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Pensions are definitely a political hot potato in most countries around the world as population demography changes with an increase in the numbers of retired citizens. Canada is no exception as private pension schemes are being promoted to take the heat off the Governments Canada Pension Plan that many analysts believe will not be able to cope in the future. Please note that any pension payments are classed as income and will be subject to standard taxation rules. Using the services of a professional financial planner will enable you to plan your retirement income in the most tax efficient way.

There are 3 levels of pensions:

Old Age Security

The most basic level of state pension is the Old Age Security payments. This is available as a monthly payment to most people over the age of 65.

Canada Pension Plan (CPP)

Once you are working in Canada, your paychecks will show deductions for the CPP to a set annual limit (approx $1800) (Quebec has its own system). The amount you pay is based upon 2 limits and your employment type (self or employed). The lower limit is frozen at $3500 and the maximum limit (adjusted every year), currently $40,500 you will only pay a percentage of the income between these limits. If you earn $100,000 a year you will not pay any more into the plan than someone on $50,000 a year. These payments will enable you to receive benefits from the plan should you become disabled or retire and, if you die, to your surviving family members.

RRSP

To encourage Canadians to save for their retirement, the Government has given substantial tax breaks to people who pay into Registered Retirement Savings Plans RRSP. The plans are government sponsored but privately administered with management fees charged by the companies that offer them. All capital gains in the plan are sheltered tax free while the plan is in force. Any cash withdrawn in retirement is declared as income on your annual tax return.

There are annually adjusted limits on the amount you can contribute to your RRSP. These are 18% of your previous years Canadian salary to a maximum of $14500. This is where being an immigrant becomes a pain. Basically, you will not have an allowance for the first calendar year you are living in Canada so any payments you make will be classed as an over contribution. You can get away with a $2000 over contribution, but over that you will be taxed. If your employer pays into a company plan that is a benefit for all the employees you will not be penalized just be careful with any voluntary payments.

There are special rules governing the use of RRSP funds. Some plans are locked in and therefore inaccessible until the plan matures. Most RRSP arent locked in and so are available to be withdrawn before plan maturity though penalties and conditions will apply.

Many couples opt to use a spousal RRSP. If one partner earns substantially more than the other this gives a tax break straight away by giving the higher paid partner some of the other persons allowance. The retirement income is evenly split between the two which will reduce the tax paid.

Normal retirement age is 65 though you can work beyond that. Before age 69 you will have several options for more information go to http://www.onestopimmigration-canada.com/Pensions.html

Before You Leave (For newcomers)

The chances are you will have pension schemes in the country you are leaving either private or state run. This can cause a major headache to sort out.

The first thing to do is to ensure that you have up to date information on all pensions you may be entitled to and these plans have your latest contact details. Most pensions will pay out only if the plan holder contacts THEM. You must ensure you have the contact details and let them know you are moving to Canada.

Check and get written confirmation that the pension plan will pay to a Canadian bank account if not you will have to make alternative arrangements

For state pensions, Canada has social security agreements with many different countries regarding qualifying time for state pensions so check these to see if it helps you.

If you choose to transfer to a Canadian plan, check to see how much it will cost and if there are any additional penalties incurred as it may not be worth it. If it is ensure all the ground work is completed before you leave and you have points of contact to deal with to make it a smooth transfer or someone to sort it out if its not! You cannot open a Canadian Pension until you have a SIN (Social Identification Number) so this cant be done until you have landed.

The current state of the economy and unemployment rate may have you frustrated. Consider the following steps to save money, downsize and recycle. Adding your savings to those unnecessary expenses that leech off of your budget can help foster a frugal lifestyle.

1. Keep One Car – Besides your home, your car is probably the second highest expense in your budget. Cut down to one car so you are forced to use public transportation, carpool, and bike or walk to work. Telecommute if possible, saving money on gas, lunches out and professional clothing and dry cleaning. Further, look into a smaller economical car versus an SUV, saving tons of money annually on gas, tires and insurance.

