Years ago, when we were working away at Lakehead Living in Thunder Bay, Ont., a colleague asked us if we were contributing to a registered retirement savings plan (RRSP).

“What’s that?” we asked. And once it was explained that you would get a tax refund for contributions made to an RRSP, the 25-year-old us was in – starting off at $25 per month.

What’s the best retirement savings tip out there? Save with SPP decided to have a look.

Start saving today, advises the Merrill division of Bank of America. “Start saving as much as you can now and let compound interest — the ability of your assets to generate earnings, which are reinvested to generate their own earnings — have an opportunity to work in your favour,” the bank advises.

At the InvestedWallet blog there are two tips of note – to “fund your retirement account with side hustles,” and to “ditch the lavish vacations.”

Using “side hustles,” such as “flipping furniture, using a 3D printer to make money, or completing freelance gigs” is a great way to boost savings – direct your profits there, rather than to buying furniture or taking trips, the blog advises. And on big annual trips, Invested Wallet suggests cutting back on “destination” vacations (the average vacation in the U.S. costs $1,145 per year) and instead, doing something affordable during time off and putting the saved cash into retirement.

The Forbes Advisor offers up a couple of good tips – get rid of your debt now, and not after you are retired, and “practice retirement spending now.” The first one needs no further explanation – debt is harder to pay off when you are living on less.

The “practice” tip is intriguing. Basically, the article suggests that most retirees will live on 80 per cent of what they were earning before retiring. We had a friend who was fearful about living with her first mortgage. So her husband said look, let’s bank the difference between our rent and the mortgage in the run-up to buying the house, and live on the reduced income. This idea worked, her fears were abated and by now we’re sure that house is paid for.

At Sun Life, a variety of tips are included, with a sound bit of advice being “take full advantage of your employee pension plan.” A lot of times, the company pension plan may be optional. You don’t have to join. But if you don’t, you are missing out on putting away money for retirement, often with an employer match.

If you are in a defined benefit pension plan, be sure to find out if there are ways to purchase service for periods of time when you were off on a maternity or parental leave. Your future you will thank you later.

We’ll add a few others we have gleaned over the years.

Make your saving automatic – contribute something towards your retirement every payday, and up it when you get a raise. You will be paying yourself first.

A nice place to put your Canada Revenue Agency tax refund is back into your SPP or RRSP account. You’re making the refund tax-deductible.

Start small. We started with $25 a month nearly 40 years ago. Don’t think you have to start off big, or you may never start off at all!

If you haven’t started saving yet, a wonderful resource to be aware of is the Saskatchewan Pension Plan. It’s open to any Canadian with RRSP room. With SPP, you can contribute any amount you want, up to $7,000 per year, and can transfer up to $10,000 a year from other RRSPs. SPP will pool your contributions, invest them at a low cost, and grow them into a future source of retirement income. Check out SPP today!

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Focusing on what can go right in retirement

We’ve read, endlessly, about what can go wrong in retirement – running out of money, inflation eating away the value of your income, and so on – so today Save with SPP decided to focus instead on what can go right with retirement.

It’s not as easy to find good news on the subject, but an article from a few years ago from Sun Life looks in detail at retirement success.

The article cites a poll taken last decade as indicating that “having an active lifestyle” is most important to “Zoomers,” defined as those aged 45 plus.

“Today’s retirees aren’t spending their days in front of a TV. They’re walking, running, travelling, returning to school, volunteering and working part-time,” the article states.

The article looks in detail at the retirement life of Dennis Watson and his wife Sue Lamb. Dennis tells Sun Life that for him, retirement is “sleeping in, reading more, golfing more and travelling,” adding that “life’s good.”

What did he credit for his retirement success story? Planning. “People don’t plan to fail, they simply fail to plan,” he notes in the article.

Here are the key elements of his plan.

First, he started saving early. “Starting with my first part-time job, I saved about $1,000 a year, putting money every month from my pay into my tax-sheltered registered retirement savings plan (RRSP),” he tells Sun Life. He said that even putting a little money away each year will add up after four decades, the article continues.

Dennis also “borrowed money to max out my annual RRSP contribution” and “used my income tax refund to pay down my mortgage.”

As his savings grew, he began to invest his money in “quality stocks – banks, insurance, telecommunications companies,” and made sure his family was adequately covered by insurance, the article adds.

