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Financial advertising, marketing and sales without the 56% google inefficiency.

Google admits that advertisers wasted their money on more than half of internet ads

By  http://qz.com/author/zwenerflignerqz/

Online advertising is a fickle thing. It accounts for 20% of the ad industry’s total spending, and over 90% of revenue for the internet giants Google and Facebook. That said, no one seems to have any idea whether it actually works.

That uncertainty reached a new high this week, as Google announced that 56.1% of ads served on the internet are never even “in view”—defined as being on screen for one second or more. That’s a huge number of “impressions” that cost money for advertisers, but are as pointless as a television playing to an empty room.

This is not a big revelation. The web metrics company ComScore reported last year that 46% of online ads are never seen. Spider.io, an ad fraud company acquired by Google in February, has pointed out that a large portion of ads are “viewed” only by robots, revealing that one botnet of 120,000 virus-infected computers viewed ads billions of times, running up the tab for advertisers without offering them the human eyeballs they sought.

Still, the acknowledgement by a heavyweight such as Google that ad viewability is a problem could shake up the industry by delaying possible IPOs of ad companies and requiring new ways for advertisers to gauge the effectiveness of their ads.

The nineteenth-century retailer John Wanamaker famously said, “Half the money I spend on advertising is wasted. The trouble is I don’t know which half.” In this case, it’s the obviously the half that pays for ads which are never seen, and now advertisers are looking for new tools to figure out which those are.

It’s worth noting that Google made this acknowledgement of the deficiency of the model it has profited richly from while also offering a new model to advertisers: In July it introduced its Active View product, which measures only viewed ads.

Reputation Management in Canada

[Canadian National News] Opponents skeptical after Rob Ford's post-rehab speech  Reputation Management in Canada – Rob Ford famous mayor of Toronto is now in the fight of his life and political life. It will be a landslide in one way or the other.

People, businesses, politicians and governments need reputation management for many reasons and there are all types of mistakes, gaffs, errors, errors in judgement and faux pas.

It really would be great to fix mistakes, reverse negative actions, take it all back, say my bad and in the case of most Canadians have a simple and meaningful apology and move on.

Everyone can make a mistake but not everyone can apologize sincerely. REPUTATION.CA in Toronto makes its living from investor relations, customer service and fixing problems as a go to in-house contingency and crisis management team. In person, online and throughout the Internet people may get a bad rap or want to change a real or perceived reputation.  If you are not in trouble and don’t need their help it is called marketing and when you know you need help to remove negative comments, bad reviews or worse call or email the fine smart people at REPUTATION.CA Think twice before you act or act badly in person, in writing or online. Checking your personal or company reputation online is a matter of fact and business both large and small are taking notice.

James Dean

 

Tax Free Profit Extraction Using Life Insurance

A tax avoidance strategy has been growing in popularity in recent years. Although CRA has been aware of the strategy for over ten years, its increase in popularity and the Federal government’s current focus on reforming the taxation of insurance means that the life of the strategy may be coming to an end.

There are several good reasons for life insurance to be owned corporately rather than personally. A business owner is typically a key person of the business, and any buy-sell agreements or business interruption applications may require that the policy be owned corporately. Corporate ownership also allows for the payment of premiums with corporate dollars, which for small businesses generally have a lower tax rate than if the policy is owned personally.

There are of course also downsides. The loss of creditor protection, a potential impact to the capital gains exemption, additional complexity and accounting requirements, and the potential taxation of the death benefit are among the impacts to consider. Properly planned, these issues can be minimized, making corporate ownership an attractive option.
The corporately owned policy can be a newly issued policy, or could be a personally owned policy that is sold to the corporation. The latter may be the only option if health concerns make it costly, or even impossible, to obtain a new policy.

The sale of a policy from personal ownership to corporate ownership introduces a little used, until recently, tax savings opportunity. In exchange for the policy the corporation pays the individual the fair market value of the policy. The gain reportable to the individual is based on the cash surrender value of the policy rather than the fair market value, the two of which may differ substantially.