2. Downsize your Living Space – No need for the expansive McMansions to impress the Joneses. Instead, pick as small as house as possible, while still being comfortable to save thousands on utilities and mortgage. Renting can also save you a lot of money, especially in certain markets. After mortgage interest, the cost of insurance and maintenance, buying a home can cost much more than renting, especially if you invest your savings.

3. Recycle – Check at second hand stores and yard sales for gently used clothes, electronics or furniture or visit websites like Craigslist.com or Freecycle.com to find just about anything. Recycle your aluminum, paper or glass for some extra cash or repurpose old items for new uses.

4. Cook at Home – Cutting down on eating out, brown bagging your lunch and cooking the majority of your meals at home can save you thousands of dollars per year. Create a weekly menu to try new things and engage the family to make it more fun.

5. Wait it out – Save yourself from pricey impulse buys and give yourself a cooling off period. Create and keep a wish list and date each item that you want. Make it a rule not to buy anything off of that list for 2 -4 weeks. After the wait, get the item if you are still pining, but you are likely to save a lot more with this system.

6. Save on Entertainment – Cut out your cable service (up to $1200 per year), cancel magazine and newspaper subscriptions to read online, frequent the library for free book reading and DVD rentals, go on a hike or play board games to present virtually free family activities.

This was a guest post by GoBankingRates.com, a site that provides daily updates on the latest CD rates, finance information and more.

If you need some extra money there is a nice loan type for this purpose payday loan. So, if you are skint, you can apply for this loan until your next payday. And its indubitably, that payday loan is a quickest and one of the most convenient ways to receive cash into your wallet for your uncontemplated needs. Cash advance is another term for this loan type. Payday loans are very akin to other debt operations, but have some special particularity. Shortly, payday loan is just a usual loan, but its a short-term and has large application fee.
One of the interesting features of cash advance is debt consolidation. So, the rules are very similar as other loans. If you have many different debts, its possible to unite all of your debts into just one loan. Debt consolidation is a helpful payday loan option, and its helped many people with there financial problems. In addition! With the help of such loan consolidation you can substantially abate your monthly loan payments.
Other very good advantage is that you can have bad credit history or no any credit history. Payday loan lenders put this financial risk of their work with no credit history borrowers in a high application fee. Its nice news for people with some finance troubles in a past, which signed in their credit history, or for people, who just came from abroad as an immigrant and refugee.
The loan application is fully online. There are some easy steps for apply:
1.Choose your online payday lender.
2.Read about lender conditions. Especially, closely examine rate of interest.
3.Fill online form.
4.(Some lenders need a fax with your personal information.)
5.Receive approve (15 min 1 hour) on your email.
6.Receive cash on your saving account.
If you want to apply for payday loan you have to correspond some requirements: you must be at least eighteen years of age citizen with valid saving or checking account.
Many people find payday loan services very favourable. Really, you have to fill only one online form. Approve is also usually very fast. Thus, the loan process is very quick, because its does not involve any other information commonly required for some other loan. Often your cash can be in your account within one hour! Is it attractive? Yes! But remember – payday loans have the biggest charges of any loans types. Itll cost you plenty of money!
Payday loan application fee differs greatly, each lender has its own loan interest rate. Its not a waste of time, to carefully compare conditions of many lenders. Payday loan process is very quick, but we strongly recommend to spend much more time to choose the best lender for your particular situation. Thus youll find lowest fee on your payday loans application. Youll be very surprised that there is wide difference of interest rates between services, which provide cash advance. Those, who say that payday loan is too expansive, just didnt find a suitable online service with acceptable rates.

The 401(k) retirement plan is funded by employee contribution and a matching employer contribution. The major feature of the plan is that the contributions are taken from pre-taxed salary. The fund accumulates tax-free until it is withdrawn. Most businesses and tax-exempt organizations can create these retirement plans.

The 401(k) takes its name from the IRC (Internal Revenue Code) of 1978. The operation of the 401(k) is administered by the EBSA (Employee Benefits Security Administration) of the Department of Labor.

The 401(k) plan has a lot of advantages. First and foremost is that the employee can contribute pre-tax money that reduces the tax paid in each paycheck. Also, the company contribution and any growth in the fund is free of tax until withdrawn.

