BigAssSuperstar left a comment on my previous post about my net worth update. As he pointed out :
"Now that's something I hadn't considered doing ... adding my company pension value into my NetworthIQ. Is that a typical thing to do? I mean, I got a company pension statement in the mail a month or two ago ... and if I added in the present value of that, I'm certain my graph would spike up... I just never considered adding that as an "asset", as I consider it something I don't have access to until years in the future."
Do you include pension in your networth? I will not include pension like CPP in my net worth for sure because it is largely affected by the government policy. Will it still be there when I retire? I don't know. But in terms of company pension, I think as long as it is vested, it is fine to list it as your assets. Of course, it is locked-in, but, I mean it is still your money, isn't it? There is little difference between RRSP and pension I think. They are both your retirement fund, right?
8 years ago
4 Comments:
I would DEFINITELY include a pension into your networth! It's your money! Sure you won't be able to access it for a while, but it's still yours.
When I'm eligible for my company's pension plan, you can sure bet I'll be adding it to my NetworthIQ. :)
Interesting ... thanks for the insight.
I'm not sure yet whether I'm going to add my company pension to my networthiq list. Sure, it's my money -- well, the portion *I* put in, anyway -- but it's not an asset I can get at if I want it. I see my 'assets' as 'money I could spend if I absolutely had to.'
Likewise, I have a whole life insurance policy ... I know, I know, whole life has a bad reputation ... there's tens of thousands of dollars of 'cash value' in there after the past 20+ years of paying into the policy. But do I put that as an asset? Sure, it's "my money" and I could borrow against the policy I suppose ... but is it an asset? Is it spendable money?
If I'm going to go that far -- do I start putting regular perpetual bills like insurance premiums and rent in the liabilites?
While I love the idea of plumping up my net worth with something like a company pension, I still don't feel right about getting that beautiful number with money I can't really touch. I"m not convinced a creditor would take that same pension into account when calculating my net worth for a loan.
Anything I'm missing?
First of all, I did not add the company pension into my net worth because I want to have a beautiful number. I added it because I consider it as MY money. If your pension is vested, there is no difference between MY contribution and MY COMPANY'S contribution. I can transfer ALL of my pension, both my contribution and my company's contribution plus any investment earning(or minus any investment loss) into a locked-in RRSP account if I ever decide to leave the company.
In terms of accessing the money, you can get the money after you are 69 no questions asked.(If one has built up enough emergency fund, I don't see any reason to touch the money until you reach 69). Some of the provinces allow you to access all or part of the money before 69 under certain circumstances. I do not have the policies in front of me. But one can do a search online. There are plenty of information.
For creditors, I don't think they grant your loan based on your net worth anyways. I think they use income-to-debt ratio. Who get asked for net worth when applying for a loan? They only asked for my income when I got my car loan.
I don't have much knowledge in insurance. So I could not commend on the whole life insurance part.
Found an article recommending pension inclusion in net worth calculations:
"Financial assets include investments within and outside an RRSP, bonds, savings, pensions and the cash surrender value of insurance policies. Statistics Canada does not consider Canada Pension Plan contributions financial assets.
According to StatsCan total liabilities are any debts owing including: consumer credit, mortgages, loans to purchase securities, renovation loans and any accounts payable."
Details in the article at http://magazine.globeinvestor.com/servlet/ArticleNews/story/GIGOLD/20060111/wjackson0111/GIGOLDMAG/news
Other opinions at the Finance and Law blog.
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