Pensions and Severance
So one of the major interesting issues financially that I am facing is whether to opt out of my former employers pension plan and take a lump sum payment (which will mostly be transferred to a Locked In Retirement Account (LIRA)) or leave the money in the employers pension plan, and draw from it at either age 55 (at an actuarially lowered rate) or 65.
As I have said previously I will be opting out, as I have very little confidence the money will be available when I get to retiring age, and now I read in the Globe and Mail the following (by Derek DeCloet):
The bad news is that at the start of this year, Nortel’s plans were already short by $1.2-billion (U.S.). The worse news is that 53 per cent of the assets were in stocks, which have been annihilated. So the pension hole has become a cavern – one that will have to be filled with cash that the distressed company would rather use for other things. Like surviving, for instance.
I read this and am not shocked, but I am worried, as I was supposed to receive information within 30 days of my severance about my pension options, however, I have not received anything in the mail as of yet, and I now wonder what new “wrinkles” may arrive in terms of this money.
My view is that this money is mine, and I have earned it over the 20+ years I worked at my former employer, and given they “capped” this pension as of January 1 2007, leaving my money there makes little or no sense to me. If anyone cares to comment or disagree, please feel free I am open to discussion on this issue.
U.S. Elections Tuesday
As the Daily Show’s reporter is fond of saying, “Can we just FINISH THIS NOW!”. I can barely stand Canadian Elections and the campaign is typically only about 6 weeks, how our American Cousins can stand the two years of grind is beyond me.
Permit me to make the following morbid observation:
- The chance of John McCain dieing each year from his skin cancer is put at around 6%, so cumulatively it is much higher that he will die before the end of his first term as President.
- Senator Obama’s life has already been threatened and as Chris Rock has pointed out, there is gonna be some nut wanting to knock him off, just because of his race.
Errant Wallaby and Personal Finance
I have now been taught how to catch a run away wallaby, evidently you throw a towel over it, hold it by it’s tail (don’t let go) and put it in a bag, and call the Zoo in Kemptville it escaped from.
What the heck does this have to do with Personal Finance? Be prepared! If I see a wallaby in my backyard I’ll know what to do, just like in Financial Planning, in case of emergencies make sure you have a plan. (Now I sound like Marlin Perkins from Mutual of Omaha’s Wild Kingdom).
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November 9th, 2008 at 11:42 AM
Hey, like the Steve Miller song says “Take the money and run.” I can see how you’d be nervous about finally getting your pension money. I suppose the pension is underfunded on account of the huge layoffs Nortel seems to keep unleashing, and the number of those people who wisely opt to cash out their pensions.
I was listening to a podcast, and an analyst figured that near term sales for telecom suppliers would be poor, since most telcos are going to want to cut back during the economic slump. Hopefully Nortel survives long enough for the next upturn or at least gets taken over. Hope your cheque (from Nortel) clears soon.
November 10th, 2008 at 12:47 AM
[...] Canadian Personal Finance Opinions: Is it better to leave your money in your company’s pension plan than it is to take it out and invest it yourself? [...]
November 11th, 2008 at 12:11 AM
[...] Canadian Personal Finance Opinions: Is it better to leave your money in your company’s pension plan than it is to take it out and invest it yourself? [...]