Personal Finance

Saskatchewan Pension Plan

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Newbie
Oct 2, 2009
63 posts
5 upvotes

Saskatchewan Pension Plan

Hi there-

I was wondering if anyone belongs to or has any thoughts on the Saskatchewan Pension Plan. I first heard about it in the Toronto Star last week and after looking into it a bit, we considering it for my wife (27 years old). She's a dental hygenist who doesn't receive any pension in her job. We plan on investing more than $2500 this year into RRSPs, but thought that the first $2500 would do well in the SPP. We have long term growth in mind, with medium risk for her money.

I'll get an OMERS pension when I retire (still 26 years to go or so) so it would just be for her, with possible spousal contributions from me as well.

I've seen a few articles on the SPP but not to much conversation in forums. I'm trying to be informed as I can before making any decisions and welcome both positive and negative thoughts on it.

Thanks.
42 replies
Deal Addict
Dec 28, 2006
2497 posts
138 upvotes
Saskatoon
I can't really think of anything negative off the top of my head. The reality is that you could probably duplicate the SPP's mix of investments by using a "couch potato" type mutual fund(s) in your wife's RRSP using TD eFunds which have pretty low MER's.

The "up" side to the SPP is that it would appeal to people who don't want to put a lot of effort into managing their retirement investing. Kinda a "set it and forget it" type thing. If you are comfortable with managing a "couch potato" RRSP then you might be better on your own. I haven't looked too close at the fees to tell if the SPP is cheaper than using eFunds.

Another upside, which doesn't apply to you, is that the SPP offers small businesses a way to offer a pension to their employees with minimal overhead. This appeals to businesses that otherwise couldn't do this.


The SPP has pretty much been under the radar for years. The only reason it seems to have gotten any attention (what little it has) recently is because of the Fed's announcement of proposing to introduce "shared pension plans" or whatever they are calling them to give people more options in how individuals can save/invest for retirement. The reality is that this recent idea isn't new at all. The SPP has been around for nearly a quarter of a century. Not everybody wants to or has the know how or willingness to manage their own self directed RRSP.
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Jr. Member
May 17, 2009
162 posts
18 upvotes
Thunder Bay
I read through the Saskatchewan Pension Plan website. Money purchase plan, so it's transparent. Annuity payments/withdrawals qualify for the pension tax credit. You need to have RRSP contribution room in order to make contributions. From what I read it's similar to an RSP in that you deduct your contributions from your taxable income each year and get taxed on it when you withdraw the money. The money is locked in until you are 55 at a minimum. No requirement for an employer to contribute to it, so it's not like you are getting free money. Employer can contribute but it's their option. It's a very flexible plan, but for tax purposes it's pretty much identical to how RRSP's are treated. The argument could be made that with the SPP you are getting professional management at a reduced cost rather than using a discount broker and either paying commissions for trading stocks or mutual fund management expenses. With SPP there are only two funds available a balanced fund and a short term money market type fund. The SPP's performance is good over a long stretch so I think it could be a good option for people who don't want to be constantly figuring out what to do with their retirement nestegg. Interesting, it said anyone can join regardless of residency, so I assume other provinces residents can join. $2,500.00 annual maximum contribution is not very much, however over the long haul it could compound substantially. Nice program but not a real solution to the current pension crisis. It's voluntary, employers not forced to contribute so few people will be responsible enough or disciplined enough to enroll. I wish government would have the sense to eliminate the CPP, which was flawed when it was designed by the Pearson gov't and replace it with a 50/50 employer/employee money purchase plan complete with quarterly statements so it's transparent to Canadians. Defined benefit is the wrong way to go. Just look at what is happening now, you have Gen X subsidizing the baby boom generation for no benefit.
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Sep 30, 2001
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i was going to create a thread on this. Any other opinions on the SPP?
Be kind and civil with one another
Deal Fanatic
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Mar 20, 2001
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Toronto
There was another article in The Star this week on the Saskatchewan Pension Plan:

http://www.moneyville.ca/article/114175 ... skatchewan

What's still not clear to me even after reading the Saskatchewan pension plan website is how this interacts with RSP room. If I have income that lets me, for example, contribute $6k to my RSP for the 2012 tax year and I choose only to contribute $3,500 in RSP and then $2,500 in this SPP, does that mean in 2013 I could contribute the $2,500 in RSPs that I didn't last year on top of whatever my regular headroom would be? Or does that $2,500 SPP contribution 'eat up' $2,500 in RSP contributions forever (which would suck and then I don't really see much upside to SPP vs. RSP).

