Canadian Personal Finance Blog

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.

Security of your financial information is essential, for many reasons. Identity theft is the main issue, in that if someone can get enough information to re-create your identity in some fashion and get credit cards (or worse) in your name, it will create huge issues for you.

Fraud is rampant in our society, and you must be diligent to ensure you are not a victim of this crime.

Paper Security?

The Shredder , as we spoke about on Tuesday is your security weapon for your printed records. Any old financial records must be destroyed (after they are no longer needed, please don’t just destroy records without knowing whether you need them any more), or stored in a safe place until they are no longer needed. The safest place I can think of for saving important financial documents would be either a Safety Deposit Box or a home safe (or strong box). This will secure your printed information.

What kind of information?

1. Old Tax Forms, with receipts and associated responses from the government
2. An inventory of your house with it’s estimated value (don’t store that in the house)
3. Wills
4. Birth certificates and such
5. Receipts from Credit Cards, Property Tax Payments, and such (I think the rule of thumb is at least 3 years of that data).

Computer Security

Damn right you need computer security .

Possible Computer Security Attacks

First whatever computer you are running your Financial Software tools on, must be secured with a password of some kind, that is common sense.

Next if the computer is connected to the Internet (which it most likely is), then it must also have Anti-Virus and Anti-Spy Software, or your data can be corrupted, or worse still your machine can be compromised by:

• Trojan Horse software that simply replaces parts of your system with it’s own versions which will look for information on your computer.
• Key Capture software that will simply steal your on line banking password, by logging all the keystrokes you type on your system and sending them to another computer

Yup, this can happen to you, and you need to protect your finances from this kind of attack. There are many others, I am just highlighting the major ones here (there are many, many more attacks out there).

Network Security

If someone can break into your home network, they can get onto your home computers and steal information directly from your system. There are some easy fixes to stop this (or at least slow it down).

If you have a home network and have a home router, please change the password on the router from the factory default and turn off remote administration! You may as well leave your front door open if you have this turned on, and I can’t tell you how many configurations I have run into that are set up this way.

Linksys, has changed their default configuration to FORCE people to change the default password, but on older routers, this is not the case. If you have a router and don’t know what I am talking about, you need to get someone in to set up your network security.

If you have a wireless home network, TURN ON WAP or some other wireless security, and turn off SSID broadcast. Look up War Driving and see what can happen to unsecured wireless home network configurations.

I had an old router who’s security was compromised, and I ended up selling Herbal Viagra for a while (I didn’t make any money on the deal, and I had my Internet access turned off for a week, and only got it back because I plead stupidity about how I had not configured security on my system).

Again, I am only highlighting a few areas, if you aren’t sure, consult the Internet or call someone who knows about this kind of stuff, don’t just hope it doesn’t happen to you.

Disposal

Inevitably you will want to dispose of either the backup media you have been using for your computer, or even the computer itself and this is where many people’s identities get stolen (if it can happen to F1 Driver Lewis Hamilton, it can happen to you too).

1. If you have old floppies around the house and you do not know what is on them, run a powerful magnet over them, or destroy them (with a hammer).
2. If you have been doing backups on to CD’s or DVD’s and you do not need these backups any more, destroy the media (my shredder actually chews up CD’s and DVD’s, so that is where they go).
3. If you have tape media, cut it up, burn it, whatever.

This media if just thrown out, is insecure and can easily be used to get information about you (especially if they have been used to back up your financial data).

The one computer point people don’t think of is disposal of your computer. Your computer has a hard drive in it, if you simply throw the computer out, the hard disk has all of that information on it about your finances, and whoever picks up the computer now has this information.

The best thing to do with an old computer is the following, remove the hard drive from the system, and physically destroy it. Either take it apart and smash the platters, go at it with a sledge hammer or something of the like.

If you want to give this computer to someone or donate it, you must find a shop that will WIPE the disk clean or buy software that will do that. This software will overwrite the data on the disks over and over with varying patterns until the only people who might be able to read it is the CIA or CSIS, you can then donate your computer (but I won’t, I will destroy the hard drive by hand, I don’t trust any of this stuff).

Never, ever give a computer away with the hard disk intact, if you have used it for any financial work at all. Even if all you did was order some stuff from E-bay on line, wipe it clean.

Am I Being Paranoid?

You are only paranoid if everyone is not out to get you (hey I am now the Big Paranoid Cajun Man), but seriously, securing your financial data both hard copy and soft copies and the associated software is the most important thing you can do for yourself, and your family.