In many cases the taxable gain to the individual is zero, effectively resulting in a tax free disbursal of earnings from the corporation.

Overview of the transfer

A shareholder transferring a policy to his or her corporation is making a non-arm’s length transfer and therefore subject to Section 148(7) of the Income Tax Act. In exchange for the policy the company pays the shareholder the fair market value of the policy. The tax consequences consist of four parts:

  • Deemed Disposition – The shareholder who owns the policy is deemed to have disposed of the policy for the cash surrender value (CSV). The taxable income to the shareholder will be the CSV minus the Adjusted Cost Basis (ACB).
  • New Adjusted Cost Basis – Section 148(7) also deems the new ACB after the transfer to be equal to the CSV. The corporation has acquired an interest in the policy at the new ACB.
  • Payment for the fair market value – The corporation pays or provides a note to the shareholder for the fair market value of the insurance policy. There is no tax to the shareholder and the company has a reduction in retained earnings.
  • Payment of the Death Benefit – Upon the death of the life insured, the death benefit is paid into the Capital Dividend Account (CDA) to the extent that the benefit exceeds the ACB. The ACB will typically have enough time to decrease to $0, so the entire death benefit is paid into the CDA, which can then be distributed tax free.

Best Policies to Value

An actuary specializing in fair market valuation can provide advice on the potential value of a policy. The best policies to transfer will result in little or no taxable income upon disposition, and have fair market value that is greater than the cash value. There are several factors which contribute to a policy having a fair market value that is greater than the cash surrender value.

  • Deterioration in health – Any health problems that reduce life expectancy will increase the value of a life insurance policy.
  • Policies with guaranteed costs – Policies with guaranteed level premiums build up value over time, as the initial premiums exceed the cost of insurance in order to keep the premiums lower at higher ages when the cost of insurance exceeds the premiums. The reduction in interest rates has further increased the value of such policies, as they premiums were set assuming higher interest rates, and the premiums are guaranteed. Examples of these policies are Universal Life with level cost of insurance, term to 100, and whole life non-participating policies.

Government Position

Although the CRA has stated that they agree with the tax treatment described above, they also feel it is an anomaly and referred the matter to the department of Finance. This position has been confirmed several times in the past ten years. While Finance has yet to take any action, the issue does now appear to be on their radar. The next budget may very well put an end to this opportunity.

Ryan Wall
www.wallactuaries.ca

The Ascent of Money

Me and My MoneyThe Ascent of Money

MONEY.CA
The Ascent of Money

Niall Ferguson (born April 18, 1964, in Glasgow, Scotland) is a British historian who specialises in financial and economic history as well as the history of empire. He is the Laurence A. Tisch Professor of History at Harvard University and the William Ziegler Professor of Business Administration at Harvard Business School. He was educated at the private Glasgow Academy in Scotland, and at Magdalen College, Oxford where he was a Demy and graduated with first class honours in 1985, where he did completed both his undergraduate degree and PhD. After two years as a Hanseatic Scholar in Hamburg and Berlin, he took up a Research Fellowship at Christ’s College, Cambridge, in 1989, subsequently moving to a Lectureship at Peterhouse. He returned to Oxford in 1992 to become Fellow and Tutor in Modern History at Jesus College, a post he held until 2000, when he was appointed Professor of Political and Financial History at Oxford.  Mr. Ferguson taught at Jesus College Oxford for nearly a decade before he decided to cross the pond because the U.S. higher education system was doing things at his speed; a quicker more efficient way of doing things impressed him a lot. Niall was soon a professor at New York University in 2001-2002 and then 2 years later he accepted positions with Harvard University and Harvard Business School in 2004 he remarks Harvard took it’s time, but it’s one institution that attains the highest standards in higher education regularly and worth waiting for them do their homework. Dr. Ferguson is also a Senior Fellow of the Hoover Institution, Stanford University. Niall Ferguson is a regular contributing editor of the Financial Times and his latest book “The Ascent of Money” is on the New York Times Best Seller List.

