Tag: Personal Tax

Sears Canada pensioners are still fighting for a payout, and some are shocked to see what they’re receiving from their pension due to the company’s insolvency process.

Sue Earl, a 38-year Sears Canada employee recently found out she would only get 81 per cent of the value of her pension, with the other 19 per cent “up in the air,” and also had her severance payments cancelled. She assumed that her defined-benefit pension was going to be paid out to her regardless of the state and health of the company, which was a risk she took.

Experts have said that depending too much on the defined-pension plan is a risk, and that the employer-sponsored pension plans become risky when the employer isn’t healthy enough to fund them. However, James McCreath, associate portfolio manager with BMO Nesbitt Burns (Calgary) says they are also a good thing because it forced people to save.

A defined-benefit plan promises members a retirement income usually based on salary and years of service. Sears has been paying $3.7 million a month to top up these plans, and the government has now proposed new rules to not require topping up as long as it is funded 85 per cent or higher.

Sears’ troubles which has now started to impact former employees, shows the importance of educating yourself on your finances and retirement planning. Tony Salgado of CIBC Wealth Strategies (Toronto) says, “many don’t even know what kind of pension plan they have, much less what their retirement income might be.” Personal wealth planning is an extremely important part to ensure that you’re prepared for your future retirement and guarantee that you won’t be spending it paying off debt, or having to tightly manage your funds.

At Devry Smith Frank LLP, we have experienced lawyers that can assist with personal tax/wealth planning to advise on retirement planning to guarantee you’re getting the most out of your savings.

If you have any questions or would like to make an appointment with a personal tax/wealth planning lawyer, please contact one of our lawyers or call us directly at 416-449-1400.

By: Nicolas Di Nardo

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”