Covid. Time to stop the bleeding before it’s too late.

[bigbill]

First, the pensions of public servants are including when you calculate your total compensation. Second, the employees contribute, and it's not cheap. For most employees it ranges from 8% to 14% of their gross salary.

I agree that it sucks that few private employees receive pensions anymore. It's not that we should eliminate public sector pensions, it's that we need to mandate private sector pensions. Personally, I'd expand the CPP. It's objectively the best run pension fund in the world, posting amazing performance and when you consider that for the participants it's literally a risk-free investment, if I could have invested extra into it, I would. Crunch the numbers and there's no way an individual could come close to replicating the CPP in their own portfolio without taking on some pretty significant risk. And please don't bother saying that CPP is broke, because it's not, and it's a top performing pension fund. If Alberta withdraws from the CPP to create an APP inside AIMCO, they're the biggest morons that ever lived. AIMCO are amateur cowboys compared to the CPP managers, and based on recent events, I'm sure they'd flush a lot of the money away on failed derivative security strategies that are attempts to shore up results because they rarely exceed benchmarks.

Another reason to expand CPP is that employer based pensions are subject to abuse. Sears, anyone? We need to ensure that people can't lose the pension they invested in, and a large scale universal government run one does exactly that.

And yes, if the public sector is so golden and amazing, people are free to pursue careers there. Keep in mind that pretty any job with good job security, competitive pay and benefits and so on is usually in a professional capacity, so you'll need at least a degree (maybe several) and some form of designation. Envious of what a nurse earns? Well, nursing is a very difficult program to gain entry to, hard work to complete, and then the job itself is anything but easy.

 

[Cabinmon]

First, the pensions of public servants are including when you calculate your total compensation. Second, the employees contribute, and it's not cheap. For most employees it ranges from 8% to 14% of their gross salary.

I agree that it sucks that few private employees receive pensions anymore. It's not that we should eliminate public sector pensions, it's that we need to mandate private sector pensions. Personally, I'd expand the CPP. It's objectively the best run pension fund in the world, posting amazing performance and when you consider that for the participants it's literally a risk-free investment, if I could have invested extra into it, I would. Crunch the numbers and there's no way an individual could come close to replicating the CPP in their own portfolio without taking on some pretty significant risk. And please don't bother saying that CPP is broke, because it's not, and it's a top performing pension fund. If Alberta withdraws from the CPP to create an APP inside AIMCO, they're the biggest morons that ever lived. AIMCO are amateur cowboys compared to the CPP managers, and based on recent events, I'm sure they'd flush a lot of the money away on failed derivative security strategies that are attempts to shore up results because they rarely exceed benchmarks.

Another reason to expand CPP is that employer based pensions are subject to abuse. Sears, anyone? We need to ensure that people can't lose the pension they invested in, and a large scale universal government run one does exactly that.

And yes, if the public sector is so golden and amazing, people are free to pursue careers there. Keep in mind that pretty any job with good job security, competitive pay and benefits and so on is usually in a professional capacity, so you'll need at least a degree (maybe several) and some form of designation. Envious of what a nurse earns? Well, nursing is a very difficult program to gain entry to, hard work to complete, and then the job itself is anything but easy.

FracMaster too stole the employees pensions when the German owner decided to bankrupt the company. He at the time owned the most expensive house in Calgary

 

[Old Fart]

I agree that it sucks that few private employees receive pensions anymore. It's not that we should eliminate public sector pensions, it's that we need to mandate private sector pensions.

Good point Bill. Anyone who does not have their TFSA maxed out has no right bitchng about pension plans anyway, in my view. That is the best thing going. With pensions and RRSPs the money you make is taxed. With a TFSA, if you grow $6k into $60k that is $54k you made TAX FREE.

Oh, I know, people will bitch about not being able to put in $500 per month. SO...Put in whatever you can. The only difference between a pension plan and a TFSA is the choice you have each payday. We even upped it to $11k per year that you could contribute but the jealous children complained that it only helped the rich so liberals dropped it back down. No, it helped the people who were disciplined enough to save and the ones who did not feel the need to upgrade all their toys just because the newest model was out now (despite the old one still working perfectly well).

It comes down to choices. If you spend all your money now, don't begrudge the people more income later because they had the discipline to save earlier.

