Winners in Training

We were watching our local football team, lose the game and my buddy said to me, “They are such losers.” I replied, “No, I think they are just winners in training.” We both laughed and we continued to watch the game, cheer and finally with seconds left and an interception killing our final chance of winning we left. Maybe next year.

Life is funny, we win at some things and we lose at others. When we talk about winners we focus on the difference between winners and losers, maybe we should also focus on the differences between winners and gracious winners. 

Some of us have learned to be gracious winners, some of us have learned to be winners. There is a difference between a gracious winner and a winner, just like there is a difference between a loser and a sore loser. I like to think that we are all “winners in training”. Every loss we face is helping us to understand our limitations and to test ourselves so we can do better next time. The biggest difference between a winner and a gracious winner is the conditioning of our subconscious mind.

A winner conditions their subconscious mind effectively toward their goals using positive thinking mixed with the powerful emotion of faith in self or faith in others. Many philosophers believe that we are the master of our own earthly destiny. We may become the master of ourselves, and of our environment because we have the power to influence our subconscious mind.

Persistent efforts will help you reach your goals, even if temporary failure comes your way, you will carry on with the same zeal and enthusiasm. A gracious winner, when faced with a temporary failure will try harder and when they win, give credit to those around them who helped them succeed. A winner thinks they did it on their own. 

Research suggests that certain healthy competitive environments help us perform better. But while a winner's high offers performance incentive, there's a risk that your self-esteem can become dependent on beating others.

Fierce or negative opposition causes anxiety that makes it hard for us to do our best. The key is to point out there can be fierce but positive competition.

If we want to become more gracious competitors and winners than the keys are cooperation and respect. Support and respect for each other all that is required.

To avoid some of the passive aggression that comes with winning, consider these tips for how to win gracefully at work.

·       Foster Collaboration. There's a reason collaboration has endured for so long.

·       Stay Humble.

·       Take the Me out of winning and put in the We  

·       Recognize Your Colleagues.

·       Keep Setting Goals as a team

·       Share the Wealth.

DB vs DC pension plans 2

2020 is the year many of us will retire or move away from the workforce. So, it is important that we understand the two main types of employee pensions in Canada, defined contribution (DC) and defined benefit (DB). Both are important and help you when you retire, though they both work in different ways.

The DB pension plan

The DB pension is what most people in Canada think of when they think of a pension. This type of pension provides a known future income stream to the employee – in other words, a defined benefit to the employee. For this pension plan, the employer and the employee make contributions to the plan that are invested to provide the future income stream. Depending on the investment performance, this may require more or fewer contributions from the employer.

The end result – a guaranteed income stream – is easy to understand.  To make the plan fair, the government uses a number of different formulas that determine your future benefit. The formulas involve looking at a person yearly maximum pensionable earnings (YMPE), their final average earnings (FAE) and years of service.

Some but not all DB pension have Canada Pension Plan/Old Age Security integration. This is where a bridge payment is made between when the pension commences and age 65. This means that if you decide to collect your pension at say age 60, the plan would pay you an amount (the bridge) until age 65. The bridge is meant to be equal to the amount of Canada Pension and Old Age Security that you are not collecting until you turn 65, Please note, this integration is not perfect as the bridge is often being different than the actual CPP and OAS received.

If the pensioner is married/common-law, then the DB pension will pay out a survivor benefit to the spouse upon the death of the pensioner if the pensioner is collecting from the plan. The default selection is typically 60 percent of the full pension amount, but a higher or lower percentage can be selected by the pensioner. A higher or lower percentage will raise or lower the actual pension payment because the payout is based on mortality rates.

Many Boomers end up getting a divorce around retirement age, so, there is a need to know what the pension worth today?  So, how much money is needed today to pay the employee a pension for the remainder of their life? The main factors that can influence this calculation include:

·       Age at retirement

·       Penalties for early retirement

·       Mortality of the pensioner and, if applicable, the spouse

·       Current age

·       Expected rate of return on the investments (often called the discount rate)

·       Pension indexed or not

·       Rate of inflation

The ability to calculate the value is important because if the employee dies before starting the pension, the surviving spouse does not receive a survivor pension. Instead, they may receive the commuted value of the pension eligible to transfer into their RRSP. This happens without tax implications, much like an RRSP rollover on death.

