Stop fear-mon­ger­ing about pen­sion plans

The Compass - - OPINION - Lloyd Bar­rett writes from Bay Roberts

As some­one who works in the in­vest­ment in­dus­try, I take great ex­cep­tion to the state­ment by the pres­i­dent of the New­found­land and Labrador Pub­lic Pen­sion­ers As­so­ci­a­tion, Ralph Mor­ris, warn­ing in­di­vid­u­als to guard against “snake oil sales­man” tak­ing pub­lic ser­vice pen­sion­ers’ pen­sion plans.

I am no snake oil sales­man and, in fact, I would sug­gest that the vast ma­jor­ity of my col­leagues are car­ing, con­sid­ered pro­fes­sion­als who have noth­ing but the best in­ten­tions for their clients and po­ten­tial clients.

What Mr. Mor­ris is re­fer­ring to is the op­tion that pub­lic ser­vice work­ers have to take the com­muted value of their pen­sions when they ter­mi­nate their em­ploy­ment, in­stead of tak­ing the pub­lic ser­vice pen­sion that is avail­able to them when they re­tire.

Essen­tially, the for­mer em­ployee takes his/her money, and the em­ployer’s share, and trans­fers it to a ma­jor fi­nan­cial in­sti­tu­tion. This is a valid op­tion that all pub­lic ser­vants should con­sider; es­pe­cially in light of what ap­pears to be ma­jor changes com­ing to how cash-strapped gov­ern­ments ev­ery­where are treat­ing their pen­sion obli­ga­tions to their em­ploy­ees. Ex­am­in­ing all op­tions is good prepa­ra­tion - “good home­work” some would say.

When an in­di­vid­ual de­cides to take the com­muted value of their pen­sion, all the op­tions that are avail­able to them are clearly out­lined by the Pen­sions Di­vi­sion of this prov­ince. In­cluded in this doc­u­men­ta­tion is the fact that the pen­sioner would no longer be el­i­gi­ble for med­i­cal ben­e­fits if the com­muted value is taken.

What Mr. Mor­ris fails to men­tion are some of the ma­jor ben­e­fits of ex­plor­ing the com­muted value op­tion, such as con­trol­ling in­vest­ment op­tions your­self and re­mov­ing your pen­sion ben­e­fits from the whims of gov­ern­ment.

Com­muted value is not for ev­ery­one. The value of the in­vest­ment does, in­deed, vary and the value of your re­tire­ment in­come can change from year to year. It is, how­ever, a valid al­ter­na­tive, one that should be con­sid­ered by many re­tir­ing em­ploy­ees.

Fear-mon­ger­ing, such as ex­hib­ited by Mr. Mor­ris, does no one any good. In­formed de­ci­sion-mak­ing is the an­swer. Of course, didn’t we all know that al­ready?

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