Transition to new Advantages Retirement Plan™ investment manager, BlackRock

The Investment Committee of the Advantages Retirement Plan™ has selected BlackRock as the plan’s new target date fund provider, offering its LifePath Target Date Funds to members of the plan.

OMA insurance is proud to be able to support our members with an award-winning foundational retirement savings program that continues to provide value for physicians and their spouses/common-law partners. That’s why we are pleased to announce that the Investment Committee of the Advantages Retirement Plan™ has selected BlackRock as the plan’s new target date fund provider, offering its LifePath Target Date Funds to members of the plan. As a reminder, this change is required because Vanguard is closing its Canadian target date funds effective May 2021.

About BlackRock
BlackRock is the world’s largest asset manager with over $8.67 trillion in assets under management, including $200 billion for Canadian clients. The firm pioneered target date funds in 1993 and is the leading provider of target date funds in Canada for retirement plans.

Comparing BlackRock’s funds to Vanguard’s funds
A target date fund offers a balanced investment portfolio within a single fund, and the investment mix is calibrated by the investment manager based on a retirement date. BlackRock’s LifePath target date funds that will be made available under the Advantages Retirement Plan™ are similar to Vanguard’s target date funds in several ways:

  • They automatically become more conservative as the fund moves closer to the ‘target date’
  • They are highly diversified
  • They are only available to group retirement plan members in Canada
  • The underlying funds are index-based, meaning they aim to track the market rather than beat the market
  • They are low-cost, meaning there is no change in the plan’s low fees, which are 0.6% of assets (+HST) (0.15% of the asset fee is paid to OMA Insurance for cost recovery and services); and $10/month (+HST)

Further information about BlackRock’s LifePath funds that will be available under the Advantages Retirement Plan™, including fund fact sheets, can be accessed by logging into the online platform.

How the change will work
If you wish to move your existing Vanguard target-date fund holdings into the equivalent BlackRock LifePath target date fund, there is nothing for you to do. We will automatically switch your Vanguard target-date fund holdings to the equivalent BlackRock LifePath target date fund holdings. For example, if you currently hold units of the Vanguard 2040 fund today, you will be automatically switched to the BlackRock 2040 fund. We will begin the transition on February 12, 2021, and expect the process to take 7-10 business days.

If you want to move your holdings to a different BlackRock LifePath fund, you can make this change after the initial transfer to the corresponding Blackrock LifePath target date fund is complete. You may withdraw amounts from the Advantages Retirement Plan™ at any time.

  • There will be no changes to the plan’s low fees, and there are no additional costs to you for making this change.
  • There are no tax consequences as a result of the change in target date funds under the Advantages Retirement Plan™. It does not affect your RRSP or TFSA contribution room or result in additional taxes, since the investments will continue to be held within your tax-sheltered RRSP or TFSA.
  • You can continue to make contributions to, and withdrawals from, your Advantages Retirement Plan™ account during this transition period. Once the fund switch begins on February 12, future contributions will go into the corresponding BlackRock LifePath Target Date Fund until you make a change to your investment instructions. Please note that withdrawals may take up to three weeks to process during the transition period.
  • Once the switch has been completed, you will have the option to select a different BlackRock fund if you wish.
  • Remember that the RRSP contribution deadline for the Advantages Retirement Plan™ is February 28, 2021, at 11:59 pm EST for your 2020 income tax deduction.
  • You are responsible for deciding to save in the Advantages Retirement Plan™ and determining which target date fund is appropriate for you. We encourage you to log in to your account to view information about the BlackRock LifePath target date fund you will be automatically switched into. We also encourage you to access the retirement education and tools available to you on the Advantages Retirement Plan™ website.

Below you will find answers to questions you may have. Please direct any other questions to the OMA Insurance team: info@omainsurance.com or 1-800-758-1641 (select option 1).

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

FAQs

What is happening?
The Advantages Retirement Plan™ will be switching from Vanguard target-date funds to LifePath Target Date Funds managed by BlackRock. 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 and is the market leader in Canada for target date funds.

Why is it happening?
The Investment Committee of the Advantages Retirement Plan™ selected Blackrock, the world’s largest asset manager, as the new target date fund provider to replace Vanguard, who is closing its Canadian target date funds, as communicated to OMA members in Fall 2020.

