Retire the way you want. Get ready for the Advantages Retirement Plan™.

Get ready for the Advantages Retirement Plan™

This feature article is the last of three in a series on the soon-to-be-launched group retirement savings plan for OMA members and their spouses. Since the Advantages Retirement Plan™ was announced in the July/August issue of OMR, OMA Insurance has received hundreds of inquiries. This article offers more details about the plan’s features and partners, and additional information can be found on the new and comprehensive Advantages Retirement Plan™ website at www.omainsurance.com/retire.

A plan built for the physician community

The Advantages Retirement Plan™ from OMA Insurance has been a long time coming, and we will soon be enrolling OMA members into the first group retirement savings plan in Canada focused on the needs of physicians. The plan was presented at the OMA Fall 2019 Council meeting, and more than 15% of Council Delegates have signed up for meetings with OMA Insurance to learn more about the plan’s suitability for them and their spouses/common-law partners.

Through an easy-to-use online platform with digital tools and educational resources, OMA members and their spouses can build a foundational level of retirement savings. Regardless of your age, the Advantages Retirement Plan™ can help you reserve the retirement you deserve.

To ensure the Advantages Retirement Plan™ serves the best interests of physicians, OMA Insurance has put together an expert-led Investment Committee that includes physician representation. The Investment Committee reports to the OMA Insurance Board and has a fiduciary duty with respect to the selection of investment managers and annuity providers and the oversight of the plan’s investment program.

INVESTMENT COMMITTEE

 

The Investment Committee has selected best-in-class partners and will monitor them to ensure that they meet the collective needs of our members.


PLAN SPONSOR

OMA Insurance is sponsoring and distributing the Advantages Retirement Plan™ to members based on its long-standing track record of creating value for members through group insurance programs.


PLAN ADMINISTRATOR

To help create and deliver the plan, OMA Insurance collaborated with Common Wealth, a mission-driven business that works with associations, unions, and employers to provide value-for-money, collective retirement plans. As plan administrator, Common Wealth is responsible for the recordkeeping and administration of the Advantages Retirement Plan™, and is legally required to act in the best interests of plan members.


ANNUITY PROVIDER

Brookfield Annuity Company was incorporated in 2016 and has a sole focus on annuity solutions in the Canadian market. It achieved a 5% share of the group annuity market in both 2017 and 2018, its first two full years of operations. Brookfield Annuity is a wholly-owned subsidiary of Brookfield Asset Management, a global alternative asset manager that currently has over $500 billion in assets under management.


INVESTMENT MANAGER

Founded in 1975 on a simple but revolutionary idea – that an investment company should manage the funds it offers in the sole interest of its clients, Vanguard is one of the largest asset managers in the world with more than $7 trillion in assets under management. Vanguard serves more than 20 million investors worldwide.

 

How much can I contribute to the plan?

Contributions into the Advantages Retirement Plan™ are flexible and can be adjusted as your situation changes. When you enroll in the plan, you can start with as little as $100 per month and contribute as much as $33,230 per year for individual members and up to $66,460 per year for couples.[1]

Assumes that the member and/or the member’s spouse/common-law partner have sufficient RRSP and TFSA contribution room to contribute the annual maximum. Salary income is required to generate RRSP room. Amounts based on 2020 contribution limits.

How much do you save on a monthly basis?  The plan provides a default monthly savings amount with the option to change, helping you to achieve your target retirement income. This monthly target is based on a few data points such as your income, existing retirement savings, projected government benefits, and retirement date. An “auto-escalation” feature helps you save more by automatically increasing your monthly contributions on an annual basis to help you keep pace with your retirement income goals.

You can easily transfer existing Registered Retirement Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs), and Registered Retirement Income Funds (RRIFs) into the Advantages Retirement Plan™. The plan’s online portal makes these transfers easy.  Note that you should review your RRSP contribution room beforehand to ensure you are within your limits.

Why does the plan use target-date funds?

The Investment Committee has selected Vanguard’s target-date funds to help reduce the complexity and stress of managing your own investments. Vanguard Target Retirement Funds also reduce your management fees, as Vanguard’s fees are significantly lower than the average Canadian asset manager.

Target-date funds offer you:

  • Investment approaches tailor-made for retirement, based on the target retirement date of your choice
  • Automatic adjustment of your investments so your portfolio becomes more conservative as you get closer to your target retirement age

How can I secure guaranteed lifetime income?

Once you retire, it will become even more important to stay on top of your retirement savings. The Advantages Retirement Plan™ uses RRIFs and TFSAs for the post-retirement phase, provides tailor-made solutions for the post-retirement period, and assists in turning your savings into steady, sustainable income.

OMA members are looking for a way to get guaranteed income for life to protect against the risk of outliving their money, or the danger of an ill-timed market downturn as they are approaching or in retirement. That’s why the Advantages Retirement Plan™ includes an option to convert some of your savings into guaranteed lifetime income by purchasing Brookfield’s life annuity as early as age 50, with regular payments guaranteed for life starting as late as age 71.

This annuity product offering is unique to the Advantages Retirement Plan™ and is specifically designed for Ontario’s physicians and their spouses. In addition to monthly contributions into the annuity program, you can make one or more lump sum purchases in cash using your RRSP contribution room or through a transfer-in of existing RRIF/RRSP assets.


What are the plan’s fees?

By keeping investment fees low, the plan1 helps your savings go further. The Advantages Retirement Plan™ fees are two to three times less than what many Canadians pay to invest their retirement savings. Advantages Retirement Plan™ members pay a fee of 0.6% of assets (plus HST) and $10/month (plus HST). 
These fees are used to cover the costs of the plan and go towards:

  • OMA Insurance’s costs for setting up and running the plan, providing education and support to plan members, ensuring strong plan governance, and evolving the plan over time for members’ benefits
  • Common Wealth’s fees for administering and managing the plan, as well as providing and maintaining the technology for the plan’s online platform
  • Vanguard’s fees for providing target-date fund options in the program
  • Canadian Western Trust’s fees for providing custodial and trustee services for the plan
  • The costs and fees associated with the delivery of the guaranteed lifetime income program

The cost to purchase guaranteed lifetime income is based on your age and sex, the insurer’s assumptions about longevity, and economic factors like interest rates. Premium rates will be updated quarterly to reflect changing market conditions. Members will be able to access quotes through the online platform. These rates are inclusive of a fee of 0.33% per year for three years on premiums paid, which the plan charges in lieu of the 0.6% annual fee charged on investments through the plan.

References

[1] Assumes that the member and/or the member’s spouse/common-law partner have sufficient RRSP and TFSA contribution room to contribute the annual maximum. Salary income is required to generate RRSP room. Amounts based on 2020 contribution limits.