As he got near the end of his working life, he consulted a financial planner to set out his retirement plan, the article tells us. That gave both he and his wife Sue a full outline of the assets they have, the investments and the income they produce, their insurance company, and a look at all sources of retirement income, well in advance of the golden handshake, the article states.

“Retirement is the next stage in life. Embrace it, and enjoy it for all it’s worth. Life isn’t a dress rehearsal, so don’t go to the grave wishing you had done that one thing you always wanted to do. I worked hard for 40 years, so that I could enjoy the next 20 years — or more!” he tells Sun Life.

There’s a lot of positive information here. We like the twin ideas of systematic, regular retirement savings contributions and the idea of using tax refunds to plunk extra down on the mortgage (or other debt).

The takeaway is that if you start small, and later, begin to try and max out on your RRSP contributions, over time you will have a sufficient nest egg and can plan your exit from the work world.

Knowing what you’ll get from other sources, such as workplace or government pension plans, is also part of the puzzle.

People worry they won’t be able to get by on less money in retirement, but overlook the fact that they will almost always be spending less, and paying less taxes. Look at the net income you’ll get in retirement and compare it to the net income you are getting now – that’s a more realistic comparison.

If you don’t really know about investing (or don’t want to learn), a retirement savings option to consider is the Saskatchewan Pension Plan. With SPP, you decide how much to contribute – you can start small and work up to the maximum contribution of $7,000 per year. Mrs. Save with SPP borrowed money for her SPP – she put the money in a simple RRSP savings account to get the tax credit, and then transferred it to SPP the next year.

SPP will look after the tricky investing part, and will do so at a low cost, typically less than one per cent per year. At the time you turn in your ID badge, SPP will present options for your retirement income, including in-house lifetime annuities to choose from. Check out SPP today!

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Those of us who don’t have a workplace pension – or want to augment it – are pretty familiar with what a registered retirement savings plan (RRSP) is. However, there can be tricky things to watch out for when investing your RRSP savings. Save with SPP had a look around the Interweb to highlight some RRSP pitfalls.

The folks at Sun Life identify five RRSP no-nos. First, they tell us, is the mistake of putting cash in your RRSP to meet the deadline, and then not putting it into an investment of some kind. Be sure you invest the money in something – “stocks, guaranteed investment certificates, mutual funds, bonds and more” so that your RRSP contributions grow. Your money grows tax-free until you take it out, so you need to have growth assets, the article says.

Another problem identified by Sun Life is raiding your RRSP cookie jar.

“Making RRSP withdrawals before retirement to, say, cover bills or make big purchases can have lasting consequences. For one, you’re giving up the years of tax-deferred growth your money would have generated inside your plan.” As well, the article continues, you’ll face a double tax hit – a withholding tax is charged when you take money out of an RRSP, and then the income from the withdrawal is added to your overall income at tax time. Double ouch.

Other things to watch out for, Sun Life advises, are overcontributing (be sure you know exactly what your limit is), spending your tax refund instead of re-investing it, and not being aware of RRSP/RRIF tax rules on death.

The Modern Advisor blog cautions folks against making their RRSP contributions “at the last minute.” If you spread your contributions out throughout the year, you will get more growth and income from them, the article advises.

Other tips include making sure your beneficiary selection is up to date, and knowing that contributions don’t have to be made in cash, but can be made “in kind,” such as by transferring stocks from a cash account to an RRSP account.

The RatesDotCa blog adds a few more.

On fees, RatesDotCa points out that many RRSP products, typically retail mutual funds, charge fairly hefty fees. “Canadians pay some of the highest fees in the world,” the article notes. “Over many years, these fees can add up, further reducing your retirement plan. Be sure to ask for a thorough explanation of the fees you can expect, and how they will affect your retirement plan,” the article advises.

Other ideas from RatesDotCa include not repaying your RRSP if you do borrow from it, not taking “full advantage” of any company pension plan (meaning, contribute as much as you can to it), and retiring too early (the article notes that both the Canada Pension Plan and Old Age Security pay out significantly more if you wait until age 70 to collect them.

Save with SPP can add a few more, gleaned from our own “welts of experience” over 45 years of RRSP investing.

Don’t frequently move your RRSP from one provider to another. This is called “churn,” and can result in hefty transfer fees and generally reduces the long-term growth needed for retirement-related investing.

If you borrow to make an RRSP contribution, do the math, and make sure the loan amount is affordable. Sometimes the bank or financial institution will want the money repaid within a year.