Thanks!
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Mar 29, 2006
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From the guide (http://www.saskpension.com/pdfs/documen ... _guide.pdf)

SPP contributions are subject to the same rules as RRSP contributions. Your SPP contribution is tax deductible by you or your spouse, if he or she contributed for you. This deduction will be allowed, if the person claiming it has unused contribution room for RRSP purposes. Report your SPP contribution on lines 2 and 3 of Schedule 7 like an RRSP contribution and claim a deduction on line 208 of your tax return. SPP contributions will be taken into account in determining RRSP over-contributions.

***

At first I thought it was a way to get more money sheltered from income tax, but it's an either-or type of situation with no net tax savings. From the employee perspective, it's better returns than putting it in an RSP savings account, and less costly than a brokerage.
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May 11, 2014
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I don't know many people that know about the Saskatchewan Pension Plan. It is a LIRA service sponsored by the Government of Saskatchewan, but it is available to everyone in Canada (in fact, anyone in the world according to the website). It has two plans, balance and short-term fund. The balanced is your typical about 60% stocks, 40% bonds. This fund has averaged about 8.4% per year in it's 26 year history and last year earned over 15%. The short term was just started and invests in short term bonds. The fee is fairly low compared to mutual funds (about 1% MER), but it isn't as good as ETFs or TD eSeries.

The awesome part of this RRSP is that you can use a credit card to contribute. The max you can contribute per year is $2500. This is a great way to earn points or cash back. Right now, new signups will received a $10 Co-op gift card :P Only draw back is that there is a $2500 limit per year and you cannot withdrawal early.

http://www.saskpension.com

For myself, I have been using my Avion card to put $2500 a year. I am 26 and started doing this at 23. These points will definitely pay for a vacation on RRSP contributions alone. Of course I definitely saving more money in other RRSP plan (discount brokerage), but I think this is a great option for those that don't want to DIY invest or those starting out.
Deal Addict
Sep 6, 2010
2029 posts
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Vancouver
Impressive, likely well on your way to be very comfortable in retirement. If I could go back 20 years and put myself in your shoes I would probably put maxing out my tfsa before any pension/rrsp contributions, only for the flexibility of being able to access the funds. Either way you are playing it properly.
Deal Expert
Mar 25, 2005
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xgbsSS wrote: I don't know many people that know about the Saskatchewan Pension Plan. It is a LIRA service sponsored by the Government of Saskatchewan, but it is available to everyone in Canada (in fact, anyone in the world according to the website). It has two plans, balance and short-term fund. The balanced is your typical about 60% stocks, 40% bonds. This fund has averaged about 8.4% per year in it's 26 year history and last year earned over 15%. The short term was just started and invests in short term bonds. The fee is fairly low compared to mutual funds (about 1% MER), but it isn't as good as ETFs or TD eSeries.

The awesome part of this RRSP is that you can use a credit card to contribute. The max you can contribute per year is $2500. This is a great way to earn points or cash back. Right now, new signups will received a $10 Co-op gift card :P Only draw back is that there is a $2500 limit per year and you cannot withdrawal early.

