Canadian Personal Finance Blog

Show me the Money?

For those who have been reading for a while, I had to decide about whether to leave my pension in my former employer’s pension fund (which is under funded) or to take a cash settlement and transfer most of the contents into a Locked In Retirement Account (LIRA) (and take the remainder as a cash settlement).

I got a lot of advice from different folk about whether I felt confident enough to invest the money wisely enough to mimic or improve on the growth I might get in the Pension fund, however, in the end I just did not trust that my former employer will:

1. Exist in 5 years
2. Whomever buys, or takes over them will not replenish the pension fund short fall

So I have decided to take my money out, and move it to a LIRA (and a small portion to a TFSA and whatever else I can into my RRSP). 

I tried to show as much diligence as I could to the documentation that I had to submit, because the default answer if I do not submit my request in time is for the company to keep the money in the (under funded) Pension. I had the Investment Councilor at the bank that set up the LIRA, check over to make sure all the forms had the correct info and then I had Mrs. C8j check everything over as well. No point in making this big a decision and not being careful with the forms.

I mailed the forms using Registered Canada Post delivery, so I have a tracking number and will know when then the forms were delivered as well (can’t be too careful here). Paranoid? Maybe, but again, it would be imprudent to trust regular mail with these forms.

$20 More on Plumbing

I went out and replaced the fill valve on the water closet, turned the water back on, and so far so good. I am still a bit concerned that the amount of water that leaked into our ceiling, seemed more than a leaky valve might create, but my suspicion is this is a problem, but it may not be the ONLY remaining problem. It’s good that Home Depot is only a 5 minute walk away.

Advent Financial Calendar Box Day 5 

We continue the Safety Deposit box in a box idea, but in that box is an official looking piece of paper, you open it to see it is your Will.

Do you have a Will? Is it up to date? Now is the time to think about updating or writing it, using either a Lawyer or some of the Will at Home kits that are available out there. If you are single, a Will is not as important, but if you have kids and/or Property or substantial holdings, you must have an up to date Will, or your wishes after you are gone will not be followed.

Is it Safe?

One of the most terrifying movies I have ever sat through is the Marathon Man which stars Sir Lawrence Oliver as a crazed Nazi dentist hiding jewels and Dustin Hoffman as a pawn in the entire scheme, and in this movie there is a set of scenes where the crazed Nazi dentist torments the Dustin Hoffman character with a hobby drill, drilling his teeth and the only question he keeps asking is “Is it safe?”. Just recollecting this scene puts chills up my spine, but it is actually a good metaphor for the current financial crisis.

Is it Safe?

At the macro level governments have no idea whether “It is safe” and they really don’t know what the answer to the question is, but in fact this movie is an even stronger metaphor at the Personal Finance level.

Is it safe? What does that mean? Is our money safe? Is our job safe? Is our lifestyle safe? Is what safe? Is our economy safe? Is my credit safe? Is my RRSP safe? Is it safe to retire? Is my house safe? (to paraphrase a frantic Dustin Hoffman), the question without context is very hard to answer, and there is the harder part, what is the answer? Is it safe? I have no idea, but I think we are all fighting to find out “Is it safe?”. I hope we are safe, but I guess we really won’t know what the question means and what the answer is, for a while.

Are you safe?

Pension Info Arrives

My final pension settlement has arrived from my former employer, which makes me feel a little more safe. I must now answer the question, “Is it safe(r) to stay in the pension or go to the LIRA?”, I think I know the answer but I will keep my readers posted.

Montreal Grand Prix Dead

One of the major economic events in Montreal every your for a while has been the Grand Prix of Canada held in Montreal, however, this year the F-1 board decided to not return to Montreal for 2009. The Quebec Government has been attempting to change Max Mosely (no comments about Nazis and prostitutes) and crew’s mind, but Jean Charest has said he has no more economic cards to play. I enjoyed the Grand Prix and am an F-1 fan and am saddened to hear of this turn of events. This will have a serious impact on the bars in downtown Montreal that relied on the Grand Prix to draw customers.

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).

Good question after the past couple of weeks, asking that question might not be the question to ask, the question might be, “How bad is it going to be this week?”, especially on the financial markets. I have no advice or wisdom for you right now, I simply watch and ask questions and simply react to what happens. Maybe it’s best to follow the Lawyer’s credo, “Never ask any question you don’t know the answer to before hand”.

Cash is Still King

On the personal finance side (micro) we (Mrs. C8j and I) continue to live with the credo “cash is king” and continue to keep our credit cards out of our wallets. How long we can keep this up, I don’t know, but for now, it is important not to allow any credit “build up” to occur thus causing financial haemorrhaging, as we have seen in the past.

More cash is appearing from transferring work related savings vehicles into our own RRSP and savings vehicles, so again, we have decisions to make about WHAT to invest in and WHEN to do that investing. For now, I am in a “wait and see” mode, since I still have little confidence in the current economic apocalypse.

Top 100 Employers in Canada?

Given I am still looking for a job, folks send me interesting information, and one I received from my mother. Evidently there is a company that rates the Top 100 Employers In Canada, with details about every company and why they are such good companies to work for. The information is interesting and is mostly on the “macro” level (i.e. benefits and such), and not much about the work environment itself, but still very useful information to have when searching for a job. Strangely my former employer is not mentioned, curious.

I am not that picky right now, I’ll take work, and not worry as much about whether there is subsidized maternity leave (given it doesn’t really matter to me either).