Be sure your investments are diversified, and include both equities and fixed income, plus maybe alternative investments like real estate or mortgage lending. Typically, if one sector is down, others may be up.

If you don’t want to think this hard as this about RRSP investments, consider the Saskatchewan Pension Plan. Contributions to SPP are treated exactly like RRSP contributions for tax purposes. You can’t run into tax trouble by raiding your SPP account because contributions are locked in until you reach retirement age. SPP offers a very diversified portfolio in its Balanced Fund, and fees charged by SPP are low, typically less than one per cent. Since its inception in 1986, SPP has averaged eight per cent returns annually – and although past results don’t guarantee future performance, it is a noteworthy track record. Check out SPP today!

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Not everyone is comfortable talking about money with family members – spouses, kids, and so on.

In fact, Kelley Keehn, writing for FP Canada notes that she has always found it interesting that “people naturally retreat when the topic of finances comes up.”

“While it’s perhaps not the most engaging dinner table discussion or a conversation-starter on a date, money is an important subject to be comfortable talking about,” she writes. “No matter our age, salary, social or relationship status, money is an essential part of our lives,” Keehn continues.

She cites a recent national survey by FP Canada, The Discomfort Index, as finding that the topics that make Canadians squirm the most are politics (26 per cent), relationships/sex (24 per cent) and then money – tied with religion – in third place at 23 per cent. By comparison, notes Keehn, only 12 per cent of respondents found talking about their health to be a “taboo” subject.

Strangely, notes Keehn, at a time when women’s earnings now account for 47 per cent of family income, women are “more likely to avoid the topic of money than men,” by a margin of 27 per cent to 18 per cent.

While most Canadians confide in their partners about money, there’s a whopping 40 per cent who won’t, Keehn reports. Only three per cent would talk about money with strangers, two per cent with “hairstylists and estheticians,” and one per cent won’t talk about it to anyone, Keehn adds.

Save with SPP did an interview with Kelley Keehn last year.

So, what can be done to get people talking?

Writing for the Sun Life blog, Sylvie Tremblay suggests that one barrier to money talk might be our level of financial knowledge. “All too often, resistance to talking about money in a real, substantive way stems from a lack of confidence,” she writes. Consulting a financial advisor – a view shared by Keehn – is a great way to educate yourself about the topic.

Another money talk ice-breaker could be picking a financial goal you both are interested and excited about – a major vacation, putting together a down payment, or setting up a registered education savings plan (RESP) for the kids.

Other ideas from Tremblay include making an annual “money talk” appointment with your partner, setting rules about “who is handling what” when it comes to money and bills, and finally, to get started on talking right away.

An article from the Desjardins Financial Security network gives some great ideas about talking money with your adult kids.

The article points out, citing research results reported upon by the New York Times, that 83 per cent of respondents (folks making more than $100,000 per year) said they would NOT disclose their income to their adult kids. Only 17 per cent said they would, the article notes, with the main reason given for a “no” being the belief that the parents’ finances are “none of their (the kids’) business.”

However, the article says, that’s not really the case.  First off, your money may be theirs one day – and data suggests that one-third of inheritors “squander their inheritance shortly after receiving it.” Talking about money with them now, and discussing how to make it last, the article suggests, is helpful.

If you support charities, this is a nice idea to discuss with the kids – perhaps you can help grow their giving values too, the article adds. A money discussion plays a huge part in boosting the financial literacy of your children, the Desjardins article states.

“Parents with a certain degree of wealth have an opportunity to gradually expose their adult children to complex financial concepts such as investments, business ownership or overall financial planning,” the article adds.

Finally, the article suggests, it’s never a bad idea to involve a financial advisor in matters relating to inheritances or “in-life” transfers of wealth to kids, to game plan for any tax issues in advance.

The bottom line here seems to be quite simple – if you aren’t talking money with your spouse, it’s probably time to start. If everyone knows where the money is going and why, you avoid surprises, which people really only like on birthdays and other key holidays. If you are on the same page with spending, you can get on the same page with saving.

Thinking about saving for retirement, for couples and also for individuals, is a key financial consideration. If you have a retirement plan at work, be sure to join it and learn about what features it offers, particularly when it comes to benefits for your survivors. This is a good idea for both partners.

