Op-Eds
Published in the Financial Post on Dec. 13, 2011
By Alexandre Laurin and William Robson
Suppose a Canadian not employed by the federal government wanted to set aside a nest egg that would provide retirement income like that promised to a federal employee. He or she would invest in a security that is backed by taxpayers and indexed to inflation. Such a security exists: the federal government’s real return bond (RRB). The amount this person would need to put aside to achieve his or her goal — leaving aside retail costs and ignoring for the moment the tax limits on individual saving that would obstruct the project — would be a function of the yield on the RRB.
On March 31, 2011, the RRB yield was not the 4.2%…
Published in the Financial Post on June 11, 2011
By William B.P. Robson
The recent economic crisis highlighted the weak foundations of defined-benefit (DB) pension and social-security schemes around the world. The Canada Pension Plan appears to have weathered that storm well, and some are advocating an expanded CPP to alleviate risks of low incomes in retirement. Proposals for a bigger CPP that talk of guaranteed or “fully funded” benefits may mislead distressed savers, however, since the CPP offers target benefits, not guarantees, and proposed increases would not be fully funded as most people understand the term.
Treat the CPP as a DB plan making firm promises, and it would need investment returns materially…
Published in the Financial Post on April 8, 2011
By Finn Poschmann
When Jon Kesselman of Simon Fraser University and I published "A New Option for Retirement Savings: Tax-Prepaid Savings Plans," the roadmap for what was to become TFSAs, we had high hopes for tax free savings accounts. I doubt we would have believed anyone who told us that in less than 10 years' time nearly five million Canadians would hold these accounts, but we would have agreed that if you built it, they would come -and Canadian savers did. For folks in the tax policy business, TFSAs are a grand slam.
TFSAs, of course, are the arithmetic nearequivalent mirror image of registered retirement savings plans, and appeared in their current form courtesy…
Published in the Globe and Mail on December 17, 2010
By William Robson
Canada’s finance ministers will gather in Kananaskis, Alta., on Monday with Canadians’ retirement prospects high on their agenda. Post-crisis anxiety has fed expectations that the ministers will announce something big – mandatory accounts, perhaps, or the supersized Canada Pension Plan being pushed by some provinces and unions. Federal Finance Minister Jim Flaherty was right to dampen expectations on that front on Thursday. Different Canadians – modest or middle-income, large-business employees or self-employed, young or old – have different needs. Upgrading our retirement prospects requires adjusting with screwdrivers, not sledgehammers.
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Published in the Globe and Mail on April 19, 2010
By William Robson
MPs’ pensions are again in the news. No wonder: A recent report on their plans over the year to March 31, 2009 – a period when interest rates fell to unprecedented lows, the stock market lost a third of its value, and most Canadians’ retirement dreams took a body blow – showed an 8 per cent increase in their accounts. The truth, however, is weirder, and worse. These accounts are a fiction. Extraordinarily rich and completely unfunded, MPs’ plans are instructive examples of the worst in Canadian pension arrangements.
The spectacular performance suggested in the annual report tabled in Parliament would have been welcome if it had been real.…