What was the process for selecting a new target date fund provider?
The Investment Committee of the Advantages Retirement Plan™ 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 reviewing, selecting and monitoring the investment options made available under the Advantages Retirement Plan™.

The Investment Committee is pleased to have selected BlackRock to provide its target date funds for the Advantages Retirement Plan™. BlackRock is the world’s largest asset manager with over $7 trillion in assets under management, including $200 billion for Canadian clients. The firm pioneered target date funds in 1993 and is the leading provider of target date funds in Canada for retirement plans.

What are the target date funds offered by BlackRock?
A target date fund offers a balanced investment portfolio within a single fund, and the investment mix is calibrated by the investment manager based on a retirement date. BlackRock LifePath Target Date Funds are professionally managed, diversified portfolios and are structured to reduce risk as the ‘target date’ approaches.

BlackRock’s fund fact sheets can be accessed by logging into the Advantages Retirement Plan’s online platform. You can also learn more about LifePath Target Date Funds in this video.

What are the similarities between the Vanguard funds and the BlackRock funds
BlackRock’s LifePath funds are similar to Vanguard’s target date funds in several ways:

  • They automatically become more conservative as the fund moves closer to the ‘target date’
  • They are highly diversified
  • They are available only to group retirement plan members in Canada
  • The underlying funds are index-based, meaning they aim to track the market rather than beat the market
  • They are low-cost, meaning there is no change in the plan’s low fees, which are 0.6% of assets (+HST) (0.15% of the asset fee is paid to OMA Insurance for cost recovery and services); and $10/month (+HST)

Can I access the historical performance of the BlackRock LifePath 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. BlackRock’s existing Canadian LifePath target date funds are the market leader in Canada for target date funds, have been in operation since 2007, and have over $32 billion in assets under management. Because the BlackRock funds that have been created for 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.

Will this change affect the fees in the plan?
No. BlackRock’s LifePath funds are low-cost, allowing us to maintain the low plan fees that members pay today, which are 0.6% of assets (+HST) (0.15% of the asset fee is paid to OMA Insurance for cost recovery and services); and $10/month (+HST).

Are there transaction costs associated with the change to BlackRock?
There are no additional costs to you for making this change.

Are there tax consequences associated with the change?
There are no tax consequences as a result of the change in target date funds under the Advantages Retirement Plan™. It does not affect your RRSP or TFSA contribution room or result in additional taxes, since the investments will continue to be held within your tax-sheltered RRSP or TFSA.

I just transferred my money into the Vanguard target-date fund. Now what happens?
You do not need to take any action if you wish to transfer into the corresponding Blackrock LifePath fund. We will begin the process of switching your current Vanguard target-date fund to an equivalent BlackRock LifePath Target Date Fund on February 12, 2021. You will be emailed as soon as the switch has been completed, approximately 7-10 business days later. If you do not wish to switch to a BlackRock fund, you have the option to withdraw your funds from the plan or transfer them to another TFSA or RRSP/RRIF.

How will I change my investments to BlackRock?
The money currently held in a Vanguard target-date fund will be automatically transferred to the corresponding BlackRock LifePath Target Date Fund. Once the switch has been completed, you will be able to view your new fund and BlackRock units using the Advantages Retirement Plan™’s self-serve, online platform.

Can I change my target date fund?
You will not be able to select a new target date fund until we have finished the process of switching investment managers. You will be able to view your equivalent BlackRock fund during the transition period. We will notify you when the switch has been completed, at which time you can change your target date fund.

Can I continue to make contributions to the Advantages Retirement Plan™?
Yes, you can continue to make contributions throughout this transition period. Once the fund switch begins on February 12, future contributions will go into the corresponding BlackRock LifePath Target Date Fund until you make a change to your investment instructions. This fund change will have no impact on any last-minute RRSP contributions. Please note that to ensure your contribution is processed and meets the RRSP deadline for the 2020 tax filing year, contributions to the Advantages Retirement Plan™ must be made by Sunday, February 28, 2021, at 11:59pm EST.

Can I make withdrawals from the Advantages Retirement Plan™?
You can make withdrawals under the Advantages Retirement Plan™ at any time. Withdrawals may take up to three weeks to process during the transition period.

Who can I talk to about this change?
The OMA Insurance team is available to speak with you about this change, as well as provide you with information about the plan. You can contact us at info@omainsurance.com or 1-800-758-1641 (select option 1).