If you are saving on your own, take a look at the Saskatchewan Pension Plan, marking its 35^th year of operations in 2021. The SPP offers you a “do it yourself” pension plan that not only invests your savings, but provides the possibility of a lifetime pension with benefits for your surviving spouse. Check them out today.

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Canadian savings rate jumps to 28.2%, says Statistics Canada

For decades we’ve been told that Canadians – once known as a nation of savers – had shifted to become spenders.

No more. According to figures from Statistics Canada reported on by U.S. News and World Report, we are piling up the savings these days. The article notes that by mid-2020, Canadians were saving an incredible 28.2% of their disposable income, up from just 2-3% before the pandemic.

“There’s a pot of cash that’s basically sitting there and we’re interested in monitoring where that goes,” states Statistics Canada economist Greg Peterson in the article. “It’s a kind of notable divergence from what we usually see.”

Peterson states in the article that Statistics Canada is curious as to whether Canadians will pay down debt with their stockpile of cash, or spend it on goods and services, which would benefit the re-emerging economy.

Where did the extra money come from?

“Disposable incomes jumped sharply on higher government transfers – namely emergency wage benefits – while household spending fell amid COVID-19 shutdowns,” the article tells us. That seems right. Back in the spring, when the first pandemic-related restrictions began, there wasn’t much to spend money on other than groceries and gas. Things have been slowly improving ever since.

And certainly many Canadians have been counting on the CERB benefit during these months of the pandemic.

Let’s face it; we are in a crisis situation and it’s always good to have a little money in the wallet to help tide you through.

A survey out in early September from Sun Life finds that nearly half of us “feel less financially secure due to COVID-19.”

Forty-four per cent of those surveyed by Sun Life who say their mental health has been affected by the pandemic cite “financial stress as the main factor,” a Sun Life media release notes.

Younger Canadians appear to be the most worried group, the survey finds.

So, putting it all together, we’ve suddenly changed back to a nation of savers, and it’s quite possibly the uncertainty of our recovering economy that’s to blame. While things are returning slowly to a more normal state, there are still people out there who haven’t been able to get back to work – not everything has re-opened, or re-opened fully.

Having a little cash on hand for emergencies makes a lot of sense in this situation.

However, if you are sitting on excess cash for the short-term, consider earmarking a little bit of it for your retirement savings as well. A good place to tuck away a few loonies can be the Saskatchewan Pension Plan. You can set up SPP as a “bill payment” using your online banking website, and direct some of your extra dollars to them, either a little or a lot. With SPP there are no pre-defined contributions; it is up to you to decide how much to chip in. Your future you will thank you for any stray dollars you can send his or her way.

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According to a recent article in MoneySense nearly two-thirds of Canadians have built an emergency fund. That’s great, but means that one-third of us have not.

For those of us is in that bottom third, an emergency fund is designed to cover “unexpected expenses, such as urgent major repairs (not renovations) to your home or car, unexpected medical expenses not covered by universal healthcare or insurance, or lack of income due to job loss,” MoneySense explains.

As many of us are finding out during this bizarre year 2020, without an emergency fund, these unexpected expenses are being covered “with a credit card… payday loans, or heavily using your unsecured line of credit,” the article continues. All of these are high-interest options, and the interest piles up if you can’t pay the money back in full.

Some folks also raid their retirement savings to pay the bills, a strategy that can backfire at tax time or in the distant future when you’re trying to leave the workforce – more about that later.

MoneySense recommends we all set aside enough money to cover “three to six months’ worth of fixed expenses.” OK, so we know the what and the why – let’s turn to the how.

An emergency fund, the article suggests, should not be set up like a retirement savings account. “Saving for an emergency isn’t about long-term goals, increasing your wealth, or planning for retirement, it’s about having immediate access to cash,” the site advises.

MoneySense recommends that you first create a budget to see how much you can set aside each month. That amount should be invested in either a TFSA or a high-interest savings account, the article notes. “Disconnect the account from your debit card so you won’t spend it,” the article advises. Automate payments so you don’t “forget” to make them, MoneySense says. “Pay yourself first.”

At Manulife’s website, the advice is similar. An additional idea on how to build the emergency fund is to cut back on costs – “think about how much you spend on coffee, lunches out, and other impulse purchases. Give up one or two things and week and stash that money into your savings,” the site suggests.

They also reiterate the idea of making savings automatic – treat your emergency fund “like a bill… the sooner it’s saved, the less time you will have to spend it.” Manulife also warns against the dangers of analysis paralysis – start small, say $10 a week or so, and ratchet things up as you go along.