If you quit or are fired before you retire or die, then one option is to take the commuted value and transfer it into a LIRA in their name. Depending on the length of service, this is a common outcome.

Finally, at retirement, you can choose to take the commuted value instead of taking the pension if your plan allows for this to happen. Some of us want an increased choice about how to deal with this asset. Some of us believe that the commuted value can provide a larger death benefit for the surviving spouse. The full commuted value can provide more value. One only has to look at the collapse of Nortel or, more recently, Sears Canada to see examples of where a DB is not fully secure.

Each pension is different. It is prudent to take a look at what the breakeven rate of return is. In other words, what would the portfolio created from the commuted value have to earn to match the pension payments? If the comparable rate of return is reasonable, the pensioner may consider in their best financial interests to take the lump-sum.

One of the benefits of the DB, pension portfolio is the responsibility of the employer for the savings required and all of the investment risk in building retirement. This takes the decision to save for retirement out of the hands of the employee.

The value of the DB pension, especially if indexed to inflation, of a long-standing the employee will provide a solid base on which to retire. If someone worked 35 years at an employer with a DB plan, they could conceivably replace 70 percent of their pre-retirement salary if they had a pure 2 percent pension formula. Whether it is the more straightforward DC pension or the more complex DB pension, understanding how to maximize the benefits and choose the best options available are important steps on your road to financial independence.

DC pension plans vs DB pension plans

2020 is the year many of us will retire or move away from the workforce. So, it is important that we understand the two main types of employee pensions in Canada, defined contribution (DC) and defined benefit (DB). Both are important and help you when you retire, though they both work in different ways.

DC pension plan

The DC pension is more like a registered retirement savings plan (RRSP) in the way it works than what most people would traditionally think of as a pension. In this pension plan both employee and employer contribute to the plan. The amount invested is usually based on a percentage of income, up to a contribution limit. These contributions are then invested. The employee usually decides and directs what the pension plan

investments in, however, the employer also has a say.

Our government has a limit on how much each person can invest in a pension plan each year. This amount is called the pension adjustment. So, for every dollar contributed to the DC plan, the employee accumulates a dollar of pension adjustment. This means that the amount they can invest in their RRSP is reduced by a dollar. This is regardless of who makes the contribution. If the employee makes the contributions the contributions are eligible for a tax deduction. If the employer makes the contributions, they are not eligible for a tax deduction.

The government wants everyone to have a level playing field so the purpose of the pension adjustment is to equalize the retirement savings an employee with a pension can make versus someone who does not have a pension.

When a person retires and they have a DC plan, they have some options. The first is to transfer the value of the plan to a locked-in retirement account (LIRA). The second option is to use the money accumulated in the plan to purchase an annuity. The third option is to do a combination of the first two options.

To make it even more confusing changes in a recent federal budget, when a person retires with a DC plan, they can now choose aa variable payment life annuity (VPLA) or an advanced life deferred annuity (ALDA).

It is important when you are thinking about retirement and you have a DC plan that you talk to an advisor who can make sense of what you have and what you can do that is best for you. One of the first things you may want to look at is the current value of your pension. This is not complicated as all your advisor needs to do is to look at the value of the underlying investments in your plan.

What you don’t know (and this is why it is important to get impartial advice), is what future income this pension will produce. You have a defined contribution pension, which means the contributions to the plan are known, but your retirement income is dependent on the rate of return your investment earned and how much you have contributed over the years.

Employers like the DC pension plan, because it forces the employee to make retirement savings. By having it as part of the employment culture, with the savings coming right off of one’s pay, this type of plan encourages employees to save for their future.

Employees like this type of plan because the employer contributes to the plan. Each plan is different. Some employers may choose to match employee contributions, some may choose to make contributions regardless and some may combine the two in some fashion. No matter how they do it, the benefit is clear to the employee, it is free money toward their retirement savings.

Planning the End of Life, You Want

End of Life Planning begins with an in-depth discussion about your values, wishes and beliefs; It is an ongoing process. Values, wishes and beliefs mean different things; here you can focus on big values-faith-or small values-sitting down with the family for support. This subject needs to be revisited from time to time because people’s views can change depending on a variety of circumstances: health concerns, new medical procedures, new relationships.

