Retirement: From State-Reliance to Self-Reliance

What are those careless Quebecers been up to? Oh yes those careless citizens are not saving enough for their retirement so the province should do something about it. Indeed, this new idea is to force Quebecers to save – say 5% – of their income because, oh horror, most of them do not have a penny when it’s time to retire. This is what is now being discussed in our dear Province of Québec. There are so many things to say on the subject as to why this is such a bad idea but let’s just begin with some obvious ones.

Why they do not save?

Quebecers are the most burdened tax wise in North America – they may get services out of that but the cash to save is gone.

When over 30% of Quebecers don’t pay income taxes – that is a lot of people not very motivated to invest in a RSSP plan

Decade long low interest rates – yes very interesting to put money in the bank bearing 0,0000001% interest.

On top of the taxes, because of a loose monetary policy – you had inflation in especially food, shelter and energy and wages did not keep up so those “careless citizens” were hit hard there as well.

When they do save – they get hit by market crashes (remember those statements in late 2008?)

Western economies, compared to Asia, have this very bad habit of discouraging savings by taxing it which is so unproductive because that capital is the lifeblood of an economy (not credit as one famous US president stated recently…)

Let’s say the state takes my money (that is not hard to imagine) – what is their track record?

Well not good. It is even a joke to seriously consider given them your hard earned money. Let’s see:

CDPQ lost $40B in 2008 with derivatives investments and will be depleted in 2035

Even the Quebec government employees’ pension fund is financed at only 57% (where in 1999 the province had set a 70% statutory target by 2020 – good luck with that – the fund lost 13% in 2008 – managed by the CDPQ)

But let’s not pick on the CDPQ – what about the Social Security fund in the US? Empty. That’s right. It’s full of IOUS and that is why (with Medicare and Medicaid) the US have to keep printing money to keep afloat.

Ok the Canada Pension Board is doing better but do you seriously think you can live on that? The monthly payment will not buy you a tank of gas if the pace continues.

Let’s create another agency – the right one…

We are talking about creating another agency; obviously, the CDPQ can’t do its job right. But how is that one supposed to be better at managing money then the others? Where are those super competent people that will bring us more than 8% returns? Are they hiding? How can we prevent the government from using these funds for “emergencies”? This is what is happening in a way in France and Hungary with private pensions. When the state need cash it goes where it can find it…

It amazes me that the only solution that is envisioned is always more government intervention in our lives. Why not get out of the way? Those irresponsible citizens don’t save – well we will force them! How is this supposed to make them more responsible?