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Malcolm

Driverless Snow Plow Plus topic drift into Pensions

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Good on ya for being responsible and knowledgeable enough to manage your finances.  I, fortunately, have done OK as well.

However...

99 percent of the population either can't or won't, and therefore put their trust in their companies and institutions.

As we have seen, it isn't that pensions can't be administered in a honest and profitable manner, it is that they make so much money they become a target for corruption.  After the huge raiding of pensions that has happened in the last couple of decades, nothing's left in the pot.  So now it is more profitable to force employees into DC pensions and to sit back and rake in fees on an annual basis.

 

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5 hours ago, deicer said:

A DC pension is better for the institutions because they can charge higher fees.

 

FWIW, fees in my TFSA are $6.95/year (1 trade). Fees in my unregistered account are less than $69.50/year (10 trades). How much does a DB manager charge? Check out how much it costs to manage the CPP now that they've hired a bunch of "professionals" to try to beat the market rather than just buy the index as was done previously. It's crazy expensive now! And the results aren't any better.

 

3 hours ago, boestar said:

On that note My DC I have now performs better than the DB where I used to be BY FAR.  Mainly because I get to choose the investment portfolio.

Likewise. And it's NOT difficult to do; although the financial industry does a good job at convincing people that they're too stupid to manage their own money.

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15 minutes ago, Malcolm said:

The major benefit of a well managed DB plan is that it pays out until you die. A DC on the other hand may not.

The major benefit of a well managed DC plan is that the equity doesn't die with you. A DB on the other hand, does.

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That's if you have enough that you can live off the returns without touching your stake.  How many average people, working 40-60 hours a week have the time and effort to work a portfolio like that?

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13 minutes ago, deicer said:

That's if you have enough that you can live off the returns without touching your stake.  How many average people, working 40-60 hours a week have the time and effort to work a portfolio like that?

Setting up an account with a transfer agent can be a bit of a PITA, but after that you can set up an automatic deduction from your bank account every month and let the dividends reinvest. There's ZERO fees to invest through a transfer agent, and you never have to spend a minute of your time "working" your portfolio after the initial setup. If you have enough capital, forgo the transfer agent and get a discount brokerage account instead. Fees will be < $100/year and time spent "working" the portfolio would be less than an hour a month. Seriously, how much time do you (the proverbial "you") think a professional financial advisor spends on YOUR (the proverbial "your") account every year??? If they're spending more than an hour a month, they're trying to increase their fees by churning you account. It's not rocket science, but personally, I'm glad so many people think it is. I own bank stock and love that people pay the fees. 😀

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37 minutes ago, Rich Pulman said:

The major benefit of a well managed DC plan is that the equity doesn't die with you. A DB on the other hand, does.

Not always, mine provides a pension for my wife if I die before her.  Mind you to get that I took a slightly reduced pension.

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24 minutes ago, Rich Pulman said:

Setting up an account with a transfer agent can be a bit of a PITA, but after that you can set up an automatic deduction from your bank account every month and let the dividends reinvest. There's ZERO fees to invest through a transfer agent, and you never have to spend a minute of your time "working" your portfolio after the initial setup. If you have enough capital, forgo the transfer agent and get a discount brokerage account instead. Fees will be < $100/year and time spent "working" the portfolio would be less than an hour a month. Seriously, how much time do you (the proverbial "you") think a professional financial advisor spends on YOUR (the proverbial "your") account every year??? If they're spending more than an hour a month, they're trying to increase their fees by churning you account. It's not rocket science, but personally, I'm glad so many people think it is. I own bank stock and love that people pay the fees. 😀

That is the strategy I have taken as well.  DRIP's are a good friend.  Banks are good friends 😉

My major point is, talk to the average Joe about this stuff and they think you're an alien.

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4 hours ago, Malcolm said:

Not always, mine provides a pension for my wife if I die before her.  Mind you to get that I took a slightly reduced pension.

Fair enough, but you’re still paying for the privilege of leaving your wife (assuming she survives you) a reduced pension. What happens if she dies before you? Will your pension go up?

Actuarily, a DB pension plan can only produce a greater income (per pensioner) for a given investment than a DC plan because it relies on the fact that some contributors won’t be around long enough to become collectors. Which side of that equation will you be on?

BTW, if you receive $50,000/year in pension income and your AEF friend receives $50,000/year in dividend income, who do you suppose has the highest net income?

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1 hour ago, Rich Pulman said:

Fair enough, but you’re still paying for the privilege of leaving your wife (assuming she survives you) a reduced pension. What happens if she dies before you? Will your pension go up?

So far on the winning side. 

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1 hour ago, Rich Pulman said:

What happens if she dies before you? Will your pension go up?

That is the question I asked when Scuba02 passed last year and "No" it does not go up. 

I too gave a bit of pension up so she would receive my full Airline pension if I passed before she did.

I don't know about the other 'trades' but the AC pilot  pensions do not increase each year. That growth was given up, forever I guess. when AC was against the ropes.

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14 minutes ago, Kip Powick said:

That is the question I asked when Scuba02 passed last year and "No" it does not go up. 

I too gave a bit of pension up so she would receive my full Airline pension if I passed before she did.

I don't know about the other 'trades' but the AC pilot  pensions do not increase each year. That growth was given up, forever I guess. when AC was against the ropes.

Mine was not indexed either.  Others have told me that when they die the funds in their non DB pension will pass onto their survivors.  Well, mine will go to my spouse and if we are both gone then frankly I DON'T care if the rest, if any balance remains, is gone. 

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