Business torrents

The economy is picking up. If only job growth would follow.

A spate of data Thursday showed U.S. factories grew last month at the fastest pace since June, construction spending increased for a third straight month, and both retail sales and auto sales rose in November.

But the number of people applying for unemployment benefits is still too high to signal strong hiring.

The reports offered a mixed picture for the economy one day before the government reports on job growth in November. Economists project that employers added a net 125,000 jobs. That’s not enough to lower the unemployment rate, which is projected to stay at 9 percent for the second straight month.

And manufacturers could face strains overseas in key export markets, especially if Europe’s debt crisis worsens and leads the continent into another recession.

For now, factories are growing. The Institute for Supply Management, a trade group of purchasing managers, said Thursday that its manufacturing index rose to 52.7 in November, up from 50.8 in October. Any reading above 50 indicates expansion.

An index that measures new orders rose to a seven-month high.

Bradley Holcomb, chair of the ISM’s survey committee, said manufacturers “are cautiously more optimistic about the next few months based on lower raw materials pricing and favorable levels of new orders,” he said.

Still, companies have tempered their outlook with concerns about future economic growth, government regulation and the debt crisis in Europe, he added.

Ian Shepherdson, an economist at High Frequency Economics, said the increase in new orders suggested that factory output will expand at an even faster pace next month.

“The economy seems finally to be developing real momentum; growth is accelerating,” he said in a note to clients.

Manufacturing has grown for 28 straight months, according to the index cashadvance. Factories were among the first businesses to start growing after the recession officially ended in June 2009.

Still, the report is consistent with only modest economic growth. Earlier this year, the index topped 60 for four straight months.

Separately, the Labor Department said the number of people who applied for unemployment benefits last week rose above 400,000 for the first time in four weeks. The increase comes after applications had drifted lower over the past two months.

A third report showed that U.S. builders spent more in October on new homes, offices and shopping centers. Construction spending rose for a third straight month, the Commerce Department said. Despite the gains, overall construction spending remained depressed.

The projected job growth in November would be an improvement from the previous month, when the economy added just 80,000 jobs.

Some economists are more optimistic after payroll provider ADP said Wednesday that companies added 206,000 workers last month, the most this year. That survey doesn’t include government agencies, which have been cutting jobs.

Other economic indicators reinforce the outlook for an improving economy. Retailers reported a strong start to holiday sales over the Thanksgiving weekend, consumer confidence surged in November to the highest level since July, and Americans’ pay rose in October by the most in seven months.

Those reports have caused many economists to forecast a pickup in growth in the final three months of the year, to about a 3 percent annual rate. That would be an improvement from growth of 2 percent in the July-September period.

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Eurozone ministers have agreed on measures to give their rescue fund more firepower on global markets in an attempt to ease the pressure on their embattled euro currency.

The 17 ministers meeting in Brussels agreed on options to give the rescue fund more leverage power and build up resources to help bigger troubled EU members such as Italy and Spain.

Earlier Tuesday, the ministers threw a lifeline to Greece, approving an euro8 billion ($10.7 billion) rescue loan so it would not run out of money in the next few weeks.

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Comedian and commentator Rick Mercer’s distinct take on Canadian politics and social issues can be caught on the Rick Mercer Report every Tuesday at 8 p.m. on CBC. In our series on the financial habits of notable Canadians Mercer told the Toronto Star’s Emily Mathieu about his $19,500 row house, why trying to make a living in show business is a gamble and why entertainers, thanks to the nature of their industry, tend not to retire.

How did your childhood influence your attitude toward money?

My parents were pathological about living within their means and there simply wasn’t a lot of money. So as a family there were no trips to Florida but lots of camping trips, the driveway wasn’t paved (still isn’t) but there was money for music lessons, the house is small and had one bathroom for a family of six but it was paid for.

For people who had relatively little money my parents didn’t actually stress about money because they avoided debt. They certainly made a lot of sacrifices. As kids we knew that they would help out with post secondary education, for example, but the entire time I was growing up I doubt my father ever paid more than a thousand dollars for a truck, and he would paint them with a brush. I can’t actually think of anything that my father needed that he bought new.

Even now if I mention to Dad that I went to Canadian Tire and bought a lawn mower I know what he is thinking “Hmm, bought a new lawn mower, fool and his money”.

What was the best financial advice they passed on?

