off staff due to budget restraints (see Harris Government), and changing their investment strategy.

They are now 104% funded, and a good example of how DB pension plans can be affordable and maintained properly.

Part of their success may be, that they have members of BOTH employers and workers on the board of the pension plans.

Everyone has a stake in the success of the plan........and it is reflected in how they implemented changes.

Instead of Pooled Pensions and other useless "retirement schemes", the government should allow big pension plans to expand their membership to include other workers who don't have a pension plan.

It would be good for the people........good for the country.......but not so good for insurance companies.


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## HaroldCrump (Jun 10, 2009)

sags said:


> The employee must pay BOTH the employer and employee costs to the pension plan to buy back pension time, including the intervening investment returns.


Yes, that is true.
There is no employer match for buybacks (thank goodness) :rolleyes2:



> It is an option for some people..........but hardly a gift.


It is a gift available to most public sector plans. Hardly any private sector plans have this feature (although some have bridge benefits).
You can't buyback years of CPP either.



> Instead of Pooled Pensions and other useless "retirement schemes", the government should allow big pension plans to expand their membership to include other workers who don't have a pension plan.


I agree with you one 100% that PRPP is completely useless.
It's not even a pension, so therein ends the story of PRPP.

But I disagree that the govt. should expand the public sector pension plan to include non employees.
If that is what we want, why not expand CPP?

Why do we need to expand two dozen or so public sector plan managements, hire more administrators, bureaucrats, etc.

In fact, we should be doing the reverse - consolidating the public sector pension plans to reduce the overhead.
The best case scenario for the tax payer would be to unwind these public sector pension plans and bring everyone under the umbrella of the CPP - with the same benefits and features as the rest of the workers.
If it's good for the goose, it's good for the gander.
And if it ain't, then let's increase the CPP to a level that is.


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## RBull (Jan 20, 2013)

^+1


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## sags (May 15, 2010)

The government could do a lot of things.........but they are too busy right now worrying about Justin Trudeau.


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## 1.5M (Apr 21, 2012)

none said:


> Socialist failure? Countries that fall into the socialist category (which also Canada does but not to such an extent) generally have a better quality of life than more "capitalist' countries.
> 
> I would argue this is evidence of a capitalist failure and socialist win.
> 
> ...


We should not compare 19th century systems. Both socialism and capitalism were better systems than what was before, but these days they both fail miserably. Too bad people don't understand that, and keep trying to correct a defective system by replacing it with the other defective system. What we need is a new, 21st century system that would correct the mistakes of capitalism and socialism, not a bad mix of the two.

A company should be focused on profits not on employers retirement. That's an individual issue. An individual should be able to choose to have his retirement planned and managed by a specialized private corporation, by government, or by himself.


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## 1.5M (Apr 21, 2012)

none said:


> source: http://en.wikipedia.org/wiki/Quality-of-life_Index


That's garbage. Their criteria include "divorce rate" and "rate of church attendance". Probably that's why Ireland is no.1 and US is at the same level as Canada.


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## none (Jan 15, 2013)

actually other countries scored higher because they population is generally happier. Believe it or not, objectively, North america is not the best place in the world to live.


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## none (Jan 15, 2013)

1.5M said:


> A company should be focused on profits not on employers retirement. That's an individual issue. An individual should be able to choose to have his retirement planned and managed by a specialized private corporation, by government, or by himself.


I disagree. I don't think everyone should need to become versed in ETF and index fund, stops, puts etc etc in order to have a decent retirement.

Lots of companies (for example, starbucks, costco etc) have these plans for their workers and enjoy much higher employee satisfaction, employee work ethic and employee retention.


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## 1.5M (Apr 21, 2012)

none said:


> I disagree. I don't think everyone should need to become versed in ETF and index fund, stops, puts etc etc in order to have a decent retirement.


You should double check what I said, I said the individual should have an option of whether a specialized financial corporation should plan and manage his retirement or do it himself.



none said:


> Lots of companies (for example, starbucks, costco etc) have these plans for their workers and enjoy much higher employee satisfaction, employee work ethic and employee retention.


Yeah, and if a worker doesn't want to be part of that and to manage himself that money, does he have that option? 
And what will happen with those pension plans when those corporations will start having financial problems? Oh, wait, we know, the answer to that question started this thread.


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## none (Jan 15, 2013)

1.5M said:


> Yeah, and if a worker doesn't want to be part of that and to manage himself that money, does he have that option?
> And what will happen with those pension plans when those corporations will start having financial problems? Oh, wait, we know, the answer to that question started this thread.


Why she s/he have an option - does an employee get an option in everything? What about non-smoking legislation at work? Ack! someone can't smoke at work infringing om his personal freedoms. As per your comment about the financial issues, if managed properly this isn't an issue at all.


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## HaroldCrump (Jun 10, 2009)

none said:


> actually other countries scored higher because they population is generally happier.