He is now best known for telling the story of money and the history of money in all its lustre, lore and affect on humans since the beginning of commerce and trade. Outside of the academic world Ferguson is known for his revisionist type views that try to rehabilitate imperialism and colonialism. Within academia circles he is the champion of counterfactual history and is often times the subject of some considerable controversy.

I had the chance to sit down with Niall Ferguson for sometime and I let him know that I am personally a great fan of his work but at the same time I pointed out the fact that he has some critics out there that doubt some or a lot of your work as not more than sensationalism.

Ferguson goes on to respond ‘ I am only interested in one thing and that is historical truth only to understand the world better. Nobody gains if historians take liberties with the past so I use my best efforts to research widely as I possible can to make sure that I’ve read as much of the existing specialist literature as I can to try to use the archives but research in my own right. I am trying to draw conclusions that are as accurate as I am able to make them. Explaining the complexities of the past financial history is not easy because this is a technical subject and there is an enormous complexity to the international financial system. So for television particularly we try to make it simpler.  I think simplification is essential for teaching, as long as you don’t simplify to the point of distortion and misrepresentation, then it seems to me that it is indeed perfectly legitimate and most desirable.

The Intellectual Process; Ferguson goes on to sum up how it all works:  I think every serious historian wants to stimulate debate on a subject because the historical process is not like science, we don’t just sit around in laboratories re-running human history.  We offer our interpretations on the basis of the facts that we’ve been able to establish and then we discuss them and debate them intelligently.

Ferguson on the critics, fools and the nay Sayers: Throughout the time I have been publishing I have encountered critics of my work and feel it is an integral part of the historical scholarship that one’s work should be subject to criticism. I think it’s often through criticism that we progress closer to a better understanding of the past. There is no doubt in my mind the next book I write will find it’s own set of critics. I look forward to any errors or mistakes in accuracy to clarify for future editions or paperback to be better. The other form of criticism is to say there is nothing wrong with the evidence presented here but you or others interpret it differently than me. So I have my critics, and I don’t doubt that each new book I publish will find it’s own set of new critics. I don’t mind that as long as the criticism is fair. The kind of criticism you can point out like a mistake or an inaccuracy and if somebody does that, I hasten to correct the error so that the information in the paperback version or in future editions is better. The other form of criticism is to say, “Well there’s nothing wrong with the evidence presented here but I interpret it differently from Ferguson on the difference of opinions.” Well that’s fine but if somebody chooses to offer a different interpretation from me, there’s no particular reason why I should accept it. It would simply be a difference of emphasis. So those are the ways that historical criticism works and I think I’ve had my share of fair, and unfair, criticism over the years. It comes with the territory. If you said something that everybody agreed with, it probably wouldn’t be worth saying. You’d simply be restating the conventional wisdom. My aim is always to challenge that received view of thinking.

Ferguson the passionate historian and author not a businessman: If one was interested in making money, one would have become an investment banker in 1985 when I graduated from Oxford and I never considered that for a moment. I dedicated my working life to understanding the way the world works, the modern world since around 1700. And the research I’ve done is a quest on my part to understand that better and then to explain it. And so if I run out of questions that I want to ask about the past then I’ll retire from history. But there are always new questions and so there are always new projects. Right now I’m just putting the very last touches to a biography of an eminent banker in many ways the most important figure in London after the Second World War—Siegmund Warburg.

I asked Mr. Ferguson if he knew much about the war of 1812, The Plains of Abraham and Canada in general.

Ferguson: Well of course! A historian of the British Empire would surely know and understand a lot of about what pivotal things happened in upper and lower Canada to shape the entire world.

I asked Ferguson what he thinks of Canada as a nation and are we on the global radar?

Certainly, I mean the work I did on the British Empire that produced the book, Empire, was in part homage to Canada. I have longstanding family ties to Toronto and, indeed, to Saskatchewan. I have traveled widely in Canada and for me the history of North America is just not the history of the United States, as it often seems to be.