My father said never loan money to friends or at least never loan money and expect it back. If you are in a position to help a friend that’s great and you are in fact obligated to, but don’t expect it back. He was adamant that allowing a friendship to be damaged because of bad feelings around money is inexcusable.

What was your first big purchase?

My first house. I was 19 years old, I paid $19,500 for a very skinny row house, attached on both sides, attached to 20 other houses and a Chinese take out. The house was essentially condemned; it came with a huge binder of work orders from the city of St. John’s.

I was the cliché of a starving actor and actually couldn’t afford to live in an apartment. Owning the house allowed me to live on my own and concentrate on working in comedy. My cousin and a few friends rented rooms for $75 bucks a month. I financed it with $4,000 down which was money that my parents had planned to give me for university. I had payments of $300 dollars a month on a $15,000 dollar bank loan. The down payment from my parents was a hand up that changed my life.

How do you prefer to pay, cash, card or debit?

I have no preference. But I’m careful to pay off my cards monthly. Which I understand is a luxury.

Do you bank online?

Very little.

What has been your savviest investment?

Canadian Banks. Boring old Canadian Banks back in the early 90s.

Have you learned any financial lessons the hard way?

Yes I have and the tip I would give for anyone who is playing around in the market is to avoid people with hot tips.

What advice would you give to people about to enter the entertainment industry?

It depends on what area. There are lots of very good stable jobs in the entertainment industry. It’s an exciting industry. That said if a young person says they want to be a professional actor or musician I generally say don’t. A person doesn’t become an actor, a musician or a dancer because other people encouraged them, they do it because they have to, it is in their blood and they can’t imagine doing anything else.

If you can imagine doing something else you should probably concentrate on that. Being an artist or a performer is a very difficult life, there is no job security. In show business you can’t make a living but you can make a killing, it is a big gamble.

Was there a moment in your career where you felt you had achieved financial security?

Yes and no I don’t care to elaborate.

Do you worry about retirement?

I don’t worry about retirement but I do worry about not working. One of the great things about being an actor or a writer is you never have to stop working. I look forward to playing a crotchety old man.

But all actors worry about not working. When I bump into Gordon Pinsent he will talk about work, where the next job is, etc. He’s worked more than almost any actor alive, he could have retired comfortably decades ago but he is an actor and that’s what actors do, they worry about their next job.

Can money buy happiness?

It certainly doesn’t hurt. Anyone who says otherwise is lying. Money can mean not having to worry about paying the bills and there is no doubt about it for the vast majority of people that is the number one cause of stress in their life. But it all comes back to living within your means.

I’m sure there are people with massive salaries and five million dollar cottages in Muskoka they visit for two weeks a year stressing about bills at the end of the month. So one thing we do know is money can’t buy smarts.

Are money and success the same thing?

Absolutely not.

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A string of explosions hit a Baghdad market and the capital’s western outskirts on Saturday, killing at least 15 people and exposing the challenges still facing Iraqi security forces just over a month before all American troops leave the country.

The bombings mark the second major attack against Iraqi civilians this week and come as American forces are packing up to leave and handing over their remaining security responsibilities to Iraqi forces. Many Iraqis are concerned that insurgents may use the transition period to launch more attacks in a bid to regain their former prominence and destabilize the country.

Iraqi security officials maintain that they are fully prepared for the American withdrawal, which is required under a 2008 security pact between the U.S. and Iraq. About 15,000 U.S. troops remain in the country, down from a one-time high of about 170,000.

Earlier this week, the top U.S. general in Iraq, Lloyd Austin, said that there would likely be some “turbulence” after American troops leave. But he did not think there would be a wholesale descent into violence.

The first blasts Saturday struck an area where people looking for work were gathered in the mostly Sunni village of al-Zaidan, west of Baghdad. Seven people were killed and 11 others were wounded, police officials said.

Hours later, three bombs exploded near kiosks in a market in downtown Baghdad where vendors were selling CDs and military uniforms, killing eight people and wounding 19 others.

“I went outside my shop and saw people running in all directions trying to leave the market area. I saw several bodies and wounded people on the ground,” said Mohammed Youssef, who owns a clothing shop in the area.

Iraqi military commanders later ordered all the vendors selling products in the area to close up their kiosks and move, in an attempt to clear out the area and make it harder for insurgents to hide bombs.

Health officials at Abu Ghraib’s general hospital and at three hospitals in Baghdad confirmed the casualty figures. All officials spoke on condition of anonymity because they were not authorized to release the information.

