18. February 2010 by Dan Walkow, CFA, CMT.

More companies are trying to calculate the cost but do not and the reason  companies cite for having not calculated the total cost? Complexity.

There are several cost factors to an 401K Plan that may have a bearing on whether you should contibute the maximum or the minimum required for comany matched funding.

Check it out here.

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19. November 2009 by Dan Walkow, CFA, CMT.

The health of most pension plans continues to improve as stock markets recover, but it will be a long time before plan members in private industry can rest easy.The blow of last year’s investment losses is forcing more employers to question their ability to continue paying the same level or type of pension benefits in future.

Meanwhile, pensioners at companies other than Nortel Networks Corp., AbitibiBowater Inc. and others in bankruptcy protection could see their payouts reduced.

Even with this years stellar stock market, rally private pension plans remain seriously underfunded and the risk of pension payout reductions  poses a serious risk for pre and near retirees.

If you are a member of a defined benefit plan (where the company funds the pension) or a defined contribution plan (where the company and you contribute funds) you should review the status of your plan as to its health and capacity to meet future pension obligations.

 If you are concerned that the plan is at risk then you should consider rolling over your pension plan, 401K to a IRA in the USA or a LIRA in Canada.

Read the full story here.

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31. October 2009 by Dan Walkow, CFA, CMT.

Ottawa did not promise a guarantee fund in the pension-reform package announced this week. Such a promise might only have made matters worse.Instead, the measures unveiled by federal Finance Minister Jim Flaherty would inch companies that are under federal watch toward making their promise to employees of a future income in retirement more storm-proof, more reliable.

Ottawa will block banks, airlines, railways, telecommunications and other federally regulated companies from taking contribution holidays when their pension plans are less than 105 per cent funded.

It will block those companies from improving benefit promises when their plans are less than 85 per cent funded.

It will require the companies to top up within five years the plans they deliberately terminate, without the company going out of business, as the provinces already require.

Other countries have pension guarantee funds that cover employees of bankrupt companies.

Ontario also has a guarantee fund, such as it is. But the Pension Benefits Guarantee Fund (PBGF) also has no money.

So, in the last provincial budget, the government emphasized it has no obligation to make up the shortfall or extend loans as it has in the past.

The pension issue is front and center for most Canadians. If you belong to a defined benifit program you really want to understand the health of your plan and if it is a signifigant portion of your retirement wealth you may want to take proactive action. 

It does little good after the fact, ask any Nortel pensioner who are faced with tough decisions at this point in time. Read more.

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