The compounding of the fund during a 20 to 30 year period is quite amazing. The employee has a lot of control in the direction of the future contributions. When the company matches your contributions, it adds something extra on top of your own money. All money in the plan can be moved from one company to another unlike pension.

The 401(k) plan is protected by pension laws since it is a personal investment plan. It includes protection from garnishment by creditors but not from domestic cases that include child support.

There are some disadvantages in the 401(k) plan, it is hard to get your 401(k) contributions before age 60 (59 1/2 to be exact). The 401(k) is not insured by the PBGC (Pension Benefit Guaranty Corp). Also, the company contributions do not kick in until a certain number of years of service have been given. The rules state that company matching contributions must either be a 3 year ‘cliff’ plan (100 percent after 3 years) or a 6-year ‘graded’ plan.

Employees participating in a 401(k) plan have many options for investment. In most cases a listing of mutual funds. The mutual funds usually include money market fund, treasuries, stock funds and bond funds. Some plans may include investing in company stock and US Savings Bonds. The employee gets to choose how the savings is invested. The employee can also choose at any time to stop contributions.

Financial advisers usually say that the average 401(k) contributor is non-aggressive in terms of their investment options. Stocks have historically outperformed other types of investment, since the 401(k) is a long term investment it should be able to minimize the stock fluctuations.

What Will You Do With Your Credit Card Debt? Credit Card Debt Solutions

With Consumer Debt at a National high, many Americans are faced with increasing credit card interest rates, minimum monthly payments, etc. It is becoming harder and harder to meet our monthly obligations each month and many consumers are looking for answers.
This article will give you a brief run-down of the options that are available today to help make the decision a little easier.

The first option is to keep doing what you are doing now. Make your monthly minimum payments, pay increasingly high COMPOUND interest and lose thousands of dollars over the course of several years doing so. According to Bankrate.com, the average household has approx. $30K in unsecured debt. Did you know that paying the minimum monthly payments will cost you $112K in interest and it will take you approx. 59 years, yes you heard correctly, YEARS to pay off? That is a definite financial choice that will put you in the poor house quicker than anything else. When you are paying interest like this, it does not even benefit you to save your money in a savings account, because the interest would not gain fast enough to offset the interest you are paying on your credit cards. So, what should you do? Consider the other options!

The next option is a Debt Consolidation. This is a generic term now being used but true debt consolidation is taking your current debt load and rolling it into a new loan, with interest over a longer period of time. You will either need some security like a home or bank account. You will pay interest that is non-compounded, which is definitely better than compound interest; however, you will spread your debt over a longer period of time and therefore shell out more cash than necessary. If you have a small debt load, under $10,000, This may be a good option for you if you dedicate yourself to making larger monthly payments than are required, paying off early if possible.

Another option is Consumer Credit Counseling . You will recognize these companies because they usually have a non-profit status. They are actually sponsored by the credit card companies themselves and they have what is called a fair share arrangement, meaning the credit card companies pay these companies to keep you paying them. Your money is not dispersed into an escrow account, but the cccs companies disperse it evenly amongst your creditors how they see fit. You will not experience any relief from your monthly payment since they will stay pretty much the same. Interest rates are lowered most often, but are not completely eliminated. I have heard many complaints that payments are skipped and facts show that most enrollees in this type of program quit after the first 12-24 months. The reason being is that your credit report is negatively affected closely to that of a bankruptcy. When lenders and loan companies see an account managed by CCCS, they view it the SAME as a BANKRUPTCY. These types of programs usually take about 5-7 years to complete. Once the program is completed, the creditors release comments about CCCS on your credit report. To Sum it up, you have no monthly savings relief, you still pay your entire debt plus interest and your credit is negatively impacted for 5-7 years.