For me the history of North America is the history of two, if not three, major experiments: the experiments, of course of the republican form of government, after 1776 and 13—and subsequently more—colonies. But the other experiment was the experiment with constitutional monarchy within the British Empire that endured right the way through into the 20th century. And still retains I think a real importance in Canadian life and then within Canada, of course, you have at least two different cultures co-existing.

Ferguson goes on about Canada and it’s Language Culture: Anglophone and the Francophone.  It seems to be very, very interesting subjects for a historian of the modern period. I constantly try to remind my US-born students that if you compare the performance of Canada and the United States in economic terms, or in social terms, that it doesn’t seem as if the, the choice of new political institutions in 1776 in those 13 colonies had a huge amount of difference. It’s not like Canada’s a desperately impoverished backwater. On the contrary, by some measures today, Canada is quite a way ahead of the United States. So this is a tremendously interesting field for historical study.  Comparative history of North America is something we need more of. Frankly too few North American historians do that. There are historians of Canada, and there are historians of the United States.  They tend to talk past one another and this seems to me to miss the whole point. The really interesting thing is that, despite a massive divergence in political institutions, these two societies have evolved in many similar ways. They’ve certainly remained materially, economically, on a par. But they’ve also developed some really profound institutional differences. And we see that very clearly in the current crisis, whether you look at banking regulation or healthcare. Canada looks to be in a stronger position than the United States.

It’s a global economy now and not just domestic. The G8 will meet in Huntsville, Ontario next year; where does Canada rank and how do you think we will fair amongst other world economies?

Ferguson: Well I think Canada is in the strongest position it’s been in, perhaps, internationally and in all of its history because I think Canadians can legitimately say that they’ve conducted financial regulation in a better way than the U.S.  Given Canada’s wealth in terms of resources, it doesn’t have the kind of fiscal problems that are going to attack nearly all the other members of the G8. Canada’s is the only public debt that isn’t soaring up towards 100% of GDP in the next ten years. So it’s a time when Canadians can perhaps legitimately put aside their historic inferiority complex and walk tall, because Canada’s institutions look like they’ve done quite well in the last ten years, better certainly than those of the United States. The problem of course is that the world is changing so rapidly that the G8 signifies less as an institution than the G20. And it’s striking that all the discussion in the American press is of the G20 in Pittsburgh rather than the G8.

Throughout history, time and the geography of the world we have been plagued by many wars. What is your opinion on war and in particular Afghanistan and Iraq?

Well I’ve written about American Empire and explored the question of the legitimacy of military action in a book called Colossus, which was published in 2004. I made it fairly clear that I don’t regard war as always an illegitimate evil. I’m not a pacifist in that sense. Sometimes war is necessary—necessary of course in the case of an act of aggression which must be resisted, but it can also be necessary where preemption or prevention is preferable to waiting to be attacked. The United States certainly had no alternative but to take military action in Afghanistan after 9/11. Where it had a choice, by contrast, in the case of Iraq. I think, with the benefit of hindsight, it might have made more sense to focus on Afghanistan and not to invade Iraq. The benefits of that invasion of Iraq seem at this point to be exceeded by the costs not only in terms of money but also in terms of human life.

On the other hand, it’s quite hard to see a very good future for Iraq or, indeed, that region if, if the status quo with Saddam in power had simply been left in place. So there wasn’t an easy, happy alternative. It was a choice between two evils. But I must say that I think at this point, knowing what we know, this is not, on balance, a good decision, not least because overthrowing Saddam Hussein greatly strengthened the relative power of Iran. And I think the Bush administration underestimated that consequence of their action. Afghanistan is the simpler case as I think I’ve already said. It would be of course completely insane to abandon the effort that’s currently being made in Afghanistan to create a stable government there. To allow the Taliban to come back into power in Afghanistan would be a complete disaster and anybody who thinks that that’s an option must be suffering from some kind of amnesia.