Sun Life covers much of the same ground, but warns against using debt as an emergency fund or tapping into retirement savings.

“All withdrawals from RRSPs (except for education and home purchases, under the Lifelong Learning Plan and the Home Buyers’ Plan, respectively) are subject to income tax and will result in the permanent loss of contribution room – that is, once you’ve taken it out, you can’t put it back in. Any withdrawals from your RRSP are immediately subject to withholding tax,” Sun Life explains.

“If you withdraw up to $5,000, the withholding tax rate is 10 per cent. If you withdraw between $5,001 and $15,000, the withholding tax rate is 20 per cent, and more than $15,000, the rate is 30 per cent. These tax rates apply in all provinces except Quebec, where provincial tax rates apply on top of the federal withholding tax,” the Sun Life article warns.

So to recap – create a savings account that isn’t hooked up to any of your cards, and automatically transfer money into it regularly. Keep the money in some sort of high-interest savings account so that it remains liquid, and ready to spend when an emergency arrives. You don’t want to risk losses here.

Think of it as an obligation, like a bill, that you have to pay each month. Then set it and forget it, until the next emergency comes along.

And if you’re busily automating your emergency fund savings, think about doing the same thing for your Saskatchewan Pension Plan retirement account. Have a pre-set amount earmarked for retirement automatically withdrawn from your bank account every payday. That way, just as is the case for a well-designed emergency fund, you’re paying your future self first.

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These days, with the costs of housing at or near all-time highs – as well as the cost of mortgages – it’s not that surprising that some folks consider their home to be their biggest asset.

Some experts recommend that people “downsize” in retirement – this means you sell your existing home, and then either buy a cheaper one with the proceeds, or rent. Save with SPP took a look around to see what the pros and cons for such a strategy might be.

At the Boomer & Echo blog, the pros of selling your existing home and “buying a newer, less expensive property” include reduced expenses and maintenance, and the possibility of having “money left over from the sale to invest.”

The new home will still appreciate in value, building your equity, the blog reports. You’ll have the ability to leverage the home’s value for a reverse mortgage, the home is an asset that can be left to heirs and “owning is more predictable – there’s no landlord to increase your rent or tell you to move.”

However, Boomer & Echo notes, there are downsides to downsizing too. Buying a new home with assets from a prior home means “your money is tied up.” If you move to a new town or city, you might be buying when prices are high. There can still be unexpected maintenance costs, and even if you don’t have a mortgage taxes and property insurance are still costs, the blog advises. Prices can go down in real estate, a risk, and if you do need to sell “you are at the mercy of realtors, buyers, and market conditions, plus selling takes time and effort,” the blog notes.

So what about renting?

The folks at Sun Life asked a couple of experts about the pluses and minuses of ditching home ownership and becoming a renter once you are retired.

In the Sun Life piece, real estate broker Marie-Hélène Ouellette notes that “the biggest difference (for renters) is in the level of responsibility and freedom. You’re obviously freer when renting since you can leave when your lease is up, and you have less responsibility because the owner takes care of the maintenance work.”

Another advantage of renting, the article notes, is that “you won’t have to pay any property taxes,” although the landlord’s property taxes are factored into your rent. Assuming that you have sold your home and are now renting, the renter will be able to invest the proceeds of the former property to generate retirement income, the article notes.

However, there are problems to be aware of when renting – particularly if you haven’t done it in a long time, the Sun Life article notes.

“Renters can also have less control than owners over things like decorating, repairs and renovations and even pets, and when you’ve been a homeowner for a long time, that’s not always an easy thing to handle,” the article advises.

If you’ve been mortgage free for a while, paying rent again may take some getting used to, the article notes, quoting financial planner and tax specialist Josée Jeffrey. She states that “while you can cover your rent with the proceeds from the sale of your house, you can expect your rent to increase over time, taking an ever-greater bite out of your savings.” Finally, she notes that if your money is essentially invested in your home, and you take it out to invest in the markets, you may run into unexpected volatility.

“A financial crisis can take a big bite out of your investments,” she tells Sun Life.

Both articles conclude by saying there is no single right answer – it all depends on you, as an individual. Be sure to seek out advice before you make this kind of big decision.

