Update on employer pensions and more in the November issue

The furor over the bankruptcy of Detroit has brought to light the most common fear of those approaching retirement: Is my pension safe? Our reader surveys show the Retirement column is the most popular piece of content in the magazine, which makes David Aston’s update on employer pensions a must-read for readers enrolled in corporate pension plans.

While there’s little reason to fear a catastrophic loss of pensions—Ontario retirees do have the Pension Benefits Guaranty Fund after all—it’s prudent never to put all your eggs into a single basket, whether it be a single corporate pension, government benefits like CPP or OAS, or personal savings. Rather, we should emulate a tricycle or a three-legged stool, spreading our retirement money over all three of employer pensions, government benefits and private savings in registered and taxable investment accounts.

Still, it’s wise to conduct a mental stress-test of your employer pension. If it’s partially funded and you were asked to get by on just 70% of the pension promised, how would that affect your retirement planning? Would you work a few years longer, thereby also boosting your CPP and OAS payouts and letting your RRSPs or RRIFs grow more?

For readers who manage their own money through self-directed RRSPs, this issue includes Norm Rothery’s annual Retirement 100 ranking of Canadian income-generating stocks. Once again, it’s nicely ahead of the indexes.

This issue also contains a feature by prize-winning contributor Preet Banerjee. His article on the difference between fee-for-service financial planning and fee-based (asset-based) planners also marks the launch of a new online project MoneySense initiated this summer. Previously self-directed readers have long relied on our online directory of “fee-only” financial planners to identify financial planners who charge by the hour or project.

Turns out “fee-only” is a misleading term, so we’ve substituted the term “fee for service” instead. These financial planners operate under a different business model than “fee-based” (i.e. “asset-based”) professionals who charge clients a set annual fee based on a percentage of client assets under management. (1% or 1.5% is typical.)

In August, we sent all planners in our online directory a questionnaire that clarifies the nature of their services and how they’re compensated. We now have two online directories: one for fee-for-service planners and money coaches who charge by the project or by the hour or other unit of time; a second for those who are mainly asset-based but offer the option of time- or project-based services. You can find both directories online at moneysense.ca/planners.

As the leaves start falling, Canadians are bracing for another winter. That makes Julie Cazzin’s feature on snowbirds a practical guide to following the sun or at least an escapist fantasy for those resigned to another winter of putting on snow tires and shovelling driveways. Happily, we’ll have many articles from Julie, as she’s spending a year in our offices while senior editor Romana King is on maternity leave. As regular readers know, Julie has been around since the inaugural issue of MoneySense and we’re pleased to be working with her full-time again.

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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