You often speak of “Chimerica” referring to America’s relationship with China please explain:

Well China’s doing better than almost any economy in the world in terms of output. Its economy is one of the few that’s growing strongly this year.  China’s growth of course is still way down compared with the pre-crisis period.  It’s almost been cut in half, so one shouldn’t exaggerate the achievement. This still a very dramatic slowdown in relative terms and China faces at least three major problems. Right here and now the first problem is that by powering an economic recovery with a very large-scale state infrastructure program and very loose credit conditions, the Chinese have created something of a bubble in their own stock market which is now deflating rapidly. The second problem is that they’ve, by pursuing a strategy of export-led growth, accumulated 2 trillion dollars’ worth of international reserves, a very large proportion of them denominated in US dollars, which doesn’t look like the greatest investment in history. And the third problem that they have is that their rapid growth over the past 20 years has created a certain mismatch between their political system (still a one-party state) and their social system, which is changing very rapidly with the emergence of the middle class and indeed a super-rich elite. Historically that’s a pretty difficult combination: political stagnation and rapid social change. So I think China’s economic miracle is something that conceals at least three serious structural problems. Over the long run, they need to develop their own consumer society. They need to become less reliant on exports. They need to make their own income distribution more equal. But these things can’t be done overnight. In the long run they also have major demographic problems because of the one-child policy. And so over a 20-year timeframe, China’s prospects aren’t actually quite so rosy.

Using some of his own verbiage I asked Ferguson to tell me about “Chindia”:

He laughs on goes on to say: Well in some ways India resembles the tortoise in the story of “The Tortoise and the Hare” because China would represent the hare that zooms ahead in the early part of the race, but the tortoise, which moves more slowly, ultimately wins that race. And I think because India has a democracy, and it has the rule of law, and in many ways it relies less on government and more on the market. Its long-run prospects look more appealing. If India could address its infrastructural problem the way the Chinese have addressed theirs, they would be I think, a huge payoff.  But it’s hard to build a whole new system of highways, or high-speed rail links, if you have meaningful property rights. In China, you just tell the peasants, “Piss off, we’re building a new, new highway here.” You can’t really do that in India because the peasants say, “No, you piss off because this is our land.”  So there’s a big difference there. I have a relatively optimistic long-run view of India’s trajectory. I think over a 50-year time horizon, things are looking good. Short-run, it’s not going to grow, as fast as China and from that point of view, we shouldn’t expect the kind of returns of investment that may be possible in China now.

In 2008, Allen Lane published his most recent book, The Ascent of Money: A Financial History of the World that he also presented as a PBS Special in the United States and on Channel 4 in Great Britain. Google has also chose to broadcast the video throughout the Internet making the author and the well-authored book ‘The Ascent of Money’ all that much more popular.

Niall believes that television and Internet will have a more vast reach, but books are important; after all it’s just one way I can make a living by selling some books but getting the reach is as important; after all I am still just a Scottish professor who is only asking questions and learning more to teach better and sharing the wealth of that knowledge is what I do best.

“When I stop asking questions to satisfy even my self than that will be the day I stop learning and also seize being an historian and human, I suppose”.

The Ascent of Money is a new comprehensive four-part series presents like thee epic film about money and the history of the global economic system. Niall Ferguson says, “I want to reveal financial history as the essential back-story behind all history. From ancient Mesopotamia, right down to the present the day, the ascent of money has been an indispensable part of the ascent of man.”

 

 

 

Weekend Money “OPEN SUNDAYS”

Me and My Money
Open Sunday’s

A potential client recently said he had no money in the budget for any sort of  advertising but asked how the markets were. I wasted no time and quipped it depends how your marketing is. Everyone somewhere is doing great, really well, better than expected or tell you the truth business sucks.

At this point you cannot tell any potential, advertiser exactly what you think. That is not the matter; in fact it doesn’t matter at all what you tell this person they have already made up their mind. Spending less time and effort on people that waste your time is only a learning experience to get to yes. Everyone has to make money at some point and there ain’t no shame in that.