It is very easy to create a "happy" society - just give everything for free.
Education, health, jobs, retirement - the govt. pays for everything by borrowing money.
The utopia will last for a few years, and in some cases decades, but eventually it will fall apart.

There are real examples of such Utopia - Castro's Cuba was like this for several decades (supported by the USSR).
Modern day Spain, Greece, etc. under the EU rule are slightly modified versions of such Utopia.
They managed to make it last approx. 20 years or so, but eventually it _will_ fall apart.



> I disagree. I don't think everyone should need to become versed in ETF and index fund, stops, puts etc etc in order to have a decent retirement.


No one is saying you have to be a hedge fund trader to be able to build a retirement fund.
Long term indices such as the TSX 60 (XIU), or the S&P 500, etc. have been returning approx. 6.5% - 8% (give or take) over 20 to 30 years.
If you had just bought XIU 20 years ago, you would have made about 7%.
Not a bad rate of return over a period of 30 years.

Why should the tax payer have to pay for someone's refusal to learn basic, fundamental money management and investing?



> Why she s/he have an option - does an employee get an option in everything? What about non-smoking legislation at work? Ack! someone can't smoke at work infringing om his personal freedoms. As per your comment about the financial issues, if managed properly this isn't an issue at all.


Comparison to smoke isn't a good comparison.
Smoking infringes upon the freedom of others to have a healthy, smoke free environment.

In fact, your example can be used in reverse, as follows:
A governments plan to grant a small set of individuals a guaranteed retirement infringes upon the freedom of others to pay lower taxes and plan for their own retirement.
Your example is not applicable in this case.


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## 6811 (Jan 1, 2013)

none said:


> actually other countries scored higher because they population is generally happier. Believe it or not, objectively, North america is not the best place in the world to live.


I disagree.

In all my travels I have never wanted to live anywhere else but Canada. Almost everywhere else has been just nice to visit. (Those "generally happier" individuals don't know any better  )


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## sags (May 15, 2010)

DB pension plans are simply part of overall compensation packages. 

Anyone who has ever sat at a bargaining table knows how the game is played.

The "company" has "x" amount of dollars to spend on total employee benefits, be it increased wages, more holidays, higher life insurance, DB pension plans contributions.......

Everything is assigned a number that it costs the company.

The choices of how to spend the "x" amount of dollars is made by the employees.

If eliminated, the cost to employers of contributing to a DB pension plan, will simply be allocated to another benefit.

Employees who chose to fund DB pension plans..........made wise choices.


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## fraser (May 15, 2010)

sags is spot on. Everything has a cost.

And those employees who are not part of bargaining units makes job choices based on many factors, including compensation, ie the structure of the entire package. In my case it consisted of a combination of pension, health benefits, stock option grants, bonus, commissions at various points in my carreer. I would not have wanted say, a public service DB pension benefit scheme vs the one that I have at the expense of stock option grants or performance bonus payments. Everyone has different priorities and different compensation opportunities.

In my experience though, total benefits in some non union sectors are dropping. I know of one multinational that has reducted it's salary add on cost from 43 percent to the mid twenties (ie the real cost of an employee went from 1.43 times salary to 1.24 times salary. They did it by reducting health benefits, changing and capping vacation entitlements, closing and grandfathering the DB plan in favour of a DC plan, freezing salaries, lowering performance bonus money, etc. etc Then they made further reductions by offshore outsourcing of every function possible.


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## sags (May 15, 2010)

Companies are cutting back in union shops as well...........although unionized workers may fare a little better than their non union management counterparts.

At the end of the day..........the corporations start with all the power and all union representation can hope to do is put restrictions on some of that power.

Every discussion comes back to the same starting point eventually.

The problem isn't the quantity of money circulating in the world. 

It is how the money is being distributed.


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## 1.5M (Apr 21, 2012)

fraser said:


> In my experience though, total benefits in some non union sectors are dropping. I know of one multinational that has reducted it's salary add on cost from 43 percent to the mid twenties (ie the real cost of an employee went from 1.43 times salary to 1.24 times salary. They did it by reducting health benefits, changing and capping vacation entitlements, closing and grandfathering the DB plan in favour of a DC plan, freezing salaries, lowering performance bonus money, etc. etc Then they made further reductions by offshore outsourcing of every function possible.


That's another problem with all those benefits. You don't really know how much you're paid. I don't think a corporation should be offering any of those benefits. I work for money. Give me money. I know what I want to do with it better than the gov or the corporation I'm working for.


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## HaroldCrump (Jun 10, 2009)

fraser is correct that these benefits are part of total compensation.
A monetary value can be assigned to each of these gold-plated benefits - from a DBP plan, bridge, buybacks, cashable sick days, 5 year sabbaticals, etc.

And that precisely is the problem - at least in the public sector.
Total compensation is too damn high.


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