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RBC Kills Its DB Pension Plan

Rockslinger

Banned
Apr 24, 2005
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Any employee hired by RBC after yesterday will not be eligible for their defined benefit plan. Looks like governments will be the only ones offering DB pensions because they have unlimited taxing power. We exist to serve the public sector employees.
 

Rockslinger

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Apr 24, 2005
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Other than public sector employees, does anyone still work long enough for a company to qualify for a pension, any pension?
 

nottyboi

Well-known member
May 14, 2008
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Basically anyone who has a DB pension plan will in the long run, have a nasty surprise. These are all built on the premise of average equity gains of 7-8% over time. This assumption is based barely more then 70-80 years of data.. which means it is really a based on FUCK ALL.
 

Rockslinger

Banned
Apr 24, 2005
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Basically anyone who has a DB pension plan will in the long run, have a nasty surprise.
The NORTEL pensioners took a 40% haircut on their pension. Public sector workers will do ok though. How many people work in the broader public sector? I imagine a lot.
 

JohnLarue

Well-known member
Jan 19, 2005
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Basically anyone who has a DB pension plan will in the long run, have a nasty surprise. These are all built on the premise of average equity gains of 7-8% over time. This assumption is based barely more then 70-80 years of data.. which means it is really a based on FUCK ALL.
Are you sure you are not referring to a defined contribution plan rather than a defined benefit plan for the nasty surprise?

Correct me if I am wrong, but with a defined contribution plan, the employee bears the risk the return is below the 7-8% average
With a defined benefit plan the employee will receive a defined benefit and the employer bears the risk of a below average return

RBC like a lot of employers is off-loading the market risk onto the new employees.
 

Mencken

Well-known member
Oct 24, 2005
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Are you sure you are not referring to a defined contribution plan rather than a defined benefit plan for the nasty surprise?

Correct me if I am wrong, but with a defined contribution plan, the employee bears the risk the return is below the 7-8% average
With a defined benefit plan the employee will receive a defined benefit and the employer bears the risk of a below average return

RBC like a lot of employers is off-loading the market risk onto the new employees.
I remember when people with DB plans were complaining very very loudly that their pensions were terrible and those in DC plans were getting rich. Just roll the clock back a few years and this was the case. Many with DC plans came out a way ahead - some retirees were able to buy annuities that were 2 or 3 times that of those stuck in DB plans.

That has reversed in the past few years....basically because of low interest rates (and returns from everything else as well) the amount of dollars needed to buy that annuity has increased vastly...and the theoretical value of a DB plan has risen accordingly.

If we got another long bull market and a spike in inflation...and interest rates, then those DC plans would be worth a lot once more.

But it is true...why would any business want to take the risk themselves by guaranteeing pension amounts...when the option of putting the onus on the employee to take that risk by making choices about where the money is invested.
 

Samurai Joey

Active member
Sep 29, 2004
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Other than public sector employees, does anyone still work long enough for a company to qualify for a pension, any pension?
Well, I worked for one company (private sector) for over 4 years and was able to transfer my pension (mostly defined benefit, with a small additional defined contribution component) to a locked-in RRSP account, and I have a separate defined contribution plan with my current employer. I'm sure if I leave to pursue new opportunities, I will only go to companies that offer some form of pension plan.
 
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Rockslinger

Banned
Apr 24, 2005
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Well, I worked for one company (private sector) for over 4 years and was able to transfer my pension (mostly defined benefit, with a small additonal defined contribution component) to a locked-in RRSP account,
Did you make contributions to the plan?
 

dunkula

Member
Nov 13, 2004
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Any employee hired by RBC after yesterday will not be eligible for their defined benefit plan. Looks like governments will be the only ones offering DB pensions because they have unlimited taxing power. We exist to serve the public sector employees.
This takes effect jan 2012
 

bill_1279

Active member
Feb 25, 2011
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Nortel, I think got rid of their DB pension plan I think around 2006, or 2007. They started up a DC plan. It seems all the private companies are doing this.

The idea of raising the CPP contributions to make the CPP better was discussed by the government. I like the idea.
 
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