People have all different kinds of ideas and concepts about money and very few people have it or enough of it. I will endeavor to make money in some way or fashion that does not cause me to work hard. And so anytime is a good time to make money and to make money hand over fist is an art unto itself and money its own reward.

There is a difference between the have’s the have nots and the haves too much and you may lavish, squirm or just pass by. Awkward at best no one wants to talk about money, I suppose the one’s that have it have no reason to complain aloud. There are some that know, some that try and a few that know and try and fail and the one’s that ultimately triumph through trial and error and trials and tribulations.

You know something more than the others; more precisely more than most, you know more than a little, you know a lot. I am willing to work for money as long as I don’t feel I hate it and want to give up writing, sharing and communicating at such a slow speed.  I do spend charitable time working and need to make real money not unlike thousands of other hard working Canadians.  Part time money, ain’t no shame in that. So I am going to blog, talk and communicate some ideas and thoughts that people would really want to know about; the inner working of money in play and work. So this new post, section, category called “Weekend Money” is dedicated to any one who works one or two jobs or even three to make up for your local economy than this is dedicated to you. “You and Your Money” could not be a better salute to hard workers everywhere.

I will work part time on week-ends here and there and I will think of you and your industrious nature to make money, enough money and then more than enough money to share perhaps.  Let’s see maybe I will get back to you next week or maybe pay someone to do it. I may even quit by next week . My point was that the Bank of Montreal recently renovated a location near me in grand fashion and announced in a giant blue and white banner “OPEN SUNDAYS”.

Everyone is working harder for the same money or less as cost rise…yes its sounds terrible. I should hope to get paid for news, reviews and interviews that matter most to you and your money. Please allow me enjoy what I do for a living and at the same time put in a little extra time, over time or a few bucks on the side rather than call it work. I will see you here at the same time and the same place for the next “pay for” newsworthy article for MONEY unless I am fired for moonlighting or laughing all the way to the bank after church.

I have to mention my day job; as the guilt is settling in. I am responsible for online editing for MONEY.CA and publication articles for Money Magazine. I am not sure if I should be using this powerful system on week-ends and especially Sunday’s. It may not be official as nothing of the sort has been done before, so please don’t get us in trouble and try not to let anyone know about what we are doing its weird but I just don’t want people to know I work part-time.

James Dean

 

 

MONEY-CANADA.COM

Me and My Money
Me and My Money – News For MONEY

Money Canada Limited is proud to announce our online International partner for the Canadian online destination place of  MONEY.CA MONEY-CANADA.COM a website, a strategic alliance to go and get and keep the attention toward MONEY and then Canadian Money and then to harbor Canadian’s and also attract and retain the attention of foreign investors and International money to our online investment marketplace and real investment advisors, facilities, services and opportunities.

MONEY-CANADA.COM sole intention is to be remembered and not forgotten when it comes to MONEY or Canada our purposes can be served in this stand on guard manner. The world of money is a big place and who if not us can get, interpret and present it best for the best of known needs and privilege of Canadians and equally to under-served communities. MONEY-CANADA.COM has a need to protect our distinct nation, independent currency and colorful money and robust economy.

MONEY.CA keeps the interest and concern going for both Canadian Financial Literacy and less greedy pursuits of helping individuals make, save and preserve more of their money.

Join us! donate, volunteer, contribute or advertise and promote all for the right reasons. Please note MONEY-CANADA.COM and CANADIAN-MONEY.COM stand on guard for thee and represent Internationally 24-7. MONEY.CA is held in high regard with the unique ability to communicate money, personal finance and financial literacy at its highest capacity with your social media, movement and currency. info@money.ca 1-800-789-1011 – We have the financial content, can do the financial advertising and can achieve measurable results beyond your expectations. Call 416-360-0000

 

 

A New Approach to Pension Design

In 2008 the Alberta/BC Joint Expert Panel completed its work on suggested pension reforms. Alberta passed Bill 10 implementing the majority of the suggestions and is expected to release the enabling regulations sometime this summer. There are a number of positive changes in the legislation, but the change that could transform the pension landscape across Canada is the introduction of the target benefit plan.

