Important changes to the Advantages Retirement Plan™

Vanguard, the investment manager selected to provide target-date funds for the Advantages Retirement Plan™, has decided to wind down its Canadian target-date funds in the spring of 2021.

Vanguard, the investment manager selected to provide target-date funds for the Advantages Retirement Plan™, has decided to wind down its Canadian target-date funds in the spring of 2021. This decision came as a surprise to us and is unrelated to the performance of the funds within the Advantages Retirement Plan™, which has been strong, but is part of a broader global product realignment at Vanguard.

We would like to reassure you that your money now invested in a Vanguard target-date fund will remain in the fund for the time being.  You do not need to take any action today.  You can continue to make contributions to and withdrawals from the Vanguard target-date funds now offered under the Advantages Retirement Plan™ until changes are implemented.

Vanguard’s decision does nothing to alter OMA Insurance’s long-term commitment to delivering a high-quality retirement program for the physician community. The Advantages Retirement Plan™’s Investment Committee, OMA Insurance team and our partner Common Wealth have already begun the process of choosing a new target-date fund provider for the plan. The objectives are clear: find a new provider of low-cost, diversified target-date funds and ensure a smooth and seamless transition to a new investment manager.  Further information will be provided as it becomes available.

Below you will find answers to questions you may have. For any other questions or if you would like to discuss further, please do not hesitate to reach out to the OMA Insurance team. Contact us at info@omainsurance.com or 1-800-758-1641 (select option 1).

Sincerely,
Terry Caputo, Chief Financial Officer, OMA Insurance
Kayte Fredrickson, Vice President, OMA Insurance

FAQs

What is happening?

Vanguard, the investment manager selected to provide target-date funds for the Advantages Retirement Plan™, is planning on winding down its Canadian target-date funds in the spring of 2021.

Why is it happening?

Vanguard has made a business decision to wind down its Canadian target-date funds as part of a global product realignment. As a result, we will be selecting a new investment manager for the Advantages Retirement Plan™.

Can I continue to make contributions to the Advantages Retirement Plan™? 

Yes, until the closure or termination of the Vanguard target-date funds under the Advantages Retirement Plan™, new contributions can be made to the Vanguard target-date funds.

What is the process for selecting a new investment provider?

The Advantages Retirement Plan’s Investment Committee oversees the Plan’s investment program. Appointed by OMA Insurance, the Investment Committee is composed of investment experts, including three former executives from Canada’s largest pension funds, and two physician representatives. Committee members have a fiduciary duty to put members’ interests first when selecting and monitoring the investment options made available under the Advantages Retirement Plan™.

The Investment Committee is responsible for selecting a new investment provider and has already initiated the process.

What will happen to my investments with Vanguard?

For the time being, your money will continue to be invested in the Vanguard target-date funds with the same high-quality investment strategy and approach that Vanguard has used to date.  Further information as to what will happen in the future will be provided as it becomes available.

I just transferred my money into this product.  Now what happens?

You do not need to take any action today. Until a new provider is selected, Vanguard will continue to manage its target-date funds with the same high-quality investment strategy and approach that it has used to date.

How will I change my investments to a new provider?

You will be able to change your investments to the new provider using the Advantages Retirement Plan™’s self-serve, online platform. OMA Insurance advisors and the service team will also be available to assist you with the transition. Once a new target date fund provider is selected, we will provide you with more information about how to make the change. 

Is this because Vanguard’s funds have performed poorly?

No. This decision is unrelated to the performance of the funds, which has been strong. It is part of a product closure decision by our investment provider. 

Will this change affect the fees in the plan?

We are committed to keeping costs low through this transition. Ideally, we would like to maintain the low plan fees that members pay today. However, doing so will depend on our ability to negotiate low fees with the investment manager that will replace Vanguard.

Will the new investment provider also offer target-date funds?

The Investment Committee’s priority will be to find another provider of low-cost, diversified target-date funds, as the Committee has recommended such funds as an appropriate default investment choice for physicians and their spouses to use when investing for retirement.

Who can I talk to about this change?

The OMA Insurance team is available to speak with you about this change with you, as well as help you to get the most out of your Plan. You can contact us at info@omainsurance.com or 1-800-758-1641 (select option 1).

Will the Advantages Retirement Plan™ offer investment choices beyond target-date funds?

As part of its broader oversight role, the Investment Committee regularly reviews the Advantages Retirement Plan™’s investment program to ensure it responds to the needs of members and helps them achieve retirement success. The Advantages Retirement Plan™ is expected to evolve as the Plan grows, investment options on the market change, and Plan members provide input on what they would like to see.

Can I make withdrawals from the Vanguard target-date funds?

You can always make withdrawals from the current investment options offered under the Advantages Retirement Plan™.

What is a target-date fund?

A target-date fund invests your money in a mix of equities and fixed income that is appropriate for a given retirement date. Instead of choosing several funds to create a portfolio to help reach your retirement goals, you can choose a single target-date fund to match your retirement date.

The target-date fund will adjust the mix between equities and fixed income based on your target retirement age. This approach is meant to grow your money as much as possible during your working years, while lowering the risk of investment losses as you get closer to needing your money in retirement.

What happens if I’m not sure what investment option to choose?

The Advantages Retirement Plan™ has a default path set by the expert-led Investment Committee. By default, your contributions will be invested in a fund that is appropriate given the year you expect to retire under the plan. The default lowers the risk of investment losses as you get closer to needing your retirement income.

The default target-date funds are built to balance investment returns and risk over your lifetime.

How is the money I contribute to the Advantages Retirement Plan™ invested?

Plan members can select a target-date fund, which provides a mix of equities and fixed income. The fund is matched to each Plan member’s expected retirement date and automatically adjusted as you get closer to that date. Target-date funds provide an investment solution that can reduce the complexity and stress of investing over time.

Are funds rebalanced periodically?

Yes. Target-date funds automatically diversify, adjust, and rebalance your retirement savings, so your portfolio becomes more conservative as you get closer to your target retirement age.

What happens if the market drops?

The value of your target-date funds can fluctuate due to market performance. However, the benefit of target-date funds is that they are automatically adjusted for risk: risk is decreased as you approach retirement. In addition, your asset allocation is automatically rebalanced to help mitigate against swings in the markets, and your funds are diversified, helping you avoid overly risky or excessively conservative investments.

Are my investments guaranteed?

Target-date funds are not guaranteed and will fluctuate based on market performance.