The last option I will outline is Debt Settlement. This type of program is becoming increasingly popular because of its many benefits to consumers. Debt Settlement Companies are experts at negotiating your debt down, on average for all cards/accounts, to 40% to 70% of what you owe. One card may settle at 80%, even 100% in some cases, the next card could be 30%. The end result is an overall total average of 40% to 70% of all the cards. This will be based on who your creditors are and their criteria. Creditors are directed to speak only to Certified Debt Mediators once enrolled and the process begins. Enrollees are set up on monthly payment plans, usually at a savings of 50% out of pocket providing immediate cash flow. You will be set up with one monthly savings amount, which will be deposited into a secured trust account at a Bank. Savings amounts are YOUR money. Settlement Companies have no access to it, beyond their fees, and neither do the creditors. It is a secure, protected trust account. This is the money, as it accumulates, that will be used to settle your debts. The consumer will have control of their own funds throughout the whole process. The average time a consumer is in the program is 12-36 months. During this time, the creditors will be reporting late pays on the consumer’s credit report while this process is going on. As settlements are reached with each creditor, the creditors will report a settled in full, paid with a zero balance. So, ultimately, at the end of the program, then your debt to income ratio will have improved and your credit will begin to heal itself for the future. In addition, you will not have the long term effect of a public record as you would with a bankruptcy.
Debt Settlement Companies do charge fees for their service, because creditors are not in alliance with DSC’s and do not give them kick backs for payments like in Consumer Credit Counseling programs. The fees average 15%-18% depending on which company you choose and the quality of service they provide. Most established firms will offer an online back office in which you can track your payments and settlement activities. Often times, fees are looked at in a negative light. But if you actually do the math, the savings still add up to substantial amounts and your credit gets back in shape pretty quickly. For instance, for $30K in debt and fees at 15% or $4500.00, you will still have an average savings of approx. $10,500. That is nothing to sneeze at! If your credit is a concern, then you must weigh your priorities.

Becoming debt free will give you many more advantages in your long term financial path, then two years with some late marks on your credit report. You may even consider credit repair after you are out of this type of program.

According to the AA, the average cost of running a small family car over 10,000 miles per year was 5,611, up from 5,534 in 2006. Depreciation is the main cost issue to consider, accounting for around half the annual running costs.

Fixing your annual costs by renting a car for up to two or three years is becoming more and more popular, according to Ling Valentine (34), the extrovert Chinese immigrant owner of LINGsCARS.com.

This method of financing a brand new car, (commonly referred to by the catch-all phrase “leasing”) avoids increasing interest rates and APRs, by fixing the monthly rental of a new car in a simple, clear figure. This monthly payment can then be compared on a like-for-like basis across a wide range of new cars, something that is almost impossible with the many different “offers” surrounding traditional finance.

“The monthly cost depends on several factors”, says Ling, from her Gateshead ‘World Headquarters’. “First I take the discounted price of the new cars I get from ordering in bulk, often from dealers who need to shift volume to hit targets. Then, I check around a dozen different contract-hire finance providers, who will each value the residual value differently, guessing what the car will be worth to them at the end of the lease term. Finally, I package this together, making sure my own overheads are dramatically less than those of other providers, including the franchised car dealers and car companies themselves. I do not have dozens of expensive glass-palace showrooms to run.”

The result is that LINGsCARS provides, at the touch of a button on a web-browser, a price list of over 400 different brand-new makes and models of cars, all with an easily comparable monthly rental figure. Ling even does something which is unheard of in the new car trade, and lists every car in price order, allowing visitors to her website the ability to compare cars from a 111 a month Chevrolet Matiz to a 735 a month Range Rover. No car dealer in the UK allows that “street-price” comparison, across such a wide range. She lists prices based on annual mileages of 10, 15 and 20,000 miles, suiting most peoples’ use; “You are rewarded for driving less, a very Green way of doing things”, she claims.

New car dealerships often require you to put down a large deposit and then take out a finance deal on a brand new car, or the alternative is to take a loan and write a large cheque. Lings argument is why tie up large amounts of your capital or borrowings in a car? “I only ask for three-months rentals as an initial payment, followed by a direct debit payment every month. For a nice new car costing around 300 a month, such as a SAAB 9-5, or a Kia Sorento 4×4, or an Alfa GT or the latest Honda CRV, that means you only have 900 invested, and you are paying the rest month-by-month as you use the car. At the end of the agreement, the car is simply returned to the finance company, you can’t keep it. You have just paid for the use of the car. It is impossible to fall into negative equity, and there is no lump sum to pay at the end.”

