Canadian Personal Finance Blog

Busy week, so I am taking a break and publishing one of my favorite posts, about Risks and dealing with Risks.

Cancer, Now That I Have Your Attention

Yup, I am really talking about that, as Cancer’s ability to kill Canadians is rising, and Canadians are taking care of Cardiovascular issues more. Six out of every 10 deaths in Canada are caused by these two issues. Cancer is becoming more of a killer, is the bottom line for now.

So what the heck does this morbid topic have to do with Financial Planning issues? Maybe I’m just feeling morbid? No, but, if you look at this data, maybe you need to ask yourself the following important financial questions:

• Do I have enough life insurance so that my family can survive my death? Same question for your spouse too?
• Can my family survive financially a prolonged illness (as Cancer is capable of being)? Do I have any disability insurance?
• Do I have a will?
• Do I have enough health insurance to deal with a catastrophic illness?

If you are young and single, no it doesn’t matter that much, but if you are young and just married and planning on having kids, NOW, is the time to do this kind of stuff in place. No I am not selling insurance (and I am not advocating whole life insurance at all), but I am saying, go find out about what you need to deal with these concerning numbers about Cancer.

Hope for the best, and plan for the worst! (a wise saying).

Yesterday I received in the Canada Post a very interesting package from my family Doctor. I am one  of the lucky Canadians who actually has a family doctor that I can go see on a regular basis (and make appointments with). He is a good Doctor, and has served me and my wife well over the years.

The mailing outlined to me the fees that my Doctor will be charging for various services not covered under the Ontario Health Insurance Program, which included:

• Prescription renewal (over the phone) $11.72
• Back to work note  $14.45
• Wart Removal $20.00
• etc., etc., etc.,

I wondered why some of this stuff wasn’t covered under the OHIP program, but I am not going to  stop my Doctor from getting paid for services that he does either. If you are asking my opinion, this kind of extra charging is what is going to kill OHIP and I think all this should be paid for in some fashion as part of my medical taxes (but we can discuss that further later, just my opinion).

I then turned the page and saw that in fact this was not just a list of service fees, it was my Doctor offering me an extended warranty program (effectively). For a fee, I can either enroll myself and/or my family in the Coverage plan, and many fees would be waived.

Naturally with any good coverage plan there is the Basic or Standard Plan and the Premium Plan. In the Standard plan a few of the services are covered (mostly administrative), however under the Premium Plan I can get full coverage from all service fees:

• Basic Family $100
• Premium Family $130

Let me be clear very few of these services are actual medical procedures (Wart removal, uninsured vaccinations, TB Skin test and driver’s physical seem to be the only services that are Medical in nature, the rest are simply administrative services (notes, referrals, etc.,)).

I did have a “WTF” moment after I finished reading the letter (and then I read the front page which explained it all to me, yes, I should have read the letter in the order it was sent).  I am not happy about having to pay for all of these services, but this seems to be the Normal Business Procedure for Doctors these days, but now, my Doctor is branching out into the Insurance Business?

The business of running a Doctor’s office is not a trivial one, I fully agree, and there is an overhead involved that needs to be reimbursed in some fashion, but is this the best way to recuperate your operating expenses? None of these expenses would be covered by my Health Insurance at work (I don’t think, I should check), so I am the one that must pay for these services (if I need them).

What is next? My Doctor will start offering Health Insurance like Sun Life? Might not be a bad idea really, if he starts selling Health Insurance he’d make good coin there too.

Any opinions on what my gentle readers think of this program?

• Should I sign up for it?
• Is it justified that my Doctor offers this?

Yesterday I spoke of the Class Action Suit against my current employer by employees who were part of the Pension Fund that the company discontinued this past year. Needless to say the announcement of this class action suit has caused a great deal of discussion in my company and I find the discussion points fascinating.

As background in the mid-90’s there was a great deal of discussion about how the Defined Benefit pension plan was useless to younger employees because all it did was constrict their ability to put money in their RRSP’s due to a very high Pension Adjustment (I sat on a study committee about this topic), and so there was a push to introduce a new pension plan that was less restricting in terms of Pension Adjustments. A new pension was brought in, which many people adopted, but I just never got around to changing.

Two years later another “investors” pension came in, where you could try this new pension which had an even lower pension adjustment or you could opt out effectively as well. Again, more people moved around, but this time, I wondered, why the company wants me out of the existing Pension? My answer was, it must be good, so I stayed in it.

Last year it was announced that the original pension program was going to be stopped and capped (i.e. the value you have in it now, is not lost, but nothing new can or will be added to it), along with the cancellation of any retirement health insurance and other benefits that were part of this retirement package (many older employees were exempted from this decision, anyone 52 and older at the time is what I remember).

The loss of the pension and the health benefits is a significant kick in my retirement plans, and with this class action suit not including me, as I wrote yesterday, I must rework my retirement plans due to this.

The interesting discussions that have started in the company is, “Why would you trust the company to take care of you when you retire?”.  Many current employees are complaining that they aren’t part of the class action and are thus out in the cold, and their comments are being answered with the, “Why did you expect the company to honour their agreement?”, which seems odd to me.

Do You Trust Your Company Pension

I guess my first reaction to this is, why wouldn’t I? If when I got hired, I was told there was a pension program in place that I would be part of, after 2 years, and that it is part of my benefits package, why would I assume that this was something I couldn’t plan around?

If I didn’t think I was going to be at the company for a long time (which I didn’t at the time) I might make other plans for retirement as well (assuming the pension would be small) but I certainly wouldn’t assume that it would be unavailable or changed in the future.

In Canada (I believe) private pensions are governed under fairly strict rules of conduct and funding, and it is unlikely that a private pension would “collapse” and be unavailable due to mismanagement (I didn’t say impossible, I said unlikely), and they are run as a 3rd party Entity from the company (thus if the company went bankrupt, the pension shouldn’t be an asset that creditors could plunder to get their money back). If I am incorrect in my assumptions, I assume one of my readers will correct me here.

I made the assumption (after being at the company for more than 8 years) that the pension might be a part of my retirement plans, and if I somehow made it to retirement age at the company, it would be very nice, however with this change in the pension, that is no longer the  case (I sill have a great deal of equity, but I have lost benefits and growth of the fund).

I guess my question to my readers is, what do you think of this?

1. Is it fair for a company to change their pension system to help them survive financially? This pension plan was a heavy strain on the company’s capital spending.
2. Is it correct for an employee to assume their pensions are “safe” and will not be changed because of the agreement of employment they signed when they were first employed by the company?

I have my opinions (which I think you can guess by my writing), but I am always interested to hear what my readers think as well.