Maybe You’ll Die Young

That title’s gotta be in the top 10 for the biggest bummer titles of the whole year. I’d be depressed, but I’m full of endorphins after pleasuring myself. That’s a death joke and a masturbation joke and we’re not even done the first paragraph. You know where to find the ‘back’ button.

Anyhoo, there are hordes of you out there who just aren’t bothering to save for retirement. Before you all get mad and egg their houses, they have a legitimate reason for their lack of planning ahead. They work at one of those places that provides employees with a pension plan.

A quick primer on pensions, for those of you unaware. There are two kinds, the best is called a defined benefit plan, which pays each eligible employee a certain amount per month based on certain factors, like the time of tenure and how much money they made. The lesser pension plan is called a defined contribution plan, which is basically a work sponsored savings account. All that’s guaranteed is the amount of money accumulated in the plan. Once you retire, getting paid a set amount every month is more attractive than bingo night at the old folks’ home.

For those of us unlucky enough to not get one of these pensions, not to worry. Every government in the industrialized world has a pension plan for their citizens. In Canada, someone who paid into the plan for years is looking at a retirement benefit of about $1600 per month. That ain’t bad, but you’re sure not going to Branson, Missouri very often on that kind of scratch. You’re either going to need some retirement savings or some sort of pension to make up the difference.

Up here in Canaduh, by far the best pensions are promised to government workers. One of the largest pension funds in Canada is the Ontario Teacher’s Pension Plan, which has assets of over $117B. This thing is more massive than my penis, which is literally BIGGER THAN YOUR HEAD. Teacher’s (as it’s commonly known) used to have large investments in CTV and the Toronto Maple Leafs, as well as owning some famous downtown Toronto real estate. Hey, when you have $117B to invest, you can buy some pretty cool stuff.

This plan is huge, it’s essentially co-sponsored by the Government of Ontario, and oh yeah, it has $117B worth of assets. You should probably just drop everything and become a teacher for the gold plated pension, right? Hmm… maybe not. It turns out the Teacher’s pension plan is a little short. Like $9.6B short.

Whoops. Hey, at least it’s an improvement from last year, when the plan announced they had a $17.2B shortfall.

Let’s take a look at some American pension plans. For instance, say you were a firefighter in a random city, like Stockton, California. Or San Bernardino, California. Or maybe Birmingham, Alabama. How would your public pension be if you spent your career working for one of those cities? Well, chances are it would be more dead than Grandpa’s penis without Cialis, since each of those places has declared bankruptcy in the past 12 months. Pensions have been slashed to almost zero. Yes, that can happen when the city that guarantees the pension goes bankrupt.

Remember when General Motors and Chrysler went bankrupt, and almost took Ford down the crapper with them? Sure, there were all sorts of things that brought them down. They were getting their ass kicked by foreign competition. They had too many gas guzzling SUVs, vehicles that consumers don’t really want anymore. They were also bloated with debt. On top of all that, these companies had made huge pension plan promises to their workers, pensions that eventually became perhaps the biggest factor leading to their financial ruin. 30 years ago, a pension from General Motors was as good as gold. Now? Not so much.

Pension shortfalls are everywhere. Air Canada’s pension plan is short $4.4B, probably because people would rather fly in a Soviet made helicopter. Boeing recently needed to inject $1.5B into their pension plan, causing the company to miss earnings expectations. The City of Regina is currently dealing with a $246M pension shortfall. One of their proposed solutions is to raise contributions to a whopping 45.5%. I know you don’t believe me, so here’s the link. Hell, even NASA is looking at a shortfall of over $500M. They can send a man to the moon, but they can’t even get pensions right.

It didn’t used to be this way. During the bull market of the late 1990s, company pension plans were flush with cash. Companies like General Motors used to routinely take the extra money that the pension made (as in, any money the plan made that was in excess to what it needed) and report it as part of the company’s profits. Sure, it’s kinda sneaky, but it’s all acceptable under accounting rules.

Prolonged low interest rates have hampered pension fund returns for years now. Considering the record low yields we’re currently experiencing, these challenges are here to stay for the foreseeable future. Everybody and their dog (especially their dog) are predicting subpar equity returns for the next decade or so. That’s not good for your pension either.

Plus, we have a demographic challenge. Pensions were pretty safe when there was a giant glut of baby boomers paying into them and hardly any old people collecting. As more boomers retire in the next decade, your contributions will help to pay for your parents’ pension. Don’t let them say you never did anything for them. Maybe you can guilt them into buying you some crap.

The company I work for used to offer a pension plan. It’s been closed to new employees for years now, unless you get promoted beyond whatever it is I do. But even if they did offer it, I’d still be contributing money to my retirement. These pensions aren’t guaranteed. Considering the massive pension shortfalls everywhere, having a backup plan may not be such a bad idea.

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