Pensions: why I have one and you don't

<DISCLAIMER: I work for a crown corporation (meaning the government of Ontario is the sole shareholder), and have a defined benefit pension plan. No, you (the taxpayer) don't pay my salary nor do you fund my pension. We produce and sell a product, and that's where we get our revenue from which my salary and benefits are paid.>

So, there's been a bit of talk lately about pensions. Well, truth be told there's always been talk about pensions. It usually revolves around people who don't have pensions bitching and complaining about those who do have pensions. Since a good chunk of people with pensions happen to be public servants (including teachers), it often degrades into a classic game of "blame the public servants with good pensions".

Now, let's look into this a bit more, shall we? Why don't YOU have a good pension/retirement savings?

Well, according to this CBC article (http://www.cbc.ca/news/business/cpp-reform-needed-to-head-off-poverty-charles-sousa-says-1.2467563) "Right now only half of Ontario workers have a private pension and only a third contribute regularly to an RRSP." I want you to keep this in mind while I explore several of the reasons why I have a good pension lined up and you don't.


Reason #1: I contribute to my pension plan every year

People with company pensions typically have no choice. It is a compulsory plan, and they pay into it whether they want to or not. This fact alone probably covers 50% of the reason why my retirement will suck less than yours. Remember, 2/3 of Ontario workers don't contribute regularly to their RRSP. Even in lean years, when I could really use that cash, my company deducts my pension contributions, while you go and spend what could have been your RRSP contribution on useless crap.

Stop spending, start saving, and you will be 50% closer to having a retirement on par with mine.


Reason #2: I contribute more than you do (if you contribute at all)

Each pension plan is different, but just to give you an example, I contribute 7% of my gross pay every paycheque. Teachers (whom most of the general population love to criticize) pay a whopping 14% into their pension plan. How much did you contribute last year?

Most workplaces will match a portion of your RRSP contributions. A typical scenario that I've often run into is a matching contribution up to 3% (meaning that your employer will contribute up to 3% of your gross salary into your RRSP as long as you also put in 3% ). So if you put in as much as I do, you'll have a total RRSP contribution of 10% (your 7% plus your employer's 3%).

Quick example for you who are mathematically challenged. If you earn an average of, say, $70k per year, and save 10% of your pay for 30 years , assuming a rate of return of 5% net of inflation (meaning in today's dollars), you'd have almost $500k.

Once again, stop spending, start saving, and you'll have covered 75% of the ground necessary to having a good retirement fund.


Reason #3: Your company doesn't offer a pension plan (or even matching RRSP contributions)

Well, you may at last think you've found a reason that isn't your fault. I mean, what can you do if your company does nothing for your retirement right?

But alas, you'd be wrong to think this. If your company doesn't offer any retirement plans at all, just switch to a company that does. Am I supposed to suffer simply because you chose to work for a company that doesn't offer a pension or RRSP contributions? That was entirely your decision, and the fault rests entirely with you.

Now, there are those few select individuals that really can't do anything about #3. Maybe life just dealt them a really bad hand. However, these folks are akin to the number of obese people for whom genetics are to blame (meaning, like, 1% of them). For the vast majority of you, hard work, dedication and more careful thought put into education/job training would lead you to a better job at a better company.


Reason #4: You have a pension but it isn't as good as mine

Ok, you got me. My pension plan is pretty good, not many people have anything like it. But, much like in Reason #3, if you want one like it, apply to a position where it is offered. You can't have your cake and eat it too. You'll find that a lot of the jobs that come with this type of pension aren't necessarily the most exciting, or lucrative. Sometimes, you have to choose between a fun, exciting and rewarding position, and one that comes with a pension. Pick your poison.


Conclusion

In conclusion, for most of you, 100% of the blame for not having a good retirement fund rests entirely on your shoulders. It really isn't my fault, nor should I have to suffer, because you have a bad job that pays little, doesn't provide retirement savings, and, especially, the fact that you SPEND ALL YOUR MONEY INSTEAD OF SAVING IT. I don't wear fancy clothes, don't really go on vacation, don't drive a fancy car. I chose to work for a company that I knew didn't pay large bonuses, paid a salary that was less than what I could make elsewhere, and had potentially less opportunities for career advancement/development - but had a good pension. And, in return, my retirement will likely be quite comfortable.

Make a choice. Spend your way into poverty in your golden years or stop pissing away money and start saving a nest egg. But, most importantly, stop trying to blame people with pensions for your misery.

Don't have a pension/retirement savings? Guess what - IT'S ENTIRELY YOUR FAULT.

NOTE - There are some unfortunate individuals who have suffered through incredibly harsh times and events, and simply cannot do better than they currently are. They are clearly not targeted by this post.

More "green energy" news

So, as if the situation hadn't pissed me off enough already,  we now have the government saying they had no idea their Green Energy Act would be this costly.  Because it's not like everybody in the industry told them this would happen a decade ago. They simply chose not to listen and wasted our tax dollars instead.

Idiots.

http://www.thestar.com/news/queenspark/2013/12/10/ontario_tilts_against_wind_turbines_as_costs_spiral_cohn.html

Ontario Green Energy Act - the fiasco

So, by now some may have guessed how I feel about the so-called Green Energy Act (GEA). I think it's a steaming pile of crap. I try to put the reasons why into easy to understand posts and explanations, but sometimes this fails. Unless people work in the sector, or have specialized knowledge, they usually just don't get what's going on and why it's bad.

So, I'll be linking to external articles that help explain in ways that perhaps I can't.

Here's the first, from the Globe and Mail.

http://www.theglobeandmail.com/globe-debate/editorials/ontarios-low-voltage-electricity-policy/article15727240/

Investing 101 - Mutual funds? Individual stocks? Bonds?

So, you've saved up some money, and now you're wondering what to do with it. Buying a house currently isn't an option for you, because you're too poor. You could blow it on useless crap, which would be fun. But no, you've decided to be responsible and invest it. Good for you.

The question now is how to invest it? Well, I'll give you a few tips and some inside information. I'm no Warren Buffet, but I do have a degree in finance, and have worked as a performance analyst for an investment manager in the past. So you could say I have some passing knowledge of the subject.

This is going to be a very condensed, summary version. I'll be posting a bit more detailed stuff later on.

Stocks: Only if you have a lot of money to invest. If not, and you really want to try your hand at individual stocks anyway, only invest a small portion of your total savings. Otherwise don't try. People who are much smarter than you have tried, and failed.

Bonds: No. Bond values are only going to go down in the future. I'll explain why in a later post.

Mutual funds: Generally speaking, yes. But only if you pick the correct ones. I'll go into them in more detail in a later post.

Exchange-traded funds (ETFs): Yes, with a caveat similar to mutual funds.

So bottom line? Go for a well-balanced, diversified mix of low-cost mutual funds/ETFs. Stay away from bonds, and only dabble in stocks with a bit of your money (unless you're a wealthy, sophisticated investor).

Stay tuned for more in-depth posts on each asset class.