“I would suggest you put your spare cash into your house or your savings, not into a big deposit on a new car, which is a depreciating asset”, says Ling.

The necessary oil and filter servicing is cheap, Ling insists, as the cars are brand new and never fall due for an MOT and are unlikely to need major items like brakes and tyres. She says road tax is fully included for the term; “I deliver these new cars to your door, all you have to do is insure them, service them and put fuel in them”.

Breakdowns, which are unlikely on new cars, are fully covered by the manufacturers warranty. Some AA or RAC type cover is included for at least the first year. A big benefit is safety; new cars have the highest safety ratings and the latest safety equipment built in, an important consideration for families.

Talking about traditional new car ownership, the AA says: “As most owners come to pay their motoring bills, each is more expensive than last year’s undermining claims that cars are getting cheaper to run.”

Ling insists she can change that; “As long as you are credit-worthy and you look after the car like it is your own, you can release the equity in your current car and get into the cycle of changing your car for a brand-new one. You can do this very cheaply, every two or three years”, Ling says.

It is no wonder that in 2007, LINGsCARS rented over 28m of new cars, and that Ling has been awarded “Best non-franchise motor industry website of the year*”. In this Beijing Olympic year, this is one Chinese who is already winning medals in the UK!
* Automotive Management Awards, Feb 2007.

Everyone likes to save money. Auto loans can carry significant financial burdens for many people. One way to save money is to lower the financial burden these loans carry. The best way to save money on your next auto loan is to improve your credit score. A higher credit score means a lower auto loan interest rate. There are four basic tips for raising your credit score.

Regularly check report The first thing each and every individual should do before applying for an auto loan is get their own credit report. Checking credit reports for accuracy should occur once a year. If there are any mistakes that negatively affect your credit, corrections can take up to three months to fix. Staying on top of these mistakes will save you headache in the long run.

Reduce credit card balances An important factor in your FICO credit score is the ratio of owed amount to credit limit. If you have over 25% of your credit limit owed, this could lower your credit score. Try to limit the use of credit cards if this is your problem. Pay bills timelyPaying bills on time is one aspect of good credit in which most people are aware. Be sure you make timely payments on bills especially close to the time you apply for a loan. A late payment six years in the past will not affect you credit as heavily as a late payment in the present.

Pay off debt Many credit cards offer appealing balance transfer rates. Do not fall victim to these rates around loan time. If you cancel a credit card and transfer it’s balance over to another credit card, you are increasing the debt to credit limit ratio. As stated earlier, this is not a good thing. Instead of transferring debt, work on paying off that debt before applying for an auto loan.

There are many reasons why improving your credit score is so important. Saving money on auto loans is just one of the many benefits of having great credit. Improving your credit not only improves the health of your current financial situation, but sets you up for future financial success.

The 401(k) retirement plan is funded by employee contribution and a matching employer contribution. The major feature of the plan is that the contributions are taken from pre-taxed salary. The fund accumulates tax-free until it is withdrawn. Most businesses and tax-exempt organizations can create these retirement plans.

The 401(k) takes its name from the IRC (Internal Revenue Code) of 1978. The operation of the 401(k) is administered by the EBSA (Employee Benefits Security Administration) of the Department of Labor.

The 401(k) plan has a lot of advantages. First and foremost is that the employee can contribute pre-tax money that reduces the tax paid in each paycheck. Also, the company contribution and any growth in the fund is free of tax until withdrawn.

The compounding of the fund during a 20 to 30 year period is quite amazing. The employee has a lot of control in the direction of the future contributions. When the company matches your contributions, it adds something extra on top of your own money. All money in the plan can be moved from one company to another unlike pension.

The 401(k) plan is protected by pension laws since it is a personal investment plan. It includes protection from garnishment by creditors but not from domestic cases that include child support.

