parvus wrote: .... It's complicated. CPP is not fully funded. I should have been more clear about that and tracked down more than what I had remembered. Sorry.
...
My views - "fully funded" or "surplus" or "deficit" in a DB pension is more than complicated - it is misleading and confusing -
What does "fully funded" mean? Isn't this a key question?
Of course one compares assets and liabilities - what Liabilities?
Do we mean
- Liabilities - referred to as "solvency' - but often not including inflation cost
or
- Liabilities - referred to as "windup" solvency cost - this includes inflation promises
or
- Liabilities - referred to as "going concern" into the future - with numerous actuarial assumptions - like investment return - that usually are not mentioned. Can have a huge difference on surplus or deficit.
How does one know what liability is used when reading the literature - when comparing two DB pension plans, etc and etc. (It drives me nuts - as it is very misleading - most of the time.)
Some of my concerns on this in print back in 2008 -
ghariton wrote:More generally, whenever a government operates a program that takes in large amounts of taxpayer money, there is a temptation to use some of that money for other purposes.
I have read, but can't confirm, that the Ontario Pension Plan will be investing in "infastructure." I take this to mean those "green bonds" that Kathleen Wynne has been talking about. This could result in contributions going towards building subways in Toronto, moving around gas power plants, etc.
If I were in this plan, I wouldn't be terribly pleased about my money being used that way.
ghariton wrote:More generally, whenever a government operates a program that takes in large amounts of taxpayer money, there is a temptation to use some of that money for other purposes.
I have read, but can't confirm, that the Ontario Pension Plan will be investing in "infastructure." I take this to mean those "green bonds" that Kathleen Wynne has been talking about. This could result in contributions going towards building subways in Toronto, moving around gas power plants, etc.
If I were in this plan, I wouldn't be terribly pleased about my money being used that way.
Especially if, like the Saskatchewan Pension Plan, participation reduces RRSP contribution room!
"I disagree strongly with what you say, but I will defend to the death your right to say it."
AltaRed wrote:If it is a registered plan, presumably it has to reduce RSP room (unless it is an Ontario provincial tax deduction only on contributions).
So, if it is compulsory like CPP and would encroach on my ability to save/invest as I please in my RSP , is it selfish of me to be glad I don't live in Ontario? or that at 73 I'm too old anyway?
"I disagree strongly with what you say, but I will defend to the death your right to say it."
AltaRed wrote:As long as the Canadian taxpayer (ROC) isn't shouldering any burden, I should be neutral.
The federal government (ROC) is ALWAYS the guarantor of last resort, even if it's only through the ballot box ,the (eastern) majority rules, and through the equalization formula if it's not otherwise spelled out-that's the nature of our federation so we might as well be realistic!!
"I disagree strongly with what you say, but I will defend to the death your right to say it."
AltaRed wrote:If it is a registered plan, presumably it has to reduce RSP room (unless it is an Ontario provincial tax deduction only on contributions).
So, if it is compulsory like CPP and would encroach on my ability to save/invest as I please in my RSP , is it selfish of me to be glad I don't live in Ontario? or that at 73 I'm too old anyway?
Has anything been mentioned about this being a registered pension plan? All I have seen is that it will be similar to the CPP, with the exception that benefits will not be fixed like CPP, but will rather be based on the fund's performance. I may be wrong, but I don't see how an enhanced CPP (assuming that is what this is) will affect RRSP contribution allowances.
Much of this discussion seems to be jumping the gun, in that we know very little about the details of the proposed plan.
AltaRed wrote:As long as the Canadian taxpayer (ROC) isn't shouldering any burden, I should be neutral.
If the contributions are tax deductible at the federal level, the shortfall in tax revenue will have to be made up somehow.
Exactly! The tax on any income you have deferred is at least partly compensated by a higher rate of tax on the income you have NOT deferred and any benefit of the deferral is itself dependent on you living long enough to benefit (the tontine effect) .
(If you die young enough the eventual tax on the deferred income may actually be higher than it would have been if you had not deferred!- for a CPP like program it is 100%)
"I disagree strongly with what you say, but I will defend to the death your right to say it."
Springbok wrote:Much of this discussion seems to be jumping the gun, in that we know very little about the details of the proposed plan.
I imagine much of this thread is really about 'having fun' speculating...
So to speculate some more, I believe there are political motives associated with this plan. Otherwise, why bother with the boondoggle in costs it is going to take in setting this thing up and administering it? As already said upthread, an instrument of social policy? Source of funding for pet government infrastructure projects? This latter one looks to be low hanging fruit.... build infrastucture and apply user fees and when the public squeals, the gov't of the day can point to the pension fund.....saying 'don't look at us'.
parvus wrote: .... It's complicated. CPP is not fully funded. I should have been more clear about that and tracked down more than what I had remembered. Sorry.