Those who have built up sufficient retirement income through a workplace pension plan or personal savings may have more flexibility in the choice of whether or not to leverage their homes in these ways. If you have access to a workplace pension plan, be sure to sign up for it and maximize your contributions. If you’re saving on your own for retirement, consider joining the Saskatchewan Pension Plan . They can efficiently and effectively grow your savings over time and can turn it into a lifetime income stream when you retire. That extra income will provide much needed extra security, no matter where retirement takes you.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

A look at the best of the Internet, from an SPP point of view

You saved it – but can you make it last?
By now, most of us get the idea that paying for one’s retirement involves saving money in the period leading up to the end of work, and then making those savings last.

That second part, preserving the wealth, doesn’t always get as much attention as the first. How do you keep that nest egg from running out, and ideally, leaving a bit for the kids once you’re gone?

According to Heather Rennie of Sun Life, there are a number of obstacles your retirement savings will face, including “taxes, inflation, bad investment decisions and the natural reduction of assets.” She recently wrote an article called “6 Ways to Preserve Wealth for the Future” that provides a strategy for managing these risks.

Rennie says that setting a goal is an important first step. If you’re not all that concerned about leaving wealth to future generations, your investments will be much different than those you would want otherwise, she notes.

It’s worth thinking about setting up some sort of trust arrangement, Rennie writes, if you expect someone else, such as a family member, will be helping with your finances when you become quite elderly. “This can help safeguard the money from those who might make investing mistakes,” notes Rennie.

Diversification of investments – a balanced approach – is recommended, she writes, as is having some guaranteed investment funds/products in the mix. This category of investment puts some guarantees around the payouts not only to you, but to your beneficiary.

Rennie speaks as well of the need for tax efficiency. Withdrawals from many registered products are fully taxable, but making use of a TFSA can provide “tax-sheltered growth and tax-free withdrawals.”

These steps can help ensure that there is some wealth left to transfer to future generations.

Why retirement is the best time of life
Some great insights on why retirement rocks from the folks at Love Being Retired:

• “You don’t have to act your age.”
• “You don’t have to wait for the weekend to have fun.”
• “You don’t have to waste time doing what you do not want to.”
• “You can learn/heed/study what you really want to.”

Lots of freedom at the end of the rainbow, isn’t there? And the Saskatchewan Pension Plan can help you get there.

 

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

 

After a long career as a pension lawyer with a consulting firm, I retired for the first time 13 years ago and became Editor of Employee Benefits News Canada. I resigned from that position four years later and embarked on an encore career as a freelance personal finance writer.

In December 2010 I wrote the article Is this small pension plan Canada’s best kept secret?  about the Saskatchewan Pension Plan for Adam Mayers, formerly the personal finance editor for the Toronto Star. The Star was starting a personal finance blogging site called moneyville and he was looking for someone to write about pensions and employee benefits. I was recommended by Ellen Roseman, the Star’s consumer columnist.

The article about SPP was my first big break. I was offered the position at moneyville and for 21/2 years I wrote three Eye on Benefits blogs each week. It was frightening, exhausting and exhilarating. And when moneyville began a new life as the personal finance section of the Toronto Star, my weekly column At Work was featured for another 18 months.

But that was only the beginning.

Soon after the “best kept secret” article appeared on moneyville, SPP’s General Manager Katherine Strutt asked me to help develop a social media strategy for the pension plan. Truth be told, I was an early social media user but there were and still are huge gaps in my knowledge. So I partnered with expert Leslie Hughes from PunchMedia, We did a remote, online presentation and were subsequently invited to Kindersley, Saskatchewan, the home of SPP to present in person. All of our recommendations were accepted.

By December 2011, I was blogging twice a week for SPP about everything and anything to do with spending money, saving money, retirement, insurance, financial literacy and personal finance. Since then I have authored over 500 articles for savewithspp.com. Along the way I also wrote hundreds of other articles for Employee Benefit News (U.S.), Sun Life, Tangerine Bank and other terrific clients. As a result, I have doubled my retirement savings.

All my clients have been wonderful but SPP is definitely at the top of the list. I am absolutely passionate about SPP and both my husband and I are members. Because I was receiving dividends and not salary from my company I could not make regular contributions. Instead, over the last seven years I have transferred $10,000 each year from another RRSP into SPP and I would contribute more if I could.