The market had until recently been protected by blast walls, but the military spokesman for Baghdad, Qassim al-Moussawi, said they were removed because the security situation in the city has been improving cash till payday advance.

The bombers “try to prove their presence and hinder our efforts to remove all the concrete walls, but we will continue removing them and keeping control,” he said.

Baghdad is crisscrossed with concrete blast walls that both reassure and frustrate residents. The walls helped reduce violence and protect areas such as markets or major buildings. But they also create huge traffic jams and hurt the economy.

The Iraqi security forces have been slowly removing the blast walls, but some people in the market area Saturday said they wanted them back.

“We have been expecting something bad in the market after the security forces removed the blast barriers a few days ago,” said Youssef.

Violence has ebbed across Iraq since the height of the fighting, but deadly bombings and shootings still occur almost daily as U.S. troops prepare to leave. On Thursday evening, 19 people died in the southern city of Basra after three bombs went off in quick succession.

As the U.S. has drawn down the number of American troops in Iraq over the last year, the U.S. military has played more of an advising role to Iraqi security forces, leaving the more high-profile jobs such as patrolling and manning checkpoints to Iraqi security forces.

But U.S. troops have played a key role in helping Iraqi forces gather intelligence on suspected insurgents, something that will be lost when the American military departs.

In a recent interview with The Associated Press, Gen. Austin said that Iraqis are very good at human intelligence _ gathering information from a local population that they know well. But they lack the American technology and ability to analyze intelligence gathered from multiple sources and then use that information to combat terror networks such as al-Qaida.

“What we’ve learned about al-Qaida is they have a very sophisticated network and the ability to kind of see themselves across the country, and synchronize activities,” he said. “In order to counter that I think you need the ability to put pressure on the network.”

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Libya’s oil production is quickly increasing and now stands at more than 600,000 barrels a day, a prominent Libyan oil expert said Thursday.

Ali Tarhouni, who just stepped down as the oil and finance minister, said he expects production to reach 700,000 barrels a day within a few days.

He held his government post until a new transitional government was sworn in Thursday. He said he refused an offer to serve in the Cabinet of Prime Minister Abdurrahim el-Keib because of the many challenges it will face in establishing governance and economic stability.

Before the civil war, Libya was producing about 1.6 million barrels per day no fax payday advances. Tarhouni said he expects production to reach about 1.2 to 1.3 million barrels by next June, when elections are scheduled to be held.

“That would be tremendous,” he said.

Tarhouni told reporters in Tripoli that he will not hold any official position for now. He said he plans instead to travel around the country to give lectures and meet with young people in an effort to encourage civil society and democracy.

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At the start of the critical holiday shopping season, the economy received a dose of mixed news Wednesday.

Consumers barely increased their spending in October, and businesses pulled back on investment in long-lasting manufactured goods. Still, Americans’ pay rose by the most in seven months, a sign they may spend more in coming weeks.

Some economists were discouraged by the reports, especially after a separate report earlier this month showed Americans spent more on retail goods in October for the fifth straight month.

Paul Dales, a senior U.S. economist with Capital Economics, said the slower consumer spending growth and decline in business investment suggest economic growth in the October-December quarter could be weaker than first thought. He now expects just 2.5 percent growth instead of 3 percent.

Consumer spending increased 0.1 percent last month, the Commerce Department said. It was the poorest gain in four months. Spending on durable goods such as autos showed a solid increase. But spending on nondurable goods, such as food and clothing, fell.

“Today’s report was a good reminder that much of what consumers spend their money is not purchased at the shopping mall, but is rather spent on their homes and on their health,” said James Marple, senior economist at TD Economics. “With services spending making up 65 percent of total consumption expenditures, the poor performance here more than made up for the continued gains in spending on goods.”

The report also showed that Americans earned more in October. Income increased 0.4 percent last month, the best showing since March. Private wages and salaries drove the gain.

The solid increase followed five straight months of weak income gains. And when subtracting taxes and adjusting for inflation, income rose 0.3 percent in October.

Many Americans chose to save the extra money. The savings rate ticked up to 3.5 percent of after-tax incomes, up from 3.3 percent in September _ the lowest level since December 2007, the month the recession started.

Some economists predicted consumer spending would slow because Americans spent more over the summer while earning less payday loan lenders in states. Consumer spending is important because it makes up 70 percent of economic activity.

A separate Commerce report showed businesses cut orders for durable goods in October. The 0.7 percent decline was largely because of a big drop in volatile commercial aircraft orders.

