The Advantages Retirement Plan™ is offered through an easy-to-use online platform, where plan members can prepare for retirement hassle-free. You’ll find the following user-friendly characteristics:
Easy enrollment process
You can follow the plan’s easy step-by-step process to build a foundation for your retirement savings, which involves:
- Setting your target retirement income
- Choosing how much you want to save
- Selecting from a suite of investment options to save and grow your retirement savings to draw income from later on
- Connecting the Advantages Retirement Plan™ to your bank account
The Advantages Retirement Plan™ provides education throughout the process to help guide you as you make these decisions.
The online dashboard for the Advantages Retirement Plan™ will show you a snapshot of what your projected retirement income looks like, what your savings target is going forward, and if you are on track to meet your retirement goals.
Flexible online platform
After you’ve created an initial retirement plan, you can access the online platform for the Advantages Retirement Plan™ at any time and modify your selections; after all, your personal preferences and/or life circumstances may change over time.
You can use educational tools available to you through the online platform or seek guidance on how to use the self-service platform by asking OMA Insurance staff. The OMA Insurance team looks forward to providing support as you enroll for the Advantages Retirement Plan™ and participate in the program on an ongoing basis, but the staff cannot provide any investment advice.
Savings and contributions
When you’re planning for retirement, one big question is whether you are saving too much or too little. How do you know if your savings are enough to last you for as long as you live? The Advantages Retirement Plan™ helps you figure out what is “just enough.”
The plan incorporates insights from behavioural economics to help members save sooner rather than later. When a person starts saving early and saves an adequate amount on a regular and consistent basis, financing retirement becomes much more cost-effective.
In the enrollment process, you will set a target retirement income and choose how much to contribute to your Advantages Retirement Plan™ savings accounts on a monthly basis.
Setting your target retirement income
The Advantages Retirement Plan™ offers an easy-to-use, self-serve online platform that helps you calculate your target retirement income once you provide a few data points, so that you don’t have to do the calculations yourself.
Physicians have tended to rely on personal savings and government benefits since they haven’t usually had access to group retirement plans. This is where the Advantages Retirement Plan™ comes in as a group retirement plan to help OMA members and their spouses/common-law partners.
As you enroll in the Advantages Retirement Plan™, you will go through the process of setting your target retirement income – how much you want to have as your monthly income when you retire – based on just a handful of inputs, such as your current age, desired retirement age, and annual pre-tax income. Given this information, the plan will automatically calculate for you approximately how much to expect from government retirement benefits. A default monthly savings rate will also be provided during the enrollment process.
Contributing to grow your nest egg
With the Advantages Retirement Plan™, you can contribute in a few ways:
Choose monthly contribution amounts to be deducted from your bank account once a month
How much do I save on a monthly basis now?
The Advantages Retirement Plan™ provides a default monthly savings amount to help you achieve your target retirement income. This monthly target is based on a few data points, such as your existing savings, your projected government benefits, and your retirement date.
To participate in the plan, you can start with as little as $100 a month. You can always revisit and change your monthly contribution amount later, simply by going back to the Advantages Retirement Plan™ online platform.
Where do I put my savings?
You can choose to contribute your monthly savings to a Tax-Free Savings Account (TFSA) and/or a Registered Retirement Savings Plan (RRSP) account within your plan. The Advantages Retirement Plan™ will set a default contribution allocation split between your TFSA and RRSP accounts, which you can change at any time, including when you first create your retirement plan.
Transfer in existing assets into your Advantages Retirement Plan™
You can transfer existing RRSP, TFSA, and Registered Retirement Income Fund (RRIF) funds into the Advantages Retirement Plan™. A direct transfer has no impact on your TFSA or RRSP contribution room. This way, all your savings can start benefitting from the cost-effective approach in the Advantages Retirement Plan™. Also, direct transfers can happen at any time. There may be costs associated with transferring from your financial institution, so please check beforehand.
Make lump sum contributions
Flexible one-time lump sum contributions can be made to the Advantages Retirement Plan™ at any time, once you’ve completed the enrollment process.