 

[Guy2013]

Personally, I'd expand the CPP. It's objectively the best run pension fund in the world, posting amazing performance and when you consider that for the participants it's literally a risk-free investment, if I could have invested extra into it, I would. Crunch the numbers and there's no way an individual could come close to replicating the CPP in their own portfolio without taking on some pretty significant risk. And please don't bother saying that CPP is broke, because it's not, and it's a top performing pension fund.
Another reason to expand CPP is that employer based pensions are subject to abuse. Sears, anyone? We need to ensure that people can't lose the pension they invested in, and a large scale universal government run one does exactly that.

I could not agree more. I am amazed at the returns the CPP achieves and like you I have often said that I would contribute more to it if I could to icrease my eventual pension payout. Unfortunately most Canadians have little understanding of the CPP, it drives me crazy when friends or relatives complain about the amount they will recieve monthly and demand the government increase it. I aways explain that while it might be administered by an arm of the government it is a individual contribution based program, not a taxpayer funded one so what you get out at the end is based on what you put in. That usually elicits a response such as "then why doesn't the government just put more in". Having said that, thank Christ it exists as too many individuals would have nothing in their senior years.

 

[Cabinmon]

I could not agree more. I am amazed at the returns the CPP achieves and like you I have often said that I would contribute more to it if I could to icrease my eventual pension payout. Unfortunately most Canadians have little understanding of the CPP, it drives me crazy when friends or relatives complain about the amount they will recieve monthly and demand the government increase it. I aways explain that while it might be administered by an arm of the government it is a individual contribution based program, not a taxpayer funded one so what you get out at the end is based on what you put in. That usually elicits a response such as "then why doesn't the government just put more in". Having said that, thank Christ it exists as too many individuals would have nothing in their senior years.

Don’t forget all the people that don’t live to become seniors. The Cpp just keeps that money

 

[bigbill]

Nope, the CPP does indeed have a survivour pension. It's complicated and the amount depends on your age, the age of your beneficiary, and other factors like are they a spouse or child.

People get angry that the CPP pension is reduced for survivours, but the reality is that almost all defined benefit plans have reductions for that case. With most public service pensions, if you opt for a pension amount that your spouse will receive should you die, then the overall amount from day one is reduced. This is because actuarial calculations now have to account for two people. Pensions weren't designed to pay out to your heirs for all of eternity.

CPP also has a one time payout to an estate of about $2300 on top of survivour benefits.

Something else a lot of people don't realize about public sector pensions is that many of them are reduced by the amount of the CPP. As an example, the teacher's pension is calculated at different rates for income that is under the CPP threshold vs income over it. The idea is that you are building one pension that is a combination of both plans. Are public service pensions "rich?" Not really. In 2018 the average teacher's pension was just under $33K. Since when is $33K a year "golden" or "rich?" If you were able to max your CPP, then your total pension would be about $52K. That's not a lot of dough in 2020, and most teachers don't get max CPP. Most public sector pensions are around the same. There ARE some politicians out there that have ridiculous pensions! Don't lump the rest of the public sector in with them.

Also with respect to CPP, ignore the emails and posts about how you as an investor could have easily beat the CPP had you had the money yourself. Those calculations are based on using the current year's contribution level. Go back to the 1960s and max contributions were under $200/yr. Not the $4700 it is now (including both portions)

There's a ton of misinformation out there about pensions because it's easy to spread because few people really take the time to learn about the pension they pay into each and every pay-cheque.

What is real is that no employer can dodge contributing to the CPP and no employer can steal the CPP from you. I used to be an advocate for mandated private sector pensions but now as employees have them stolen away and given to executives as bonuses, I've revered my thinking and believe a more robust CPP is the way to go.

 

[Old Fart]

People get angry that the CPP pension is reduced for survivours, but the reality is that almost all defined benefit plans have reductions for that case.

Also, in many cases, the survivor did not contribute to CPP.

 

[Guy2013]

Don’t forget all the people that don’t live to become seniors. The Cpp just keeps that money

The CPP allows for a survivor benefit and also a one time payout of up to $2500 .
Most private pensions provide a number of options upon initially receiving them that determine what happens at the time of an individuals death. Monthly payout amounts are calculated based on the option chosen,
more money no survivor benefit versus less money and survivor benefit.

The fact is no one is saying that the CPP is the perfect solution, but it is a reasonable one for those without a private pension or who are unable or unwilling to save for retirement.

 

[UserNameTaken]

" Time to stop the bleeding before it's too late" It's rather unnerving to watch the protests in the USA, knowing that COVID 19 loves crowded places, when zero distancing is being practiced. Pretty sure we won't have to wait till "fall" to see how the second wave of this virus is going to be played out! With the phased openings being carefully managed in most places, it seemed we were on the path to "stop the bleeding". Now? Anyone's guess.