While many of us would prefer not to think about the end of life, consider for a minute question like these:

1.    Would I want to die in a hospital or at home?

2.    Do I want extreme life-sustaining measures at        the end or not?

3.    If I can't make decisions about the treatment I       want, who should decide on my behalf?

4.    What happens to all my "stuff" after I am gone?

5.    Will tidying my affairs be a huge burden on my      family and friends?

6.    How will people remember me?

7.    Did I "make a difference" in my time on earth?

As a workshop facilitator for health and wellness, we have a series of workshops on Personal Planning or End of life planning. The questions above are important as a starting point to help you plan and so they are important. Some may consider all of the questions important, while others may think that only one or two are important. The problem is that if you wait to think about these questions until the last minute, it may well be too late to tell anyone what you want. Hence the need for "end of life planning".

The idea is to think things through in advance, document what you want, and share your views with those who will be impacted and can help make things happen the way you want.

No matter where you live, for each of the three areas of end of life planning (end of life care; tidying your affairs; legacy), the planning process boils down to two steps:

Step 1: Understand the choices, and make some decisions

Step 2: Document and communicate what you want — usually, in the form of some specific documents’ others have developed for the purpose. The documents in every jurisdiction will be different so you should become familiar with those you need in your area.

While making the decisions and communicating them is the essential first step, unless you capture the decisions in a set of appropriate documents it turns out all that thinking and deciding might be wasted. At the end of life, the legal system and the healthcare system are inevitably involved with what happens, and unless there is the right paperwork, you don't get what you want.

So, ... a good way to approach this is first to understand what you want and what you need it to look like, and then take a step back and think about making the right decisions, so you can fill out the documents required in your area, appropriately.

The good news is that there is quite a lot of educational material out there to support this whole process, and a number of organizations that have put a lot of work into making the process of learning, deciding, and documenting as easy as possible.

In BC we have the following organizations that you can turn to for support. Each jurisdiction will have different organizations and different levels of support. I suggest doing a “Google” search for “End of Life Planning (your location)”

•     811 Health Link BC Health Link BC https://www.healthlinkbc.ca/health-feature/Advance-care- planning

•     Advance-care-planning https://www2.gov.bc.ca/gov/content/family-social- supports/seniors/health-safety/advance-care-planning

•     Advance-care-planning Canada http://www.advancecareplanning.ca

•     Alzheimer Society of BC provides information and support to alleviate the personal and social consequences of Alzheimer’s disease and other dementias. www.alzheimerbc.org

•     BC Government Advance Care Planning https://www2.gov.bc.ca/gov/content/family-social- supports/seniors/health-safety/advance-care-planning

•     Doctors of BC https://www.doctorsofbc.ca/news/advance-directives

•     Health Care Consent laws are changing https://www.doctorsofbc.ca/sites/default/files/advance-

•     directive-primer_booklet_webupdatedfeb72013.pdf

•     Law Students’ Legal Advice Program Clinics, law students from the University of British Columbia offer free legal help with some legal matters. 604-822-5791, www.lslap.bc.ca

•     Lawyer Referral Service, offers referrals to lawyers who can provide up to a half-hour consultation for $25. Lower Mainland: 604-687-3221, Toll-free: 1-800-663-1919, lawyerreferral@bccba.org

•     Medical Order for Scope of Treatment Brochure https://www.fraserhealth.ca/-/media/Project/FraserHealth/FraserHealth/Health-Topics/Advance-care-planning/medical_orders_for_scope_of_treatment_brochure.pdf

•     Ministry of Attorney General provides information about planning for incapacity. www.ag.gov.bc.ca/incapacity-planning

•     No CPR Form https://www.healthlinkbc.ca/health-feature/no-cpr-form

•     My Voice: Download in whole or in part at www.gov.bc.ca/advancecare

•     Nidus Personal Planning Resource Centre and Registry, provides detailed information about end of life planning. info@nidus.ca, www.nidus.ca

•     Nidus advance directive handout http://www.nidus.ca/PDFs/Nidus_FactSheet_Advance_Directive.pdf

•     Public Guardian and Trustee offers advice on Advance Care Planning 604-660-4444, www.trustee.bc.ca