The Advantages Retirement Plan™ offers an auto-escalation feature that will automatically increase your monthly contributions on an annual basis to keep up with annual inflation rates and your income growth. If you want to start with an amount that is less than the default monthly savings rate, the auto-escalation feature is helpful in putting you on an automatic path to reach your default savings rate over five years or less, depending on your preference for the time horizon. You can always opt out of the auto-escalation feature, including when you initially sign up.
Investments to boost your retirement income
Ideally, most of your retirement income would come from investment returns earned over time, rather than from money you contributed to the plan. Remember that preparing for retirement is a marathon, not a sprint.
And low fees are critical. Each dollar you pay in investment management fees means lower returns – and less money to live on in retirement. Over a 40-year period, a 2% fee – typical in Canadian retail investing – can consume over half of a person’s investment returns.
Within the Advantages Retirement Plan™, OMA Insurance is committed to the philosophy of keeping fees lower while growing your retirement income over time. That’s why the plan is offering target date funds.
What are target date funds?
Target date investment funds take the guesswork out of investing for retirement. They’re tailor-made for retirement and work by allocating your money into a mix of stocks and bonds that changes as you get closer to retirement. When we’re young, we have years ahead of us and may be willing to take more risk as we endure the typical ups and downs of the market. But as we get older, we may look to start reining in the risk to help protect our savings. Target date funds can help you do just that.
OMA Insurance’s Investment Committee has selected BlackRock’s LifePath Target Date Funds for several reasons, including reducing the complexity and stress of managing your own savings and providing fees that are lower than the average Canadian retail asset manager.
Founded in 1988, BlackRock is the world’s largest asset manager, with over $8.67 trillion USD in assets under management, including managing over C$200 billion in assets for Canadian clients. The firm pioneered target date funds in 1993 with the launch of LifePath Funds. BlackRock is the market leader in Canada for target date funds, with over C$30 billion in assets in its LifePath products, which have been serving Canadian investors since 2007. LifePath is used as the default investment option in some of Canada’s largest defined contribution plans.
In the Advantages Retirement Plan™, you can choose from BlackRock’s suite of target date fund options to simplify and automate your savings for retirement – providing an easy-to-use solution to help keep track of your retirement savings.
BlackRock LifePath Target Date Funds offer you:
- Professionally managed, diversified investment portfolios to help capture potential market growth throughout your career and into retirement
- A mix of investments that changes as retirement approaches to ensure that you remain appropriately invested
Based on information that you provide, the online platform will direct you to a default BlackRock LifePath Target Date Fund option. If you don’t want the default option, you can choose from eight other LifePath Target Date Funds.
BlackRock has created a new version of its LifePath target date funds for the Advantages Retirement Plan™ and other plan sponsors that offer group defined contribution retirement arrangements through a non-insurance platform. The new LifePath Target Date Funds offered through the Advantages Retirement Plan™ will include very similar, but not identical, investment holdings and adopt asset allocation methodology that is used by Blackrock for its existing LifePath target date funds. Because the BlackRock funds offered under the Advantages Retirement Plan™ are new, they do not currently have a performance history. Performance history for the new LifePath Target Date Funds will be available on the fund fact sheets (available during the enrollment process and on the plan’s online dashboard) in the future.
You can always log in to the plan’s online platform to check on your savings. Remember, with the Advantages Retirement Plan™, the goal of the plan is to save for the long term by growing your retirement income.
 Financial author Larry Bates calculates that an investor paying a fee of 2% would get to “keep” only 41% of investment returns earned over a 40-year period. See Larry Bates, “Beat the Bank: The Canadian Guide to Simply Successful Investing” (2018), p. 45.
Guaranteed lifetime income
As you approach retirement, you will likely want to start thinking about ways to use your savings to generate income that will last throughout all your retirement years. One way you can do this is through a life annuity – an insurance product that provides monthly income for as long as you are alive, regardless of what age you live to be.