# Star article on SPP



## sagsal (Apr 7, 2009)

Basically my wife and I are civil servants in Ontario with limited RRSP room due to our DBP with the province

I invest with a third party but pay close to 2k a year in fees for the "management of the RRSPs"

I am thinking of moving over the 75k we have and managing myself and on a go forward basis invest in the Saskatchewan Pension Plan

Would love to hear thoughts

I am turning 39 and my wife 38 early next year

Thanks


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## ghostryder (Apr 5, 2009)

In case anyone needs the link:

http://www.thestar.com/training/article/908066--is-this-small-pension-plan-canada-s-best-kept-secret


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## kcowan (Jul 1, 2010)

Moving your $75k into a self-directed RRSP and investing in low cost ETFs would be a logical move. If you achieve an aggregate MER of 0.4%, your annual cost will be 75000 x 0.004 = $300 and an extra $1700 per year will accrue to your retirement.

Because your existing DBP is very rich, you should not increase your dependence on additional DBP pension. You should use your savings to build an estate nest egg.


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## sagsal (Apr 7, 2009)

*Thanks*

Thanks for the response

Just a tad confused... the Sask Pension is a DCB and not a DBP - so wouldn't make sense to have them manage my RRSP on a go forward basis?

Thanks


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## MoneyGal (Apr 24, 2009)

It's a defined contribution plan which can convert to an annuity (i.e., DB-like plan) at retirement. Annuity rates are competitive with privately-purchased annuities. So really, it is a mix of DC (while contributing) which can convert to DB (at retirement).


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## sagsal (Apr 7, 2009)

*Spp*

Is it a good place to invest then?


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## MoneyGal (Apr 24, 2009)

Would you invest in a mutual fund that had the same composition, past returns, and fee structure?


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## kcowan (Jul 1, 2010)

The point I was making is that it will increase your income at 65 based on the compulsory conversion. So it only makes sense if you consider your current DBP plan to be inadequate. All indications that I have seen are that a government DBP plan will more than compensate for your lack of income at 65.

So whether it is a good investment is moot.


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## MoneyGal (Apr 24, 2009)

It's a voluntary conversion, not a compulsory conversion (which is why the annuity payout rates are much closer to privately-purchased plans than to public plan payouts for the same dollar contributions).


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## janus10 (Nov 7, 2013)

I just finished reading Gordon Pape's "Retirement's Harsh New Realities" and on page 176 he mentions this. I had never heard of it, and would have assumed you had to live in SK to take advantage of it. An interesting alternative for someone who wants professional money management.


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## uptoolate (Oct 9, 2011)

It is perhaps a decent option for some but I agree with kcowan that if you already have a government DBP which is as good as it gets, why go with another relatively conservative asset allocation in a provincially run pension plan. Your Ontario DB pension plan could be seen as being similar to a bond in terms of safety (although under current conditions it is probably both safer and has a better return). Personally, I would go 100% equities with your limited RRSP monies. Something like VXC or VT or VTI if you wanted to go into USD. Definitely paying 2k to manage 75K is akin to robbery. Good luck.


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## My Own Advisor (Sep 24, 2012)

SPP is open to all Canadians. 

If you have 2 DB pensions, and put in about 25-30 years into each, you are set for retirement.

Personally, I wouldn't bother with SPP. Keep your RRSPs, transfer them to a discount brokerage, max them out every year, invest in some low-cost ETFs like VCN and VXC and wake up when you're 55 or 60 and do whatever you want with your boatload of income.


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## janus10 (Nov 7, 2013)

^^^ But, what if you are like millions of Canadians who don't have a DBP? Or, what if you are like me and don't even have a DC plan? Does your opinion change?

Since you have the ability to transfer $10k per year from your own RRSPs, I wonder if there are people setting themselves up in their 50's to take a portion of their investments and put it in the hands of professionals with the idea that they have this + CPP + OAS as forming the foundation of an annuity income stream.

Oh, and another thing, your $2,500 per year contributions can be made with a Credit Card. IF this doesn't count as a cash advance AND you have a 2% cash back card, then your MER is effectively zero and you ace a 1% head start to growth.


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## My Own Advisor (Sep 24, 2012)

True, millions of Canadians don't have the luxury of a DB plan, or a DC plan.

So, for them, they can use their RRSPs or TFSAs and create their own pension-like fund with roughly 20% US + 20% CDN + 20% Int'nl equities and roughly 40% bonds.

Given how efficient the markets are and have been proven to be there is less value delivered from putting "investments in the hands of professionals". 

Yes, you can make your $2,500 per year contributions with a CC but this only makes sense if you can pay off the credit card in full every month. Cash back is only good if you're not servicing debt. 

Just my take!


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## GPM (Jan 23, 2015)

Well, I'm from Saskatchewsn originally. The plan used to allow $600/year contribution originally. Really it was aimed at low income earners. However, you could use it for your RRSP, but the Feds didn't care, so I invested not using my RRSP. An extra 1200/year for the wife and I growing tax free. However, that ended with the long fought for increase to $2500/year contribution. Beware you can't transfer this money though. However, not a bad deal for someone who doesn't want to manage their own money. MER is 1% - usually you need $1 million bucks for that. It is managed by greystone and leith wheeler, two big players in the pension industry. You don't have to take an annuity. You can RRIF it at the end, but I can't figure out wether it can be combined with other RRIFS. Very friendly crew, run out of a tiny town - rosetown I believe.


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## jambo411 (Apr 6, 2009)

We started with SPP 5 years ago for our small company. We only have one employee enrolled (DW) and it doesn't charge any fees to the company. DW has an RRSP and a spousal but I wanted a third party to manage at least part of our investments in case I am not as clever as I think I am. The first couple of years we made $10,000 transfer in from the spousal to get it going but now just rely on the $2,500 per year. We may use this account to buy an annuity and RRIF the other accounts. I feel the MER is reasonable and it helps me sleep better having someone else looking after part of our retirement funds.


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