Canadian Personal Finance Blog

One of the options I have as part of my severance is what to do about my pension.

My employers pension was a Defined Benefit (up until January 1 this year), it is now a different plan (and my old pension has been capped).

The options I have are:

1. Leave my money in my former (or soon to be) employer’s pension scheme and start drawing from it at either age 55 or later.
2. Take the money out and put it into a Locked In Retirement Account, or at least the portion that the government allows.

As background my current employers pension plan is under funded, by a fairly large amount. I also have passed a point, so that I can draw from the pension when I am 55.

The question now is, do I leave the money in, or take it and run. My wife and I have decided to take the money and run, just for safety sake, given rumors I am hearing, and the fact that the fund is under funded significantly.

I am curious to hear if there is anyone out there that has gone through this and what they did in this situation. Either comment, or if you want send me an e-mail at bigcajunman AT gmail.com, if you don’t want to publicly make any statements.

Fruitful Bank Trip

My visit to the bank was quite fruitful.  I arranged to get money out of an RESP (evidently there are two ways of doing it):

• EAP which takes out the CESG portion of the RESP
• The other thing that takes out the other part, which I did

Tax implications? No bloody idea, I’ll figure that one out in February.

Opened a self-directed RRSP with TD, and ensured I could get at their E-Series index funds (another point well made by the Canadian Capitalist).

Opened a Locked In Retirement Account, well sort of did, filled in the forms, yet another system in TD which is all paper based. Found out from our service rep there are 5 different systems she deals with (at least) and none of them talk nicely to each other and many are still mostly paper based. Maybe TD can use their HUGE profits to fix that?

Finally, I got free banking for a while too. This time I phrased it in a way that made our rep happy to give it to us, and thus I don’t have to pay for banking for a while longer.

I love it when a plan comes together!

Owe for 3 on Stocks

After bad mouthing Scotiabank, BMO and Nortel yesterday, on Wednesday they all rebound back…

• Nortel up 5%
• BMO up 3.6%
• Scotiabank up 2.26%

I can sure pick them, can’t I? I have pointed out this is NOT where to get your hot stock tips, have I not? One day does not a trend make, and given most stocks were up, could be just a “follow the leaders rally”, but again, don’t take my advise on that one.

Humor

Here is a rhetorical question for the lady readers, would you go to LaSenza to a “Sports Bra Blow Out” sale? Something about that advertising doesn’t sound right to me.

BMO Numbers Stink

Is now the time to buy then? I have no bloody idea, but it is an interesting question to ask.

BMO announced their numbers on Tuesday Morning, and they were crappy. Not crappy like Nortel numbers (which are really crappy), crappy where they didn’t make enough money to make analysts happy. Does this mean we should all run out and buy stock because they did such a bad job? OK, maybe I phrased this incorrectly, but that is basically what I am hearing from some analysts, “Buy now because the stock is lower, and it is a stock with good solid foundations”. 

If a company performs badly and puts out bad numbers, and the stock drops in values, I should buy the stock? This is an over simplification, but that is some of the advice I have heard, and that I heard during the Tech Bubble explosion too.

I have never really figured out when is the best time to buy stock, so I just buy when I have the money and hope for the best. An odd tactic, but that is the way it works for me.

Scotiabank Sucks Too

Scotiabank announced at 2:00 PM and their numbers did not make analysts dance for joy either. Should we go out and buy Scotiabank now too? Don’t ask me, I just report this stuff, should you invest in a company that had their profits drop by 2%? At least they have profits, is one way of looking at it.

Today Bank Attack

Today, I walk back into my bank and will attempt a few precise financial manoeuvres:

• Set up an RRSP for me
• Investigate how to set up a locked in retirement account
• How to extract money from an RESP, which is interesting
• Try to get no fee banking for another year

I want 4 out of 4 success, I’ll keep you all posted.

After watching athletes work hard to reach their goals, I feel invigorated to attempt new financial goals of my own (OK, that’s pretty lame, but I couldn’t figure out any other way to spin the Olympics into a post over the past two weeks).

Glad to see the Canadian Athletes compete and do the Canadian thing and not win too much and be boastful, we are a very polite nation.

Coming Financial Decisions

The coming week is an important one for me financially because I must make key decisions on how much, and when my severance package is to be executed, and what to do about my pension (whether to leave it in my company’s badly underfunded pension (last time I heard it was funded up to about 87%)) or take the money and run, with some severe tax implications)).

I am meeting with a Financial Planner today (who is also a Chartered Accountant), to hear his ideas on how to make my severance package run as long as it can, and to maximize it’s financial impact for me. Ideally, when I find a job soon, I can simply use it as a debt destruction vehicle, but I must plan in case I have issues finding a job, as well (remember Hope for the Best, Plan for the Worst).

Mostly I am meeting with this gentleman, because it is free, as his services are being paid for (evidently he charges $175 an hour normally) by the Right Management team that I am dealing with. I’ll listen to anyone for free, doesn’t mean I will necessarily follow their advice, but I can listen easily for free.

Interesting questions that may come up:

• Is it better to pay down debt quickly thus having less to deal with, or plan to simply service debt so that my liquidity stays sound?
• Is it worth working at Home Depot in my spare time right now? The easy answer there is NO, not this year, because whatever I earn, I lose about 1/2 of, and we should be able to budget well enough to last that long.
• Should I cash out of my company’s pension plan? Do I think they will exist in twenty years, and will the pension fund ever get back to 100% funding is the real question.

What other questions maybe need to be asked? I am open to suggestions here folks, any good questions, please pass on in the comments section.

Should be an interesting visit.