What age is too old to go to AC and collect a full pension?

[Franky Jr]

RRSP's do not equal DC.

Very similar though.

In a group rrsp if you put in 6% and the company puts in 12%, you pay tax on the company's contribution.
In a DC if you put in 6% and the company puts in 12%, you pay NO tax on the company's contribution.
-->This is why AC pilots net a lot more money than WJ pilots every paycheck, AC pilots pay no tax on the companies contribution. WJ has no DC thus no saving on the companies contribution so the WJ pilots must pay tax on the company match.


In a group RRSP, if you quit. You can move that money to any company/brokerage and have the rrsp left intact there. Rules going forward are whatever the law is.
In a DC plan if you quit, you can move the money to any company/brokerage you want except that it has to go into a LIRA which has its own set of additional rules like how old you must be before you can make any withdrawls.

To me a DC has more policy, but the tax efficiency is more than worth waiting till a certain age to access your money.

[LTD]

RRSP's do not equal DC.

Very similar though.

Like you said Franky, they are Very similar.
And for the sake of discussion on this forum, I stated the DC = RRSP because the differences are not as notable as comparing DB vs. DC. And unless you are studying for bachelors in finance exam, it's safe to consider them equal.

As for DB vs. DC: Those are two entirely different species of pension plans..

And to get back to the title of this thread: with a DC pension plan, the concept of a "full pension" doesn't exist.
With a DC plan (or an RRSP) the more years/money you contribute to the plan + the better markets/funds perform, the more money you will have at retirement. That's basically all it boils down to.

Interesting to note that the DC pension plan is up for renegotiation in the 2017 contract reopener, as it sadly remained unchanged/unimproved during the latest round of negotiations.

Respectfully,
LTD

[Soar]

" $24,930 a year" - I suppose this is pretty obvious, but that's your contribution, correct? (then AC contributes)

Some helpful numbers here,

Max RRSP contribution is $24,930 a year (which at AC you will reach when making above 140k). So, in 25 years at 6% interest you will have 1.5 million. If you deiced to budget to the age of 90 (and keep a 3.5% rate of return or better) that's $75,000 a year in retirement.

The main issue here is getting your DC contributions to the max ($24,930) as soon as you can, which with the new 4 year low pay scale is difficult.

[rudder]

" $24,930 a year" - I suppose this is pretty obvious, but that's your contribution, correct? (then AC contributes)

Some helpful numbers here,

Max RRSP contribution is $24,930 a year (which at AC you will reach when making above 140k). So, in 25 years at 6% interest you will have 1.5 million. If you deiced to budget to the age of 90 (and keep a 3.5% rate of return or better) that's $75,000 a year in retirement.

The main issue here is getting your DC contributions to the max ($24,930) as soon as you can, which with the new 4 year low pay scale is difficult.

No, that is the 'all source' limit for which you can claim the tax deduction for the full amount of your own contributions and it cannot exceed 18% or your earned income for that tax year (unless you have unused RRSP contribution room carried forward).

[AirFrame]

In a group rrsp if you put in 6% and the company puts in 12%, you pay tax on the company's contribution.
In a DC if you put in 6% and the company puts in 12%, you pay NO tax on the company's contribution.
-->This is why AC pilots net a lot more money than WJ pilots every paycheck, AC pilots pay no tax on the companies contribution. WJ has no DC thus no saving on the companies contribution so the WJ pilots must pay tax on the company match.

I'm not sure this is quite accurate. If you put in 6%, you don't pay tax on that 6% either... As a contribution to the RRSP, you are forgiven the tax on it until such time as you withdraw it when you are retired. In every group RRSP I was part of (non-aviation world), companies made matching contributions that showed as "income" on my tax return, but as contributions to RRSP's they were deductions as well, and came out tax free at the end.

[Longranger]

RRSP's do not equal DC.

Very similar though.

In a group rrsp if you put in 6% and the company puts in 12%, you pay tax on the company's contribution.
In a DC if you put in 6% and the company puts in 12%, you pay NO tax on the company's contribution.
-->This is why AC pilots net a lot more money than WJ pilots every paycheck, AC pilots pay no tax on the companies contribution. WJ has no DC thus no saving on the companies contribution so the WJ pilots must pay tax on the company match.


In a group RRSP, if you quit. You can move that money to any company/brokerage and have the rrsp left intact there. Rules going forward are whatever the law is.
In a DC plan if you quit, you can move the money to any company/brokerage you want except that it has to go into a LIRA which has its own set of additional rules like how old you must be before you can make any withdrawls.

To me a DC has more policy, but the tax efficiency is more than worth waiting till a certain age to access your money.

This is simply not true, at WestJet, if you direct your ESP to the Group RRSP, you don't pay tax on the contribution you get from the company if you fill out the forms to be taxed at source. As well you can contribute up to 20% of your salary, which is matched by the company to the RRSP if you have the contribution room, and that would be fully tax deductible. If you didn't fill out the required CRA form, you would pay the taxes every pay and then have to wait for tax time to get your refund, but if you did, you would get your tax back every pay, making it tax free.

[tsgarp]

With the new DC pension at AC do you select the investment vehicle or does the company? The reason that I ask is that I have funds in two other pension plans at the moment and I was hoping to take the transfer values of both of them and place,them into the AC plan if I get hired.

[gasbag1]

The Company deals with the DC funds not individuals.

[matthew.oommen]

The Company deals with the DC funds not individuals.

You all arguing about making 140 k, and I'm here eating my 99 cent mac and cheese hoping I get to have your problems someday.

#firstworldproblems #lifeofanFO