Still, demand for core capital goods, which are considered a good proxy for business investment spending, dropped by the most since January. That followed two straight months of gains.

Durable goods are products expected to last at least three years. Orders fluctuate sharply from month to month.

A third report showed the number of Americans seeking unemployment benefits rose slightly last week to a seasonally adjusted 393,000 after two months of steady declines.

The four-week average of applications, which smooths week-to-week fluctuations, fell to its lowest level since April, the Labor Department said. The downward trend suggests companies are laying off fewer workers.

The economy grew at a rate of 2 percent in the July-September quarter. The modest growth is not nearly enough to lower the unemployment rate, which has been stuck near 9 percent for more than two years.

Many Americans could take home less next year if Congress doesn’t extend a Social Security tax cut and emergency unemployment benefits. Both expire at the end of this year.

The Social Security tax cut gave most Americans an extra $1,000 to $2,000 this year. If long-term unemployment benefits expire, roughly 6 million families could lose an average of $300 per week. For some, that’s their only source of income.

Both changes would leave Americans with an estimated $165 billion less to spend. The Federal Reserve expects the economy to grow only 2.7 percent next year, and economists say the expiration of the two programs could reduce growth by a full percentage point.

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Security forces fired tear gas and clashed Monday with several thousand protesters in Cairo’s Tahrir Square in the third straight day of violence that has killed at least 24 people and has turned into the most sustained challenge yet to the rule of Egypt’s military.

Throughout the day, young activists demanding the military hand over power to a civilian government skirmished with black-clad police, hurling stones and firebombs and throwing back the tear gas canisters being fired by police into the square, which was the epicenter of the protest movement that ousted President Hosni Mubarak in February.

The night before saw an escalation of the fighting as police launched a heavy assault that tried and failed to clear protesters from the square. In a show of the ferocity of the assault, the death toll leaped from Sunday evening until Monday morning. A constant stream of injured protesters _ bloodied from rubber bullets or overcome by gas _ were brought into makeshift clinics set out on sidewalks around the square where volunteer doctors scrambled from patient to patient.

The eruption of violence, which began Saturday, reflects the frustration and confusion that has mired Egypt’s revolution since Mubarak fell and the military stepped in to take power.

It comes only a week before Egypt is to begin the first post-Mubarak parliamentary elections, which many have hoped would be a significant landmark in a transition to democracy.

Instead, the vote has been overshadowed by mounting anger at the ruling Supreme Council of the Armed Forces, which will continue to hold power even after the vote. Activists accuse the generals of acting increasingly in the same autocratic way as Mubarak’s regime and fear that they will dominate the coming government, just as they have the current interim one they appointed months ago.

The military says it will hand over power only after presidential elections, which it has vaguely said will be held in late 2012 or early 2013. The protesters are demanding an immediate move to civilian rule.

“What does it mean, transfer power in 2013? It means simply that he wants to hold on to his seat,” said a young protester, Mohammed Sayyed, referring to the head of the Supreme Council, Field Marshall Hussein Tantawi.

Sayyed held two rocks, ready to throw, as he took cover from tear gas in a side street off Tahrir. His head was bandaged from what he said was a rubber bullet that hit him earlier Monday.

“I will keep coming back until they kill me,” he said. “The people are frustrated. Nothing changed for the better.”

An Egyptian morgue official said the toll had climbed to 24 dead since the violence began Saturday _ a jump from the toll of five dead around nightfall Sunday. The official spoke on condition of anonymity because he was not authorized to release the numbers. Hundreds have been injured, according to doctors in the square.

At the makeshift field clinics around Tahrir Square, medical volunteers rushed between injured protesters staggering in, or being carried in by comrades. Most of the clinics were simply a partitioned-off sections of sidewalk.

Mohammed Mustafa, a doctor at the main clinic set up inside a nearby mosque, said his site alone was treating an average of 80 cases an hour and that many of the wounded did not want to be taken to hospital because they feared arrest. He and other doctors said most of the injured had breathing and eye problems and wounds to the face from rubber bullets. A number of protesters have lost eyes from rubber bullet hits since Saturday.

During the overnight assault, police hit one of the field clinics with heavy barrages of tear gas, forcing the staff to flee, struggling to carry out the wounded. Some were moved to a nearby sidewalk outside a Hardees fast food restaurant. A video posted on social networking sites showed a soldier dragging the motionless body of a protester along the street and leaving him in a garbage-strewn section of Tahrir.