Pension plans have traditionally been defined benefit plans, which deliver known benefits to plan members, with contributions varying depending on plan experience. The longevity risk, interest rate risk, and investment risk are all borne by the plan sponsors. During the 90s when plans experienced significant return on assets plan sponsors were happy to continue with this arrangement. When the investment returns diminished and low interest rates lead to significant increases in liabilities the risks being borne by sponsors became far more apparent.

Numerous court decisions have also eroded the ability of sponsors to benefit in cases where results exceeded expectations, yet leave them responsible for providing additional funding to plans in cases where results were worse than expected. Plan sponsors in the private sector are understandably unwilling to continue sponsoring this type of arrangement.

The main deterrent from a company perspective is not the increased costs, but the increased volatility of costs, which is attributable mostly to the interest rate risk.

This led to the growth of the defined contribution plan, in which a sponsor provides predictable contributions towards a pension plan, but the ultimate benefit will depend on plan experience. The risks in this case are borne by the plan member. This works well for the plan sponsors but the consequences of the inadequate pensions provided by these plans are only in the infancy of being realized. DC plans do a poor job of mitigating longevity risk and have historically produced lower returns than DB plans.

Like so many other issues, the pendulum has swung from one position, of all DB plans, to the other extreme, in which new plans are almost entirely DC plans. What is required is a middle ground that mitigates the risks to plan sponsors, while not shifting the burden entirely to the plan member who is ill equipped to cope. The target benefit plan is designed to precisely that.

The target benefit plan aims to provide a defined benefit, however it does not obligate sponsors as a DB plan does. Instead, if needed, benefits can be reduced based on the funds available to provide the benefits. This shifts some of the risk to the plan members. This is not ideal for the members, however it is better than the alternative in which sponsors are unwilling to sponsor a plan. The new legislation includes measures to improve benefit security, such as stochastic risk based reserve calculations, that provide a high probability that the benefits will be provided, rather than forcing the sponsors to guarantee the benefits.

The death of the traditional DB plan has been evident for many years, but there has been no reasonable alternative. Some steps have been made towards introducing target benefit plans, but the Alberta legislation is the first that can be applied to any sponsor and will allow for innovative ideas to help restore the health of the Canadian pension system.

Ryan Wall

Should You Contribute to Your RRSP?

There are two advantages to RRSP investing. The first is tax deferred growth, which allows the effects of compounding to grow your assets far in excess of non-sheltered assets. The second is the assumed reduction in your personal tax rate at older ages when the assets will be withdrawn. Both of these benefits may not be as advantageous as they used to be.

RRSP funds should be invested in income generating assets, such as bonds and GICs, which would attract the most tax outside of an RRSP. Assets which return capital gains are best kept outside of the RRSP due to the more favourable tax treatment of those gains. With interest rates at multi-decade lows, and projections that these rates will continue for the foreseeable future, compounded growth will be severely hindered.

With growing government debt loads and lower projected growth rates, we also face the real potential for higher taxes. This may be especially true with respect to retirement assets, which will draw the attention of future politicians struggling to pay for the debt load which, as far as many voters will be concerned, was created by a wealthy retired class.

In analyzing a retirement strategy, it would therefore be prudent to consider the possibility of low investment returns, and higher tax rates. For instance, a 50 year old, earning only 3%/year, with a marginal tax rate increasing from 46% to 60%, by age 71 would have been slightly better off without an RRSP. Assuming investments are based on capital gains the RRSP effectiveness drops significantly.

Most scenarios for the future do still show RRSP investing to be beneficial, especially if it is likely that you will find yourself in a lower tax bracket at retirement. Nonetheless, based on age, investment return, and future tax rates, there will be a percentage of Canadians who would have been better off without registered assets. Those fortunate enough to expect to remain in the top tax bracket should consider whether deregistering all of their assets now would reduce their total tax bill, if tax rates do increase in the future.