Pension plans likely to come up short: report
Pension fund managers are rethinking the traditional way they manage money, with many conceding that they're unlikely to meet their return targets over the next five years.
It's not just stock markets failing to deliver the expected returns, defined benefit plans have also seen their liabilities soar due to falling interest rates, which are used to calculate the cost of guaranteed future benefits.
“They’ve lived through the last decade and they’ve lived through this environment of lots of volatility, low returns, interest rates going down and liabilities going up dramatically, and all of a sudden they’re saying, ‘We need to reconsider what we’re doing,’” Derek Young, president of Fidelity’s global asset allocation division told the Globe and Mail.
In the meantime, lacklustre results have put a staggering number of plans into a deficit position, leaving them short of what they would need to pay promised pensions in the future if they were forced to settle up today.
Even if pension fund managers are able to squeeze out better returns, employees are clearly going to be asked to help make up the difference.
Already feeling the sting of a 2-year wage freeeze, Ontario teachers, for instance, will soon be expected to kick in more towards their pensions as well. The Ontario Teacher's Pension Plan will be deducting an extra 1.1 per cent from teachers’ pay by 2014, the equivalent of $770 a year from a salary of $70,000.
At the same time, retirees will face 40% less inflation protection for pension benefits earned from 2010 to 2012, unless future investment returns allow for a catch-up adjustment -- which seems unlikely at the moment.
If you have one, are you being asked to contribute more towards your pension? Are benefits shrinking at the same time?
By Gordon Powers, MSN Money
Posted by: Steve | Oct 10, 2021 5:58:29 AM
Yes for years the government and pension industry have been telling younger people. Buy overvalued homes, Dump your life savings into pensions, Spend a fortune in borrowed money on a degree that won't be valued by employers and put off starting a family until your only options are IVF or adoption.
Slowly the whole mess is coming unravelled and the flimflam men and asset thieves are being seen for who they are.
But hey, for those who don't understand what's happening around the world with pension savings... INVEST MORE NOW ! (before the gig is well and truly up).
PS... There will be no secure pensions left for anyone under the age of 50. Sorry folks, that boat has sailed and the leading edge boomers have taken all they can with them.
Posted by: Heretic | Oct 10, 2021 10:44:27 AM
@ Steve
You got it all figured out Steve. I cant seem to recall my MP telling me to buy a bigger house but maybe I didn't get the memo. I do recall someone saying that you should save for the future so you dont have to live on the streets...hmmm maybe that was you Steve. No it wasn't you...you're just not that smart or maybe we havnt figured out the "flimflam" man like you have. Keep up the good work.
Posted by: sr | Oct 10, 2021 11:00:41 AM
That is it Steve continue the fight of generation and do what the bank and big company want. You forgot that it is the bank who create this mess and lowered the interest rate to favor themselves and the big company. The central bank save the banks and the big company do not want to pay the pension. These pension fund where paid for by the worker that receive lower salary to have it. And now they told you that is the fault of your father and you beleive them. Go study how the money is created and stop listening the propaganda of the media blindly!
Posted by: g | Oct 10, 2021 11:08:32 AM
Yo Steve, Looks like your ship has sailed! You need to get the facts right. Please stop blaming others for your personal failure to plan for the future. Remember this; If you fail to plan then you plan to fail....
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Posted by: We need help now | Oct 10, 2021 5:50:49 PM
Hey-Acne treatment!!You either missed the boat about what this blog is about or you are trying to get some free advertising for your zit cream!Back to the blog.Is anyone really surprised that all these "systems" are going to want you to kick more into the kitty? After all,it's not like you ever hear a report about things costing less.I'm sure more people have lost in the stock market over all than got ahead.Just like gambling.And you all know the government supports gambling too.Their lottery commercials fill the t.v. screen constantly.In between the casino and scratch ticket shows.But why is the public expected to act any different? The politicians will always get their golden pensions.Along with the big banks.They preach about public debt to offset the truth about what they have gotten us into.Canadian government has debt.The U.S. is now 15 Trillion in debt.Greece and many other E.U. nations are struggling with their debt loads.The answer always seems to be the tax payer should put out more.Not sure how that makes sense what with recessions and jobs at an all time low in a lot of places.We should just do what our grandparents and great grandparents did and just hide it under the mattress.At least that way you know you will have something down the road..........
Posted by: We need help now | Oct 10, 2021 6:05:22 PM
So does anybody have any input to this for saving that makes sense?
Posted by: We need help now | Oct 10, 2021 6:11:18 PM
Its easy to relay the problems on here,but does anyone have any good suggestions to help with all this?Steve???LOL
Posted by: greg | Oct 10, 2021 6:22:53 PM
I am not an expert in making money through investments and our government in Canada wants to make sure it stays that way so that the money managers looking after my so called pension plan can keep making $$$$ for themselves while using my money. They are not allowed to advise me on investment strategies but can only offer vague and confusing best practice methods of investing. It is much confusing for the investors let alone the poor blue collar worker. We are at the mercy of some misguided decisions that we chose enie meany miney moe.... and hope these managers funds make a few dollars. We are locked in for the long term which we are told is for our own good and it will pay off down the road. Well every quarter allmost we see our contributions evaporate. Question ... where does it all go and don't tell me its lost. It is only lost to ME. It does not burn,evaporate, travel into orbit or become a storm cloud. Someone has this money but it is not Me. Please Government if you want to manipulate what i can do with My Money try and protect it a little more and stop the lecalized theft.
Posted by: SP | Oct 10, 2021 7:11:02 PM
Back in August there was an article in the newspaper saying something along the lines of: "90% of the roughly 400 defined-benefit pension plans overseen by Canada's federal regulator are underfunded".
If that is the sorry state of the defined plans overseen by the federal regulators, what is the condition of the rest of them? Though that's only defined benefits, the other ones will be much better run and regulated than the ones overseen by the regulators
I am sure if everyone contributes a little more there won't be a problem in Canada.
We didn't have a banking crisis, we never have a housing crisis and Steve Harper will lead the economy to a best in the world position.
Posted by: peter t. | Oct 10, 2021 8:26:07 PM
About a month ago our "expert" minister of finance in Ontario was quoted as saying "we have absolute control of the ONTC pension fund"....now THAT is SCARY...Ontario Liberal government have a 15billion dollar deficit !!!
Posted by: ray larder | Oct 11, 2021 12:03:57 AM
I just want a job , I hate this welfare business.
Posted by: Mr. Negative | Oct 11, 2021 10:10:07 AM
Here is my advice, don't rely on anyone or any system to financially protect you. My dad always said " I am my own penision plan" He never believed in the system or anything the government/banks promised. He is an average working class man and saves every penny to hopefully one day retire.
Be your own financial planner and don't rely on the crooked financial system to bail you out later. Some will get a good pension, some won't see a nickle. Just a sign of the times.