Protesters also marched Monday other cities, including thousands of students in the coastal city of Alexandria. calling for those responsible for the violence in Cairo to be punished.

The protesters’ suspicions about the military were fed by a proposal issued by the military-appointed Cabinet last week that would shield the armed forces from any civilian oversight and give the generals veto power over legislation dealing with military affairs. It would also give them considerable power over the body that is to be created after the election to draft a new constitution.

At the same time, there are deep concerns the election will bring little democratic change. Many worry that stalwarts of Mubarak’s ruling party could win a significant number of seats in the next parliament because the military did not ban them from running for public office as requested by activists.

Many also believe that whoever wins the election, the military will continue to wield its domination over the next government. The current civilian government has been little more than a facade for the military, activists say. It has done little to bring about economic and political reform and has stood unable _ or unwilling _ to act as woes have mounted in Egypt.

On Monday, German Foreign Minister Guido Westerwelle called on Egypt’s rulers to listen to the protesters.

“Those in charge in Egypt would be well advised to take people’s political demands and justified concerns seriously and act fast to create the right environment for the upcoming elections,” Westerwelle said.

He called on all sides to refrain from violence so the upcoming election can be held in “a peaceful environment” and dispatched his Middle East envoy to Cairo.

Over recent months, security around the country has fallen apart, with increased crime, sectarian violence and tribal disputes. The economy has badly deteriorated. Because of the weekend violence, Egypt’s main stock index fell for a second straight day Monday, and airport officials reported a sharp drop Monday in international passenger arrivals _ a further blow to the country’s crucial tourism industry, which is one of the top foreign currency earners.

One of the most prominent democracy proponents in the country, Nobel Peace laureate Mohamed ElBaradei, called on the civilian government to resign and for a national unity government to be formed “grouping all the factions so it can begin to solve the problems of Egyptians.”

“Power is now in the hands of the military council, which is not qualified to run the country, and the government, which has no authority,” he said on a TV political talk show late Sunday. For the next six months, “we want see the powers of the military council given completely to a civilian, national unity government, and the military goes back to just defending the borders.”

The Supreme Council of the Armed Forces issued a statement Sunday night, saying it does not intend to “extend the transitional period and will not permit by any means hindering the process of democratic transition.”

The military-backed Cabinet said the elections, due to start on Nov. 28, will go ahead as scheduled.

Activists have been holding occasional protests against the military in Tahrir for months, and some have triggered crackdowns by the military or police.

This weekend’s violence was the most sustained fighting between the two sides. It began when security forces stormed a sit-in at Tahrir staged by several hundred protesters wounded in clashes during the 18-day uprising in January and February and frustrated by the slow pace of bringing those responsible to justice.

“The people had a revolution to live a better life, but look at everything,” said 47-year-old Fayez Mohammed, his eyes red from tear gas. He pointed to rising prices, street violence and lack of accountability against members of Mubarak’s regime.

“Our main demand is a date. When are you leaving power?” he said. “And don’t say, ‘Whenever God wills.’”

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Stocks finished about where they started Friday as investors balanced positive signs for the U.S. economy with a looming deadline for a deficit-cutting committee in Congress. Steep declines earlier in the week left the market with its worst weekly loss since September.

The Dow Jones industrial average gained 25.43 points, or 0.2 percent, to close at 11,796.16. The Dow traded in a relatively narrow range, rising as many as 84 points and falling as many as 15. Hewlett-Packard Co. jumped 2.6 percent, the most of the 30 stocks in the index, on an analyst upgrade.

The Conference Board’s index of leading economic indicators rose more than Wall Street analysts were expecting, a sign that the economy may pick up in the coming months. But many investors were cautious as a key Congressional committee remained deadlocked on ways to cut the U.S. budget deficit.

A bipartisan panel must agree on making at least $1.2 trillion in deficit cuts by Thanksgiving. If the committee fails and Congress takes no other action, automatic spending cuts will take effect beginning in 2013. Economists worry that a deadlocked Congress will erode business confidence and slow the already-fragile economy.

The Standard and Poor’s 500 lost 0.48 point, or less than 0.1 percent, to 1,215.65.

Telecommunications and technology stocks fell broadly. The Nasdaq composite slid 15.49, or 0.6 percent, to 2,572.50. Salesforce.com plunged 10 percent after its quarterly results came in below estimates.

