Thursday, November 08, 2007

The Pension Bet

An article I saw today was about the Yukon government investing $36.5 million in bonds that are now frozen and they might see some of this money returned over the next 10 years.

I am distressed over the Canadian government's "solution" to the short fall in the Canada Pension Plan. They have set up a system where taxpayers are paying more into the system right now than what is being paid out, and our CPP payroll deductions are indexed to be a percentage of the average wage in Canada.

This part of the plan does not distress me. What I'm betting on is the second part of this plan is going to be a disaster for Canadians. They are investing the extra money into the markets instead of paying down our debt, or at least that's my belief from what I've read on it and I believe it is about 5 years of pension money. They are thinking they will do better on the markets then paying back debt and do better for Canadians.

If you went to sleep for 20 years and saw what are markets looked like by comparison to when you went to sleep you'd be in an utter panic mode to sell everything and preserve the wealth, yet the almighty Canadian government has started taking our hard earned pension dollars putting them into that over valued mess. I don't see those dollars going anywhere but the toilet.

I'm just wondering how much asset backed bonds Canadians own. I was distressed the first time I read the plan, and that newspaper article just makes me wonder when we are going to be told how our government lost our tax pension dollars.

It is such a sad bet.


bcebitda said...

that is the reason that I am against tax fiercely. It is against the mother nature.

How can you handle your future/retirement to someone you don't know. and they change as much as favorable for winning the votes at your expense.

Deborah said...

I am not against it... Human nature is that too many people do a poor job of planning for their retirement, however, it never should have been allowed for anyone under 65 without life threatening medical issues and the amount should be reduced. 65 should be the early retirement age and 70 should be the normal retirement age, and there should even be an option to delay to age 75 and to continue to increase pension amount.

If you look at average life expectancy in the mid 80s now, that's 20-25 years of pension people are eligible to collect, and with GIS and OAS it works out to about a half million per person in pension expectations. We are completely kidding ourselves if anyone thinks we can afford that. We'd be hard pressed to afford half of it.

Age 70 for a modest pension, ineligible for OAS or GIS until after age 75 and pass a means test. The means test should be hard if you retired earlier.

I saw the need for this in the 80s and I wrote my first letter about the need to balance pension revenues with pension outputs. They introduced the ability to collect pension at age 60 since the 80s. It is unbelievable that they can just implement things that can not possibly be paid for, and their is hardly an whisper of opposition.