Sask Pension: Upto $7000 annually of Credit Card spend on an RRSP Contribution (All Canadians)
Update 31Dec2021 SPP just informed me that Ontario residents are now being accepted again! Updated the new 2022 limit of $7000. Note website still states Saskatchewan Residents only
This is not the most well-known investment product, however I believe people that require minimum spends and are planning to invest money in RRSPs can really benefit from this program.
Saskatchewan Pension Plan is a RRSP program based in Saskatchewan that is available to all Canadians with RRSP contribution room. It has a lowish MER of around 1% and has had a 31year average of around 8% return annually. It is a balanced fund and can be converted into an RRIF-annuity or be transferred to your RRIF at any other bank later on.
The great attraction is that you can use your VISA, Mastercard and now AMEX** to contribute into it and it is treated as a purchase. (**Their website and literature refers to VISA and Mastercard only. However, SPP has confirmed with me that AMEX is accepted, except for pre-authorized contributions.)
There are some drawbacks. This is not the lowest MER fee investment out there. You can definitely save on your fees with ETFs, etc. Your money is also locked-in until retirement. This means you cannot use the RRSP balance toward Life-long Learning Plan (LLP) or the Home Buyer's Plan (HBP). No transfer outs either. You can start transferring or drawing from it once it is converted into an RRIF (starting at age 55) and only at this time.
That being said if you are someone that cannot be bothered to do ETFs on your own, and are planning to sock money away for the future, it isn't a bad plan at all. The credit card spend is nice to boot.
Personally, I only do a small portion of my RRSP to SSP and do my own stocks. However, for anyone that can't be bothered, this is not a bad option.
http://forums.redflagdeals.com/saskatch ... an-985264/
2021 Return 11.53%
(Cdn. Couch iShares Core Balanced ETF: 11.06%)
2021 MER 0.92%
2020 MER 0.83%
5 year Return (end of 2021) 8.23%(annualized)
(Cdn. Couch iShares Core Balanced ETF: 7.79%(annualized))
35year Historical Return 8.09%(annualized)
1 Year 11.53%
3 Year 11.39%
5 Year 8.23%
10 Year 8.70%
1 Year 9.3%
3 Year 11.6%
5 Year 8.8%
10 Year 10.1%
Tangerine Balanced (Former CCP)
1 Year 10.53%
3 Year 11.11%
5 Year 7.66%
10 Year 8.17%
CCP TD e-Series Balanced
1 Year 10.89%
3 Year 12.00%
5 Year 8.45%
10 Year 8.97%
iShares Core Balanced ETF
1 Year 11.06%
3 Year 12.26%
5 Year 7.79%
10 Year 6.93%
Individual ETF Balanced(former CCP)
1 Year 10.71%
3 Year 11.37%
5 Year 7.97%
1 Year 3.94%
3 Year 8.27%
5 Year 5.50%
RBC Select Balanced (Big 5 Bank comparison)
1 Year 10.1%
3 Year 11.3%
5 Year 7.7%
10 Year 8.0%
Max Contribution 2022 $7000 or RRSP Contribution Limit (whichever is lower)
Frequently Asked Questions
Why invest with Saskatchewan Pension Plan?
It is a great and flexible RRSP investment that is safe, flexible, low cost and can earn you tremendous credit card rewards. This is the only, fairly low cost investment you can contribute with a credit card (apparently you can with Investor's Group, but probably not worth it with their fees). You can invest as little as 1 cent. All Canadians can join, you do not have to live in Saskatchewan! For those who also want a stable annuity/pension payment upon retirement, SPP provides competitive rates and pension payments that are guaranteed by the Government of Saskatchewan.
Another benefit for those without a pension plan, you can take advantage of the pension tax credit from the CRA (thanks @Gursk !)
The CRA allows you to claim a $2000 Pension Tax Credit each year. Annuitizing the Sask Pension at exactly $2000 per year starting at age 55 allows you to maximize this tax credit. You can simply ask for this amount and have remaining funds transferred to a RRIF of your choice at your choice of bank or financial institution. This tax credit is worth upto $300.
https://www.advisor.ca/columnists_/fran ... ax-credit/
If you were to do this with an insurance company, the annuity costs are much higher than SPP.
Can I withdraw early, transfer-out early, turn it into an RRIF at SPP and start withdrawing?
No. This is one thing to keep in mind before investing. SPP does not allow for withdraws even for the Home Buyer's Plan or Life-Long Learning Plan. SPP also does not have RRIF accounts. How this works is by transferring your funds into a RRIF at another institution which you can only start doing at the age of 59. Or you can opt for a pension through their annuity program.
However, if you live in Saskatchewan, you have the option of Variable Benefit. This allows you to maintain your Sask Pension account investment and withdraw money similar to a RRIF. They are still waiting for approval from securities regulation in different provinces to approve the product.
I already have a pension. How will this benefit me?
While you can get your money as a pension later in life, you have the ability to transfer your invested funds at retirement to any bank or investment account RRIF of your choosing. The SPP investment returns are fairly competitive.
Aren't credit card contributions treated as cash advances?
Not in this case! So rest assured, your contribution is treated as a purchase!
Can I use Amex, Union Pay, Discover etc.?
AMEX can be used but it isn't advertised as such. No other credit cards are accepted.
Does Saskatchewan Pension Plan Pre-Authorized Contributions count toward reoccurring bill payment bonuses on credit cards?
-Unfortunately by the looks of it, it depends. (Tangerine Mastercard, No) (thanks @jevonb )
(TD Rewards, Yes)(Thanks @latebuyer)
(**if anyone has a credit card with this bonus and starts an automated contribution plan, please post your experience for data points)
There are cheaper investments out there. Why SPP?
Although the MER is higher than say ETFs, the investment return has been very competitive and in some cases have beat some of the equivalent Canadian Couch Potato portfolio returns. Once you factor in credit card rewards, you are earning much more. Additionally, there are no fees involved other than the MER while many options such as ETFs require an investor to pay commission fees and in some cases management fees. That being said, one should consider the type of investment this is.
So is this the best investment out there?
NO. There is no single best investment plan out there. SPP is one of many investment options available. SPP has limitations such as it is only available as a balanced fund or short term fund. This is a 60% equity, 40% fixed income investment. This may not be appropriate to your risk tolerance nor for your growth requirements. Additionally, there are no early withdrawals. For those that need to save for retirement and are not well disciplined, this may be a good thing though! This might not be great for investors who may need early access to their money. It is important to look at your overall financial situation before deciding to invest. SPP however is a solid, no-frills option that may complement your investment portfolio. For those that need further direction, seeking advice from a financial adviser may be appropriate. RFD Investing Forum is a great community resource for those who would like to learn and DIY their investments.
Sask Pension Plan Upto $7000/yr in Credit Card spending on RRSP contributions
http://forums.redflagdeals.com/sask-pen ... ns-2167222