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-theHERALD- Wedaesday September 25 Money Matters Pagefl Planning for retirement should start now Recently I read an article by Peter a professor at Acadia University that contained some interesting observations about pension plans and What follows are some of his and some of my comments There are two kinds of employer pension plans The first is the defined benefit plan and the second is the money purchase plan The benefits under both are a function of the contributions and the rate of return of the in vestments to which they are deployed The designer of a defined benefit plan must make an assumption about the rate of return that the pension funds will earn on the average This is usually called the plans valua tion rate and is typically set at 6 to 8 per cent Employees have thus rid themselves of uncertain ty in exchange for accepting this low rate of return on contribu tions Basically they are compen sating their employer for assum ing their share of risk of the fund There is no free lunch here The fact is that employees could earn a higher rate of return without much risk in GICs a Bill or bond fund The money purchase pension can be invested at possibly more favorable rates of return but is subject to current rates which may be low at the time of retire ment and thus affect the pension payments available Given a choice many employees who think through the differences would prefer the higher returns of an employer sponsored Group or a money purchase pension plan Another big advantage is that they are more portable than the years of service that must be toted from one employer to the next in a defined benefit plan Even though inflation is on a down trend now it has averaged over 6 percent for the last 30 years With that in mind the fact is that most employees dont know that there are upper limits that the government imposes on employers regarding the amount of money that pension plans can pay out and that inflation can really eat away the pensioners spending power At percent in flation a annual pension today is only worth a little over in todays prices 10 years from now Pension plan rules are now under review but are typical ly to 15 years behind the times ITS YOUR MONEY Paul J RockHl Maybe an employee would be better off if the employer pension contribution amount were com pensated by the employer direct ly to him or her the tax breaks offered by a personal RRSP could be realized personal savings could be contributed in addition Each could select a portfolio best suited to his or her cir cumstances or attitude towards uncertainty There are RRSP eligible mutual- funds that have earned from 12 to 15 percent over the last years and some that have earned over 15 percent for the last years Or those with lit tle tolerance for risk could have something as bland as Canada Savings Bonds You have to balance rate of return with risk One year GICs have averaged a little under 10 percent return for the last 23 years one of the Sears Canada reaches milestone Sears Canada Inc the nations largest single retailer today opened its 100th retail store in Canada at the Erin Mills Town Centre in Mississauga This store is the first of seven newly ac quired SimpsonsBay stores to be opened in the Greater Toronto area this fall The square foot full- line department store offers the same friendly service trusted brand names quality products and superior values that shop pers across Canada have come to associate with the retailer for the past 38 years in Canada In addition it reflects Sears new emphasis on fashion mer chandise and presentation featuring a larger area devoted to fashion and the introduction of an environment where fashions are presented in individual shops The store that dresses Canada that sells more goods hi more categories than any other Cana dian retailer is also supplemen ting their best selling fashion ap parel with an expanded fashion selection Sears private label pro gramme is being increased and improved with updated styling and quality and national brand names are being introduced Express Alfred Sung and Sen sation by Route for women are two of the new fashion collections to be introduced which have been exclusively designed for Sears Other highlights of the store are an expanded cosmetic and fragrance area with many new brand names Mens Wear features a Wimbledon Shop for men offering an exclusive line of casual clothes as well aB recognized labels such as GWG Rileys an exclusive line of womens shoes is being in troduced and hot looks such as Chip and Pepper fashion for kids have been added We do not want to give anyone the idea that we are trading away from our existing customer states Joseph Reddlngton President and CEO but we do want to try to expand our fasion assortment to be a little more fashionforward and give our customers a broader selection Sears continues to offer its traditional wide selection as a fullline department store in cluding home furnishings and ap pliances entertainment hard ware and sporting goods as well as home improvements To provide customers with the convenience of catalogue shopp ing the store features a Full Ser vice Catalogue Desk with Inspec tion Desk and fitting room Special services offer a Por trait Studio and Travel Service Sears is extremely proud of this new store and in the words of An nette Store Manager Our employees most of whom are former Simpsons sales peo ple are very excited and looking forward to welcoming our customers to this newest Sears store ARE YOU TIRED OF PAYING TOO MUCH INCOME TAX Would you like to make your tax dollars work for you Only out of 100 people have private investment income Would you like to be one of the five Would you spend 2 hours to learn how to INVEST IN YOUR FUTURE If you are a business owner executive professional or have a combined family income of or more plan to attend our meeting and find out how you can save tax dollars and earn nontaxable income with a business investment If you are in a position where you can no longer contribute to an RRSP plan to attend If you have a large RRSP account and would like to know how to pay less income tax on the cash out of this account plan to attend MEETING HIGHLIGHTS 1 The effect of inflation and taxation on your savings dollars 2 The value of a repositioned dollar 3 How to have income tax dollars work as hard for you as you did for them The importance of financial planning 5 Money is governed today by the same laws which controlled it when prosperous men thronged the streets of Babylon years ago Call for Reservations liNVCSTHENTa Thurs Oct 3rd 00 pm Country Inn Ontario Limited attendance to 25 people No charge best known mutual funds have averaged 15 5 percent over the same period If you had invested per month or a total of for the 23 years as of June 1 you would have from the 10 percent investment and In the mutual fund Over twice as much Which would you rather have Finally most importantly upon retirement funds help in an can be converted to your choice of ah life annuity a term- certain annuity or a registered retirement income fund Or part of your funds can be put into all three or you can have more than one RRIF Anyone at deaths door can- tilt the payments in a RRIF towards the present and at death the capital balance can roll to the spouse tax free The continuing income is taxable Payouts from a mutual fund can be changed as needed But and this is a big but Funds of any kind in a pension plan can only be drawn out as monthly pension payments which is the same as a life annuity Sure some plans opt for continuing the payments to the surviving spouse at percent but you can be sure that this has been carefully calculated by the actuaries who design the plan The payments for this feature white both are alive are usually less Whatever else one reward of not belonging to a pension plan is much more flexibility at an age when spending decisions are crucial For a comparison between an actual mutual fund and a 10 per cent investment contact Peter Regal Capital Group Drive Georgetown Opt or phone 8777216 Paul J is the author of the best seller Why Invest in Mutual Funds and President of Regal Capital Planners Limited a year old financial planning company with offices from coast in Canada Youre Invited To An Open House OUTDOOR POWER EQUIPMENT invites you to our 6th Annual SkiDoo Open House Check out new models clothing and Accessories all at special pricing There will be Door Prizes Refreshments and much more Cut out the coupons below for more savings Sunday September 29th 1 000 am300 pm ski ia9i Formula Mach 1 THIS IS YOUR LAST CHANCE FOR RED HOT DEALS PRICING VALUE with the purchase of Full Face Helmet Only at Open House with this coupon OUTDOOR POWER EQUIPMENT 61GuelphStHwv7 GEORGETOWN 8770314 FREE DOUBLE VISOR FREE OPEN FACE HELMET VALUE With the purchase of a Used Snowmobile Only at Open House with this coupon OUTDOOR POWER EQUIPMENT GEORGETOWN 8774314 FREE cover With any new Snowmobile Only at Open House with 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