Making sense of the markets this week: September 6, 2021 + MORE Sep 5th

A. With the Great Resignation looming, many workers who decide to move on from the jobs they’re in today will be transferring pensions from their former employers into locked-in retirement accounts (LIRAs), or into locked-in Registered Retirement Savings Plans (RRSPs). 

There are rules to keep in mind around these transfers. Defined contribution (DC) pension plans can be transferred from a plan provider to a LIRA. Defined benefit (DB) pension plan members who take a lump-sum commuted value payment from their pension can transfer some of their pension into a LIRA, subject to transfer limits. 

A LIRA is like an RRSP, but subject to age and withdrawal restrictions. A regular RRSP can be fully withdrawn by an account holder at any time. A LIRA has limitations, since it is funded by a registered pension plan that is meant to last for life. 

Withdrawals generally cannot be taken directly from a LIRA account…

The rich get richer as rates go lower 

We know that lower rates set by central banks help to stimulate economic growth by providing cheap money. On the flipside, banks also have the option to raise rates and quell too much economic euphoria that might also create undesirable inflation. 

The COVID-19 pandemic has unfairly picked on the economically disadvantaged—and it appears that the monetary response of lower rates could further exacerbate wealth disparity. 

If you want to do more of a deep dive (it’s very interesting, to say the least) into global demographic trends and interest rates and how they’ve shaped our past, and will likely shape our next few decades, check out “Inequality, Interest Rates, Aging, and the Role of Central Banks.” 

From that link, Matthew C. Klein looks at the topic of savings rates of the rich and how they do not spur real economic growth, but rather drives down rates… 

“The key insight is that the ultra-rich are different from you and me: they have much higher saving rates regardless of their age…