The great pension debate

When it comes to financial independence, few topics are more relevant than pensions. On Wednesday, I’ll be one of four observers of the pension scene in a debate sponsored by Walrus Magazine. It’s at my alma mater, the University of Toronto at the Hart House Debates Room at lunch, with Newstalk 1010’s John Tory as moderator. Details here.

The topic: Be it resolved that Canadians are incapable of saving for their retirement needs alone.

Arguing in favor of this proposition is Jim Keohane, president and CEO of HOOPP, the Healthcare of Ontario Pension Plan, and consultant David Herle.

Arguing against is myself and Malcolm Hamilton, the veteran Mercer actuary and one of the most quoted retirement experts in the country.

Also participating is host Shelley Ambrose, co-publisher of the Walrus Magazine. There are also two “provocateurs” — certified financial planner Alexandra Macqueen coauthor (with Moshe Milevsky) of Pensionize Your Nest Egg, plus Aon Hewitt vice president Allan Shapira.

While I’m not privy to the arguments HOOPP will be making, I can say they’ll “mount a suggestion that traditional Defined Benefit (DB) pensions are the option most Canadians need because statistics show most people simply aren’t saving enough money for their retirement.”

For the same reason I don’t have access to the argument being made by the “other side,” I can’t really divulge too much of our side of the debate either. Suffice it to say I believe I’m on the side of the angels and happy I’m not debating AGAINST Malcolm. In any case, Malcolm’s views generally have been articulated often in the pages of MoneySense magazine. He even contributed the odd column in the early days of the magazine.

Over the years I quoted him at the Financial Post, the gist was often that saving outside RRSPs was “futile” because of the heavy taxation of investment income; that lower-income people don’t need to save much for retirement at all because the government provides a comfortable income in the form of CPP, OAS and/or GIS payments once you reach 65 (or 67).

For years, he thought higher-income people needed more RRSP room or Registered Pension Plan tax assistance in order to get to tax-assisted levels comparable to the UK or USA. Since the TFSA came along in 2009, this has been somewhat alleviated and Malcolm has argued that low- or middle-income Canadians that the industry urged to invest in RRSPs might better direct their limited savings to TFSAs in order to preserve or maximize those same generous government benefits. He’s also famous for saying that once you pay off the mortgage and raise a family, you may only need to replace 50% of your working income in retirement, in contrast to the 70 or 80% that financial planners and the industry often argue.

Oh, and attendees will receive a “loot bag” that includes the latest issue of the magazine, a certain book on financial independence, and possibly other goodies I’m not privy to. It should be an interesting event!

Preet Banerjee and I chat about Findependence on his Mostly Money, Mostly Canadian podcast

Meanwhile, for more on the concept of “Findependence” and MoneySense you can listen to a 15-minute interview I did last week with Preet Banerjee on his new Mostly Money, Mostly Canadian podcast.

You can find it directly here or for some more background and an amusing ancedote about “guerrilla frugality” on my personal blog here.

About Jonathan Chevreau

As MoneySense’s Investing-Editor-at-Large, he is also author of Findependence Day and co-author of Victory Lap Retirement. Reach him at [email protected], where he is the founder of Financial Independence Hub.

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