Ontario | Financial Crooks

Several of our nieces, nephews and other relatives are approaching that magic age—16—at which they can begin learning to drive legally in Ontario. Hearing the moans and groans of neighbouring parents about car insurance for young drivers, I decided to call TD Meloche Monnex and ask what rates they would charge for a new teenaged driver and when.

What’s the First Level of Driver’s Licence in Ontario?

Ontario uses a graduated licensing program. A new driver learning for the first time usually starts by writing a test on signs and road rules. If they pass with a high enough score they are granted a G1 license. With a G1, a student driver can learn to drive with a licensed, insured driver sitting beside them in the front passenger seat. There are a whole string of other conditions about what times of day they can drive, what roads they can drive on, what amount of alcohol they can have in their blood stream while driving (0!) and so on. Check the MTO website for the current rules and restrictions. They change.

Every driver should, of course, be insured. So I called Monnex to find out what their insurance rules are for new drivers who are the children of insured drivers.

What Does TD Meloche Monnex Charge for the Teenage Child with a G1 of an Insured Driver?

We have our car insurance with TD Meloche Monnex. They’ve been reasonable to deal with and they have a group discount rate for Professional Engineers in Ontario. (PEO members)

So I posed them the theoretical question of: If my child is 16 and passes the written test to get their G1, what do I have to do to insure my child?

I was surprised to learn I just have to phone Monnex and add the child’s name to our policy. There is no annual fee for us to have a child student driver added to our policy! No wonder some parents are not in a rush for their child to take their G2 road test.

What’s the Second Level of Driver’s Licence in Ontario?

After learning to drive, and after practicing for one year, a student driver can take the road test to upgrade their license to the second level. If they pass the test they will be granted a G2.

The student can take the G2 test a bit earlier if they take a Driver’s Education course approved by the Ministry of Transportation of Ontario.

I found it interesting that the government is actually listing driver’s education companies to avoid. They provide a list of “Unlicensed driving schools to avoid.”

What Does TD Meloche Monnex Charge for the Teenage Child with a G2 of an Insured Driver ?

We have our insurance with Monnex. We would want to add our child to our policy when they earn their G2.

Monnex wasn’t keen to quote me a rate yet, since this is years in advance. They did say the rate will depend on many factors. It could be around $1200/year for a driver in the GTA.

I mentioned that the driver would be one of three people in a household with only two licensed vehicles. In that case, the agent said the insurance will be more likely to be in the range of $400-800 per year.

Does TD Meloche Monnex Offer an Insurance Discount for G2 Drivers With Driver’s Education and for How Long?

I asked if our child took driver’s ed from, say, Young Drivers of Canada, would it affect the premium.

The agent said generally having drivers’ education from an approved school would reduce the insurance cost by about 5% a year.

The discount would apply for three years after the driver gets their G2 license.

What’s the Third Level of Driver’s Licence in Ontario?

Most drivers will take an “exit test” a year after getting their G2 license in Ontario. This is another more complicated road test. If they pass it, they are granted a full G class driver’s licence. That’s the usual licence us “old folks” have had for years.

What Happens to Our Child’s Car Insurance Rate Once They Get Their G1 License?

That was so far out in the future that the agent wouldn’t quote me a rate. I’ll have to write about that if and when any of our children grow up enough to get their licence so it will be a few years! If your own child has already reached this stage, please leave a comment with any info about insurance costs. I’m sure other readers will appreciate it!

For now, we have nothing to worry about. Our children aren’t old enough to be a menace on the highways, yet. When they are, however, it looks like we’ll have to add a few more thousand to our annual budget.

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Do you have a young driver in your household? Has car insurance been reasonable or a killer? Please share your experiences with a comment.

CPP of $12,000 Equals Poverty

OK, maybe it doesn’t if you have a fully-paid-off home and some other sources of income. But in general, the CPP is not going to provide enough income for many Canadians to live on with a decent standard of living.

And, even more unnerving, most Canadians are not going to be eligible for the maximum CPP. Right now, the average CPP payment is 60% of the maximum. In July 2013 that meant an **annual** CPP payment of $7234. And yes, that’s taxable income.

I very highly doubt that most average Ontarians know just how little they will get from CPP.

Voluntary Retirement Saving Doesn’t Work

I know the government wants us to be grown-ups and save money ourselves for retirement. That’s why they created RRSPs and perhaps part of why they created TFSAs. They also have talked about another voluntary plan called a Pooled Registered Pension Plan.

[Really. They expect Canadians to feel good investing their own money is something called PRPP. PRPP is a sound a baby makes. It does not inspire confidence. Ontario take note and choose something with a GOOD solid secure sounding acronym!]

Despite having access to RRSPs for decades and TFSAs for years, many Canadians don’t have them maxed out. Yet a maxed out RRSP only reflects a saving of about 18% of a person’s gross earned income per year. For an Ontarian in the 46% tax bracket that means they are only setting aside less than 10% of their net income (if they spend their tax refund.)

Although some of us do max our RRSPs and TFSAs we all know plenty of friends and family who don’t. Voluntary saving becomes optional saving when roofs leak, cars break down, children need braces and wedding bells ring.

We Need Forced Retirement Saving

I’m sure there are many people who will literally scream if they are forced to save for retirement by a mandatory deduction taken off the top of their pay cheques.

Tough.

Why should I (who have saved for retirement since the day I graduated) have to pay welfare to keep those who didn’t from starving? (Note that I said didn’t not couldn’t. People who are unable to work would not have to contribute to an Ontario pension if it is a payroll deduction.)

If someone wants to argue that the forced savings amount could be obtained by taking it from the taxes we already pay, presumably by reducing the number of tax dollars the Ontario government wastes, I would not argue with that. After all, a billion dollars to cancel a few electricity plants would have topped up quite a few retirement accounts!

Employers Should NOT Have to Contribute

I know the Ontario government hasn’t announced any details yet but I’d like to suggest they do not make employers contribute to this new pension scheme. Payroll taxes and the cost of complying with them are already onerous. Leave this one squarely on the individual. It will also avoid penalizing workers on contract who usually have to pay both the employee and the employer shares of programs like pensions.

What Do You Think?
I imagine the idea of an Ontario Pension program will have both strong supporters and sturdy opposition. Which side do you fall on? Please share your views with a comment.