...
My views - "fully funded" or "surplus" or "deficit" in a DB pension is more than complicated - it is misleading and confusing -
What does "fully funded" mean? Isn't this a key question?
An extremely important point George.
I think the unions, the government and CARP are playing an extremely disingenuous game when they say doubling the benefit will only require a cup of coffee a day. Pensions are a lot more complex than that.
I was at a seminar by Malcom Hamilton recently. Based on current RBB rates, it costs $41 now to pay $100 30 years hence. But according to the federal government's assumption, it actually only costs $27.
In other words, the public sector gets all the reward, but the taxpayer bears all the risk.
parvus wrote: .... It's complicated. CPP is not fully funded. I should have been more clear about that and tracked down more than what I had remembered. Sorry.
...
My views - "fully funded" or "surplus" or "deficit" in a DB pension is more than complicated - it is misleading and confusing -
What does "fully funded" mean? Isn't this a key question?
An extremely important point George.
I think the unions, the government and CARP are playing an extremely disingenuous game when they say doubling the benefit will only require a cup of coffee a day. Pensions are a lot more complex than that.
I was at a seminar by Malcom Hamilton recently. Based on current RBB rates, it costs $41 now to pay $100 30 years hence. But according to the federal government's assumption, it actually only costs $27.
In other words, the public sector gets all the reward, but the taxpayer bears all the risk.
I think you may be forgetting the mortality premium which is virtually impossible to quantify thirty years ahead. If life expectancy continues to increase there is of course a significant risk of insufficient funding but I suspect we are approaching the useful and desirable limits of the human life span. I doubt many in their nineties anticipate the day ahead with any real enthusiasm , even IF (and it's a big IF) they are in good health, they suffer a hefty dose of "survivors guilt" and have little left to look forward to. One can get tired of going to funerals!
"I disagree strongly with what you say, but I will defend to the death your right to say it."
parvus wrote:I'm sorry, izzy, I should have been more clear. Hamilton was contrasting the private sector actuarial approach to DB to the GOC's approach.
Fair enough! You were there -I was not! Sorry I misunderstood!
"I disagree strongly with what you say, but I will defend to the death your right to say it."
parvus wrote:... I doubt many in their nineties anticipate the day ahead with any real enthusiasm , even IF (and it's a big IF) they are in good health, they suffer a hefty dose of "survivors guilt" and have little left to look forward to. One can get tired of going to funerals!
It is true that most of their friends are dead, but the three that I have know enjoyed their lives immensely (father-95, MIL-93, aunt-96). And they all died quickly rather than lingering.
parvus wrote:... I doubt many in their nineties anticipate the day ahead with any real enthusiasm , even IF (and it's a big IF) they are in good health, they suffer a hefty dose of "survivors guilt" and have little left to look forward to. One can get tired of going to funerals!
It is true that most of their friends are dead, but the three that I have know enjoyed their lives immensely (father-95, MIL-93, aunt-96). And they all died quickly rather than lingering.
Hi Keith
My mother-in-law is 98 and one of my aunts is 97.Both are very religious and I have no doubt that gives meaning to their lives for them but I rather suspect that their attitude is more the exception than the rule these days.
For most in that age group it's more a matter of watching friends and relatives die, or worse still, descend into dementia. As a doctor perhaps I have encountered more of the latter than the former but I cannot say that I look forward to getting that old with any joy or anticipation.
Now if I could turn back the clock physically and be sure of maintaining my independence it might be a different matter but the chances of that are vanishingly small.
"I disagree strongly with what you say, but I will defend to the death your right to say it."
I know 3 people of senior age pretty well. One at 95 is doing all right in an independent living facility but limited eyesight prevents her from doing much. Days are dreadfully boring. I would not want to be her. Another at 96 also lives in an independent facility and has all her faculties and good health. She is reasonably active but has seen all the people she knew die. Her interests are pretty much limited to family members. Another at 99 has been slipping for the past 5 years and is totally dependent on others. I have no idea what he must think when he wakes up each morning. Not a chance I would want to be him.
My MIL is 101. She lived alone until 99. Now in a senior residence sharing room with sister who is 100 . MIL looks after sister who is not in as good health. She also has lots of family and gets lot's of visits. She can still remember almost every family birthday and is aware of most things going on in the world (by listening to CBC radio).
Not a vibrant life, but I thinks she is still enjoying being alive.
Assuming my wife has same genes, I just hope our retirement plan works out
The husband of a girl friend died of a heart attack while driving to a doctor's appointment. He had the presence of mind to turn off the main road onto a side street and parked. Was not found until over 24 hours later in spite of frantic calls to the police by my friend. He was 61 and lived in Oshawa. It truly is a bell curve! Early tails and late tails...one of three deaths this year. The other two were 71 and 85.