There are some disadvantages in the 401(k) plan, it is hard to get your 401(k) contributions before age 60 (59 1/2 to be exact). The 401(k) is not insured by the PBGC (Pension Benefit Guaranty Corp). Also, the company contributions do not kick in until a certain number of years of service have been given. The rules state that company matching contributions must either be a 3 year ‘cliff’ plan (100 percent after 3 years) or a 6-year ‘graded’ plan.

Employees participating in a 401(k) plan have many options for investment. In most cases a listing of mutual funds. The mutual funds usually include money market fund, treasuries, stock funds and bond funds. Some plans may include investing in company stock and US Savings Bonds. The employee gets to choose how the savings is invested. The employee can also choose at any time to stop contributions.

Financial advisers usually say that the average 401(k) contributor is non-aggressive in terms of their investment options. Stocks have historically outperformed other types of investment, since the 401(k) is a long term investment it should be able to minimize the stock fluctuations.

If you are looking for a way to save money, but always find yourself dipping into your funds, try opening up more than one account at your bank.

By having more than one account you will be able to keep your money separated, which will help you avoid spending cash that you should not be touching. Of course this can all be done with one account and some self control, but it is not always that easy. By having an account for many different reasons, you will be able to keep your money separated, and only withdraw funds from the appropriate account.

The first account that you will want to set up is a savings account. You should put money into this account and never touch it unless you are in an absolute emergency. Savings accounts will also earn you interest depending on how much money you keep in the account. This will give you an incentive to keep as much money as possible in your account.

Next, you will want to have a checking account that you can use to pay any bills that you may have. This way, you will know exactly how much money you have available each month for your bills. By having a checking account you will also ensure yourself of never having to go into your savings to pay bills.

Also, many people have found it to be very beneficial to start a personal account where they keep money that they only use for leisure. By doing this, you will be able to keep track of how much money you spend on things outside of bills. This will also help you to learn to budget your money more efficiently.

You can also open a separate account for any special items that you are saving for. If you want to take a dream vacation, why not open an account for this? Then you will be able to put a certain amount of money into the account every month in order to reach your goal. Many people overlook this type of account, but it offers many benefits and advantages.

Overall, having a number of different bank accounts is a great idea. This will allow you to easily control your spending and saving. You should open as many accounts as you need in order to keep your finances organized. By doing this you will soon find out that you are more organized than ever before.

Where do you keep your money that you set aside for annual or semi-annual payments or for emergencies where you need extra cash quickly? You dont want to draw funds from any of your savings or investment accounts there may be a penalty for early withdrawal or it might be financially disadvantageous at that time.
Most people just keep what they have in their checking accounts where it earns nothing or next to nothing. Some dont keep funds for emergencies and just hope for the best or depend on luck.

Luck always seems to be against the man who depends on it.

-Unknown

Heres another question. Do you set anything aside in case you need to pay the deductible on an insurance claim?

A good place to put funds for infrequent payments or for possible emergencies is in a money market account where interest rates are most often higher than savings accounts and are more accessible. Some banks offer even higher rates on Internet money market accounts. You really need to check your banks rates on various types of accounts to see which would be best. Its good to compare banks. There can be a big difference. Money market accounts require a higher balance, but the amount you will need to keep in it will more than meet that.

The good thing about money market accounts is that even though there is a limited number of checks you can write on it in a given time period, it is usually more than enough for most people.

When you plan your budget, you will need to make payments to this account until the balance is sufficient to cover your home and auto annual or bi-annual payments and cover all your deductibles for your home, auto, medical and dental policies. Once this account is fully funded, the interest earned will be able to reduce your monthly budget payments that go to replace that which was used for insurance payments or for emergencies.

With this account in place, you will be able to take the highest deductible allowed thereby reducing your monthly insurance payment. If you pay your auto insurance quarterly or twice a year, you now will be able to make an annual payment, saving on the service charges.

Money market accounts may not earn the kind of return as a mutual fund or other types of investments but it is definitely better than most savings and checking account interest rates. Money market accounts have the advantage of easy access for your infrequent financial needs.

With a little self-discipline, you can give yourself some efficient financial security by enabling your money to work for you in several ways.