What are my fees?
Keeping investment fees low, the plan helps your savings go further. The Advantages Retirement Plan™ fees are in line with those of large pension plans and are two to three times less than what most Canadians pay to invest their retirement savings.
How do Advantages Retirement Plan™ fees compare with other options?
OMA Insurance negotiated the Advantages Retirement Plan™ fees at considerably lower rates (based on global benchmarking data[1]) than those the average Canadian retail investment fund typically charges[2]. For example, the average Canadian mutual fund charges retail investors 2.1 per cent. In contrast, the plan provides BlackRock’s investment management services plus all other retirement services the plan offers for its members for a total of 0.6 per cent of member assets (plus HST) — 0.15 per cent of the asset fee is paid to OMA Insurance for cost recovery and services — and $10/month per member (plus HST).
Case examples:
- A physician with an average of $10,000 put into the Advantages Retirement Plan™ would pay $180 per year for end-to-end services compared to ~$210 per year if the same $10,000 were put into an average Canadian retail mutual fund
- A physician with an average of $100,000 put into the Advantages Retirement Plan™ would pay $720 per year for end-to-end services versus ~$2,100 per year if the same $100,000 were put into an average Canadian retail mutual fund
Advantages Retirement Plan™ fees are competitive (and in some cases, lower) even when compared to those of robo-advisors and other online investment solutions. However, robo-advisors and other online investment solutions only provide a few of the features the Advantages Retirement Plan™ provides and are not tailor-made for retirement.
What are my fees, and what do they cover?
Plan members pay a fee of 0.6 per cent of assets (plus HST) — 0.15 per cent of the asset fee will be paid to OMA Insurance for cost recovery and services — and $10/month (plus HST). If, at age 50, you are participating in the Guaranteed Lifetime Annuity portion of the plan, there is a one per cent fee for that product payable for three years once purchased. The monthly $10 fee will be waived for medical students.
Certain transaction processing, such as withdrawals or transfers out, may incur additional, one-time fees (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 Advantages Retirement Plan™, providing education and support to plan members, ensuring strong plan governance, and evolving the plan over time
- Common Wealth’s fees for administering and managing the plan, as well as providing and maintaining the technology for the plan’s online platform
- BlackRock’s fees for providing target-date fund options in the program
- CWB Trust Services’ fees for providing custodial and trustee services for the plan
If a plan member chooses to purchase an annuity starting at age 50 to receive some guaranteed lifetime income, the member would pay premium rates (updated quarterly to reflect changing market conditions) that are inclusive of a one-time commission of one per cent, distributed to OMA Insurance, the broker of record, over three years at a fee of 0.33 per cent per year on premiums paid. The commission on annuities is charged in lieu of the 0.6 per cent annual fee, which is only applicable to non-annuity investments through the plan. The cost to purchase an annuity is based on your age and sex, the insurer’s assumptions about longevity, and economic factors like interest rates.
|
Low fees |
Average fees |
Difference |
|
|
Fee structure |
0.6 per cent of assets[3] (plus HST) and $10 per month (plus HST) (similar to the cost of a large pension plan)[4] |
2.1 per cent of assets (the cost of an average Canadian mutual fund)[5] |
About 1.5 per cent per year |
|
Projected nest egg size at age 70 |
$2,676,504 |
$1,982,117 |
$694,387 |
|
Projected retirement assets left at age 85 |
$1,125,305 |
Money runs out at age 83 |
$1,125,305 (plus approximately two additional years of retirement income) |
|
Projected retirement assets left at age 90 |
$107,490 |
Money runs out at age 83 |
$107,490 (plus approximately seven additional years of retirement income) |
[1]Investment Funds Institute of Canada, “Monitoring Trends in Mutual Fund Cost of Ownership and Expense Ratios” (2019)
[2]Morningstar, “Global Fund Investor Experience Study” (2019)
[3]0.15 per cent of the asset fee will be paid to OMA Insurance for cost recovery and services. Certain transaction processing such as withdrawals or transfers out may incur additional, one-time fees (plus HST). If a plan member chooses to purchase an annuity starting at age 50 to receive some guaranteed lifetime income, the member would pay premium rates (updated quarterly to reflect changing market conditions) that are inclusive of a one-time commission of one per cent, distributed to OMA Insurance, the broker of record, over three years. The commission on annuities is charged in lieu of the 0.6 per cent annual fee, which is only applicable to non-annuity investments through the plan.
[4]For more details on the typical costs of large pension plans, see Healthcare of Ontario Pension Plan, Common Wealth, National Institute on Ageing, “The Value of a Good Pension: How to improve the efficiency of retirement savings in Canada” (November 2018).
[5]The mutual fund’s industry association reports that the average total cost of ownership for actively managed mutual funds in Canada as 2.10 per cent. See Investment Funds Institute of Canada, “Monitoring Trends in Mutual Fund Cost of Ownership and Expense Ratios” (2019).
