Pension or LIRA? A decision (redux)

One of the few good (read very lucky) decisions I made was to remove my money from the Nortel Pension and put it into a LIRA for holding purposes after I got laid off in 2008, and this post, I wondered (aloud), whether I had made the right decision, but in hindsight it was an astoundingly good decision (i.e. Pension or LIRA ).

Show me the Money?

pension or LIRA

Now that is some Ca$h (thanks to Bank of Canada)

For those who have read 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 rest 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 part to a TFSA and whatever else I can into my RRSP, thus the pension or LIRA -> LIRA).

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.

Luckily the forms got there when they did, and I got the money out a few weeks before the Pension announced a large short fall and they started discounting all pensions. As a bit of background info, here is what Nortel’s demise looked like graphically.

Death of Nortel

Graphically, the Death of Nortel


Clean Up Old Accounts (redux)

I have covered this topic before, that if you have old savings vehicles hanging around, you need to consolidate or clean them up, there is no point in leaving them around, because you might end up forgetting things are there. This is also true for old credit cards and such too, clean those buggers up, or they can be easily hijacked and you will have a world of headaches from them.

1937 Series $20 – front / Billet de 20 $ de la série 1937 – recto

1937 Series $20 – front ; Now that is some VERY old accounts! (compliments the Bank of Canada Archive)

For me, I am attempting to clean up a Locked In Retirement Account, which I opened in 1990, long before I knew anything, about anything financially, and I was bamboozled (or hood-winked, not sure which is a better adjective). I had money that was in a DPSP from Nortel, and a Life Insurance guy who worked with SUN Life convinced me I should put that in an LIRA. I later learned that was false, I could have simply transferred the stock into an RRSP and be done with it, so I ended up putting about $2000 in there, in some Sun Life Mutual Fund.

Fast forward to last year, and I attempted to use those funds to buy into my Public Service Pension, however that failed, a valiant try, but sometimes even when you think you have filled in the forms correctly, you can end up with a resolution not to your liking.

This year, I decided that account is going to move to somewhere where I felt I had control (i.e. my TD Waterhouse account), and as I was in the bank for yet another RESP withdrawal visit I decided to try yet again to extricate these funds from Sun Life, and I think I have finally succeeded. The funds have been transferred out of SUN Life, I received confirmation of that and hopefully they are now with TD, but I must go  visit my TD branch for final confirmation.

How much did that investment grow? I now have $3000, so it grew almost 50%, except that was over a 22 year period, so not the greatest of growth, either. I suppose I shouldn’t complain, it could have just as easily been worth less than $2000, but at least now I will be able to invest the money in Index Funds that I understand and like.

If you think you have old savings vehicles with old employers or previous banks, get a handle on them, it’s your money, so you should be controlling them.

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ETFs are the Devils Work

OK, I am tired it’s been a long week at work, and for some odd reason there is a theme in my random thoughts postings and it has to do with Exchange Traded Fund (ETFs), and I do like a nice title.  These cheap(er) versions of mutual funds or Index Funds have been getting a lot of press lately in the legitimate press and in the great financial blogosphere as well.

ETFs Are Evil

OK, I couldn’t resist again, I do actually own a few ETFs, if anyone is interested:

  • The Canadian Capitalist continues the blasphemous commentary in his Top 5 Investment Deals where he mentions the Devil’s Spawn the ETF again!
  • The Larry MacDonald another Financial Infidel speaks of these unholy investment vehicles in Mutual funds vs. ETFs, may he burn in hell for his sins against the Financial Industry!
  • Then another Financial Demon Preet at WhereDoesAllMyMoneyGo has the audacity to write Hate Mail to the Mutual Fund Dealers Association, UNCLEAN I declare him (financially speaking).
  • Michael James (known Financial Goblin) then asks the excellent question Why Do Economists Use a Bell Curve if it Doesn’t Apply? I always liked double bell curves, but then again, I also liked Poisson distributions as well.
  • Rob Carrick had some excellent advice for Parents of kids going off to University who might live off campus, Get Renters Insurance, or risk the consequences (think of a kiddie pool full of half melted ice being turned over in your son’s 8th floor apartment, do you want to pay for that? EVIL!).

Long weekend ahead folks and I plan on enjoying it, so don’t look for any new posts until Tuesday.