The Dow is down 2.9 percent for the week payday loans direct lenders. Broader indexes fell even more. The S&P 500 lost 3.8 percent, the Nasdaq 4 percent. The market fell sharply Wednesday and Thursday on worries that Europe’s debt crisis could spread and hurt U.S. banks.

Encouraging economic reports this week _ including a drop in un employment applications and an increase in industrial production _ did little to help the market because a European meltdown would easily drag down the U.S. economy, said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group.

“Our economy might be improving, but the fixation is on what’s going to happen with the world banking system if defaults happen in Europe,” she said. She said investors are reluctant to take big positions because no one knows how Europe’s problems will be resolved, or how U.S. companies’ future profits will be affected.

In corporate news:

_ H.J. Heinz Co. fell 3.3 percent after the ketchup maker’s income fell almost 6 percent.

_ Gap Inc. slid 2.5 percent after its revenue came in slightly below Wall Street’s forecasts. The company said materials costs are continuing to eat into profit margins.

_ Clearwire Corp. dropped 21 percent after a report quoted its chief executive as saying that the wireless broadband network operator may not make a big debt payment due in two weeks.

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The Federal Government finally tabled the Pooled Registered Pension Plans (PRPP) Act, and I am predictably underwhelmed. The New Retirement Deal, it ain’t.

According to the press release on The Department of Finance’s webpage, Minister Ted Menzies said, “If you invest in a PRPP you will benefit from lower investment management costs associated with the large scale of these funds. Essentially, you will be buying in bulk. This will leave you with more cash in your pocket when you retire.”

So this is it? The RPPP raison d’être, was about enabling Canadians to buy their mutual funds for less?

I have a better idea. Why not nudge Canadians to shop at Costco? You can get soy sauce in 950 milliliter jugs, 500 servings of Metamucil in one package, and four-liter containers of my 6 year-old daughter’s favorite chocolate milk syrup. . If the point is for Canadians to have more cash when they retire, I think there are much more effective ways of doing that.

I thought the point of this whole exercise was to increase pension coverage? One should not confuse an investment plan with a pension plan. The former is just a collection of money that moves up (and down) with market-linked instruments. The latter is a guarantee, a promise, a life time of security. Canadians need more longevity insurance and old-age protection, similar to the pensions of public sector employees. (I enjoy one myself, as part of my job at York University.)

I suspect the reasons 60 per cent of Canadians do not have a workplace pension – and risk having less cash when they retire – is not because they are buying their pensions at an expensive convenience store instead of in bulk.

If, in fact, the main objective the Act was to create cheaper and more secure retirements for Canadians, I would have expected to see some reference to investment costs and life-income products in Bill C-25 itself.

The only meaningful economic restrictions placed on the administrators of these plans is that “they must offer investment options of varying degrees of risk and expected return that would allow a reasonable and prudent person to create a portfolio of investments that is appropriate for retirement savings.” This is still accumulation thinking in an environment that needs de-accumulation and income guidance. So you will now be able to select both a large-cap growth fund and a small-cap value fund in your PRPP. Brilliant.

There is over $500 billion in unused RRSP contribution room, and the Canadians who have all this extra space are quite welcome to purchase low-cost index mutual funds (IMF) or exchange-traded funds (ETF) that already benefit from Minister Menzies’ economies of scale. I doubt PRPPs will make those any cheaper.

Sadly, there was no requirement in C-25 to actually offer products such as low-cost income annuities, which are the closest instruments to the pensions that so few Canadians have. To me, the PRPP looks like a group RRSP with some minor legal and administrative differences. The Provinces will probably introduce very similar enabling legislation.

Overall, I suspect we will eventually observe a crowding-out effect. Canadians who would have contributed to an RRSP anyway, who are working for themselves or in a small business, will participate in the PRPP instead. Although it’s not clear to me that sacrificing the flexibility inherent in an RRSP is worth the slightly cheaper cost of buying investments in bulk.

Whether Canadians will have more money in the pocket at retirement remains to be seen. Abnormally low investment interest rates, unaffordable housing prices and increasing unemployment rates are an order of magnitude more important to Canadian’s secure retirement.

One thing is for certain, a PRPP – like an RRSP, or TFSA—isn’t a pension. It’s just another tax sheltered savings plan. You are on your own.

Moshe A. Milevsky, Ph.D. is an Associate Professor of Finance at the Schulich School of Business, York University and the author of the recent book Pensionize Your Nest Egg.

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ATHENS, GREECE