http://www.saskpension.com

For myself, I have been using my Avion card to put $2500 a year. I am 26 and started doing this at 23. These points will definitely pay for a vacation on RRSP contributions alone. Of course I definitely saving more money in other RRSP plan (discount brokerage), but I think this is a great option for those that don't want to DIY invest or those starting out.
Interesting plan. I wonder if this is what Ontarios PRSP will look like.
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Dec 11, 2005
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This is pretty sweet but the lack of options is not very appealing. The "balanced" fund is way too conservative for me.
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Mar 24, 2008
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xgbsSS wrote: I don't know many people that know about the Saskatchewan Pension Plan. It is a LIRA service sponsored by the Government of Saskatchewan, but it is available to everyone in Canada (in fact, anyone in the world according to the website). It has two plans, balance and short-term fund. The balanced is your typical about 60% stocks, 40% bonds. This fund has averaged about 8.4% per year in it's 26 year history and last year earned over 15%. The short term was just started and invests in short term bonds. The fee is fairly low compared to mutual funds (about 1% MER), but it isn't as good as ETFs or TD eSeries.
....
MER is too high, any CC points advantage you have will be wiped away in 2-3 years as compared to a low MER ETF.
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Sep 6, 2010
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ksgill wrote: MER is too high, any CC points advantage you have will be wiped away in 2-3 years as compared to a low MER ETF.
This is a very good point.
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May 11, 2014
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to be perfectly honested, I do prefer higher risk. That is why I only invest the max $2500, invest riskier stocks in tfsa (to hopefully get extreme tax-free capital gains) and ETFs and some stocks in a self-directed discount brokerage RRSP. I treat Saskatchewan pension plan as an "retirement insurance policy" At the 8.4% it has averaged, in 40 years it should be around $400K.
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Definitely one of the disadvantages. i recommend this plan for those that don't want to do any DIY investing. I do know they market this plan for small business owners as a pension plan for employees.
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Sep 6, 2010
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xgbsSS wrote: to be perfectly honested, I do prefer higher risk. That is why I only invest the max $2500, invest riskier stocks in tfsa (to hopefully get extreme tax-free capital gains) and ETFs and some stocks in a self-directed discount brokerage RRSP. I treat Saskatchewan pension plan as an "retirement insurance policy" At the 8.4% it has averaged, in 40 years it should be around $400K.
I don't mind this but again I hope you aren't going to need access to funds over the next 20 or so years i.e down payment on a house because these funds are locked in until retirement. Returns are good though but factor in the 1% MER too. I like the idea of it being truly forced savings. 25 years ago if I had of known then what I know now I might have really given this a hard look to buy.
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Oct 26, 2003
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what is MER?
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Oct 16, 2001
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Im in that plan, or the PEPP plan. Mine is locked in until I retire, but I havent contributed for 12 years since I am no longer a SK govt employee. I contributed to it for 6 years I think.

How much do I know about it, not much. I get statements from it twice a year, and although I dont contribute anymore (they matched any contribution 100%) all interest made is matched 100% still. Every time I get a statement it grows, and in my eyes, Im getting a 100% return. Of course whatever interest I lose, they match that loss 100% to

Id have to go back through statements to see what my returns are, but it doesnt matter anyway, its locked in, nothing I can do
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Spidey wrote: Im in that plan, or the PEPP plan. Mine is locked in until I retire, but I havent contributed for 12 years since I am no longer a SK govt employee. I contributed to it for 6 years I think.

PEPP or Public Employee Pension Plan is not the same.


www.peba.gov.sk.ca/pepphome.htm

versus
www.saskpension.com
Last edited by titaniumtux on Jun 22nd, 2014 1:48 pm, edited 1 time in total.
Reason: fixed formatting
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gwplant wrote: I don't mind this but again I hope you aren't going to need access to funds over the next 20 or so years i.e down payment on a house because these funds are locked in until retirement. Returns are good though but factor in the 1% MER too. I like the idea of it being truly forced savings. 25 years ago if I had of known then what I know now I might have really given this a hard look to buy.
Like I said before, I save more than $2500 a year. The rest of my money is in my own self direct RRSP and TFSA, as well as non-registered gic and cash acconts. I do see your concern though. I am in a lucky position where I have a great income so it is easy for me to contribute everywhere. When I move back to Alberta, I know my income won't be as great so I am saving while I can.

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