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Sometimes it’s better to be lucky

Another sad look back on the events that ended my career at Nortel, and it’s impact on me and more importantly on many other folks (as I got out relatively safely, only losing a lot of on stock and options). This was written on the day that Nortel declared bankruptcy (which at the time, folks said was only temporary, it wasn’t), and my raw feelings on that day, about how it is better to be lucky, in life.

With Nortel’s bankruptcy protection announcement yesterday there is a sickening scenario for some very unlucky folks (many I know personally). Today’s title comes from one of my favorite expressions, “Sometimes it’s better to be lucky than talented”, and that is how I feel right now.

I  am OK

Nortel it is better to be lucky

Nortel Once a Giant Now Deceased High Tech Firm

As background let me outline what has happened to me, in terms of my lay off.

I was notified of my redundancy on July 30th of last year, due to restructuring. This meant that for the next TWO months I would still be on the Nortel payroll and I would have access to my office and such and I could look for jobs inside of Nortel. On the 30th of July I was also given the specifics of my severance package (I cannot disclose the terms of this agreement).

As part of the severance procedure, I had a choice  to either take my entire severance payment (lump sum) on September 30th or I could take some then and delay some until January 2nd of this year. I did split the lump sum payment and received part in September and part in January.

I also was given the choice to opt out of the Nortel pension plan, and I did so, and I received those funds just before Christmas as well.

All this means Nortel owes me no more money (there is a small caveat to this, which is not worth mentioning), thus Nortel filing for bankruptcy protection has no direct effect on me financially (hence to comment about better to be lucky).

Some are Not So Lucky

For those who were notified of their redundancy after November 16th 2008, they now are in limbo (or possibly hell, I am not sure). I have heard from one former associate that his severance package is now “gone”, because he has not received it yet.

I do not know if this is just hearsay, rumor or fact, but it is a possibility. The severance package becomes part of the liabilities Nortel owes, and it may well be that these severance packages are now simply “unsecured debt” and must be dealt with as part of bankruptcy protection.

If these folks do not get their packages this would be diabolical (in my opinion) and I really hope this is not the case, but I suspect it is a real possibility. (it was, and many folks got little or none of the money they were owed).

As for pensioners (retirees from Nortel) I do not know where this leaves the pension plan, given it is underfunded and the repayment of the short-fall must be dealt with as part of the bankruptcy protection plan as well.
In terms of investors, anybody who still holds stock in Nortel is out of luck, the paper is worthless (at least that is my guess, I am willing to hear arguments to the contrary) and the Bond holders are now part of the bankruptcy protection plan as well.

Bad Day Financially and Other Ways too

A sad day for me, seeing a company that I worked for and enjoyed most every day there take another step toward oblivion, and now many of my co-workers and former compatriots are in a “bad way” thanks to some very questionable decisions by the Senior Management Team.

I remember I was at a GIS where the present CEO Mike Z. was attempting to put a friendly smile on the capping of the pension scheme, and a former co-worker went up to the mic and berated the CEO and asked the pointed question at the end, “… I don’t know how you sleep at night!”, I wonder how Mike Z. is sleeping these days?


My TFSA has No Fees, But Yours Might

I got my official “welcome to your TFSA” paper letter on Friday from TD Waterhouse and it cleared up a few misconceptions that I had about my account (and my wife’s account). The letter was very cordial and such but it carried an important statement on it (and I quote):

More Ways to Save

* Register for our paperless record keeping solution — TD Waterhouse eServices online trading confirmations, monthly statements , and tax documents

or when,

*Your total household assets (1) with TD Waterhouse Discount Brokerage equal $100,000 or more

(1) Household accounts are defined as those TD Waterhouse Discount Brokerage accounts for clients living in the same household with the same address. Your must advise TD Waterhouse Discount Brokerage of those multiple account relationships.

Interesting statement that you must take into consideration before you open your account with TD Waterhouse in specific or any other financial institution in general.

The paperless records keeping seems easy enough, but I always like getting paper copies of transactions just so I can get that tangible feedback from the system. Thanks to my LIRA I fall into the “you have a lot of money with us so do what you want” part of the statement. 

So I have a no fee TFSA? Not positive, I will be phoning TD Waterhouse on Monday just to confirm that one.

I’ll comment on the employment figures announced last Friday tomorrow.


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