# Pension vs RRSP



## smith_ (Mar 6, 2013)

Im a IBEW member, 3rd generation. Going to trade school you meet all kinds of people. We have a union in ontario called CUSW. They have a hold on the powerplants as I hear it. They make more or less the same as IBEW members, have the same benefits(or close too) but they dont have a pension. Instead they contribute to a RRSP..Something like 7$ an hour. Now I constantly hear about how our pension here in Toronto is going to ****. An RRSP is tax deductable, you can use it here in Ontario as a downpayment on a house if youre a first time home buyer.. One of the kids at school said hes got something like 30k in his right now at 5th term. Geez, if I had that I could move out.

Opinions?


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## Celtic (Nov 19, 2007)

*Registered Retirement Savings Plan*


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## Newbee01 (Feb 9, 2013)

There are pros and cons to both, if the pension is guarenteed that is great! I currently receive an RRSP like you talked about. I personally saw fellow coworkers lose alot of money during the last recession on their RRSP, big con! Big pro is that you have control over your money so you could invest it however you want. I guess it comes down to how involved you want to be, not involved = pension, involved = RRSP. If I could have a guarenteed pension I'd take that over RRSP any day.


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## KDC (Oct 19, 2012)

A RRSP can be a lot of things. It could be Mutual Funds, GICs, or just a Bank account and related interest. As Newbee01 says, RRSPs really require your involvement to balance the risk vs where you are in life and the risks you're willing to assume. 

Well managed, they can have good growth, but going with mutual funds you're somewhat at the whim of the markets. 

Yes, you can pull it out for a down payment, but you do need to pay it back to the RRSP within 15 years. I believe it can also be used for education. 

Pensions tends to come in 2 flavours. Defined Benefit, and Defined contribution.

Defined benefit is... well, the holy grail of pension plans. You meet the qualifications, you pay into it, you get a set amount coming to you every month for your entire retirement. It's getting phased out by a lot of companies because it's deemed "not economically viable".

Defined contribution is kind of a cop out. Money goes it, but it's run similar to an RRSP. Only thing guaranteed is what goes in. What comes out is dependent on how the money gets invested. 

Personally, I have a Defined Benefit Pension, as well as my own RRSP plan that I transferred funds from my last employers "retirement plan" into, and continue to contribute to. 

It's always good to think about retirement as young as you can to benefit from the magic of compound interest.


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## Amish Electrician (Jan 2, 2010)

Sometimes you can actually learn something from Jessie Jackson!

Back in the late '70's, the Rev. Jackson discovered just how much money was tied up in retirement plans, and expressed a desire to find a way to tap into those funds.

Since then, the entire US retirement arrangement has changed dramatically, but Jessie's point is still valid: there's an awful lot of money set aside for retirement, and lots of folks want to get ahold of it. 

So the issue is: Will your money be safe until you need it? An awful lot will happen between now, and when you retire.

So, my advice is: Have a plan. Don't put everything in one 'basket.' For example, my house is paid for - there's a start to a retirement plan! I don't need much if all I have is the grocery and light bills.

There are other approaches, as well. For example, owning rental property can be a source of income- but it's not for everyone.

Your most important 'contribution' is to have a steady, predictable, reliable income between now and retirement. You can't plan if the pay is cycling between feast and famine.

The 'company' or 'union' plan is nice ... but CYA. What can happen to 'guaranteed' plans was well demonstrated by both the Teamsters Union and United Airlines - both of whose retirees were disappointed when it came time to collect.


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