By the end of 2017 I started turning down work, but I was still reluctant to sever my relationship with SPP. However, as my days became increasingly full with travel, caring for my aged mother, visiting my daughter’s family in Ottawa, choir and taking classes at Ryerson’s Life Institute, I realized that I’m ready to let go at long last. After the end of May when people ask me what I do, I will finally be totally comfortable saying “I am retired.”

I will miss working with the gang at SPP. I will also miss the wonderful feedback from our readers. I very much look forward to seeing how both savewithspp.com and the plan evolve. My parting advice to all of you is maximize your SPP savings every year. SPP has changed my life. It can also change yours.

Au revoir. Until we meet again….

—-

Written by Sheryl Smolkin
	Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Health Canada statistics reveal the number of Canadians with prescriptions for medical marijuana more than tripled between the fall of 2015 and 2016 from 30,537 people to nearly 100,000 individuals. And with legalized marijuana for recreational use slated to come into effect July 1, 2018, it is expected that use of the drug will soar.

In response to the proliferation of legal marijuana use, life and health insurance companies have had to rethink several aspects of their pricing and coverage including whether or not:

• Individual life insurance applicants using marijuana must pay smokers’ rates
• Benefit plans will reimburse clients for the cost of medical marijuana.

Smoker/Non-smoker rates
Until the last several years, marijuana users applying for individual life insurance had to pay smokers’ rates. For example, a man in his 30s could expect to pay about two to three times as much for a policy than a non-smoker. A smoker in his 40s could expect to pay three to four times as much.

Insurance companies charged this massive price increase because smokers have a much higher risk of death than non-smokers. In addition, smokers often have other health problems like poor diets or an inactive lifestyles.

Within the last two years, the following insurers in Canada announced their plans to begin underwriting medical and recreational marijuana users as non-smokers, including:

• Sun Life
• BMO Life Insurance
• Canada Life
• London Life
• Great-West Life

Sun Life is taking the most comprehensive approach, saying it will treat anyone who consumes marijuana but doesn’t smoke tobacco as a non-smoker. BMO Life Insurance is more restrained, limiting non-smoker status to people using only two marijuana cigarettes per week. Canada Life, London Life, and Great-West Life issued a joint statement which said that “clients who use marijuana will no longer be considered smokers, unless they use tobacco, e-cigarettes or nicotine products.”

This change won’t affect group benefits as coverage is not individually underwritten. An article on Advisor.ca includes a chart comparing where a series of major Canadian life insurers stand on pot use.

Drug plan coverage
So, what about coverage for medical marijuana under your benefits plan?

If your coverage includes a health care spending account (HCSA), you are in luck. Medical marijuana is an eligible expense under HCSAs because the Canada Revenue Agency (CRA) allows it to be claimed as a medical expense on income tax returns. Note that only marijuana is eligible under CRA medical exempt items, not vaporizers or other items used to consume it.

However, even though physicians are prescribing cannabis and people are using it for medical reasons, it is not currently covered under almost all traditional drug benefits. That’s because Health Canada hasn’t reviewed it for safety and effectiveness or approved it for therapeutic use the way it reviews and approves all other prescription drug products.

This means marijuana hasn’t been assigned a drug identification number (DIN), which the insurance industry usually requires before a drug can be covered. Until there is research that can be reviewed by Health Canada, marijuana will remain an unapproved drug and unlikely to be covered by your plan.

However several recent events suggest that it may be only a matter of time until group and individual drug plans offer at least limited coverage for medicinal marijuana.

Jonathan Zaid, a student at the Umiversity of Waterloo is the executive director of the group Canadians for Fair Access to Medical Marijuana. He has a rare neurological condition that causes constant headaches, along with sleep and concentration problems. Zaid said he was sick for five years before even considering medical cannabis. He tried 48 prescription medications, along with multiple therapies, all of which were covered by his insurer without question – except for medical cannabis.

After eight months of discussions, the student union (who administers the student health plan) came to the conclusion that they should cover it because it supports his academics and should be treated like a medication.

Similarly, the Nova Scotia Human Rights Board ruled in early 2017 that Gordon Skinner’s employee insurance plan must cover him for the medical marijuana he takes for chronic pain following an on-the-job motor vehicle accident. Inquiry board chair Benjamin Perryman concluded that since medical marijuana requires a prescription by law, it doesn’t fall within the exclusions of Skinner’s insurance plan.

Perryman said the Canadian Elevator Industry Welfare Trust Plan contravened the province’s Human Rights Act, and must cover his medical marijuana expenses “up to and including the full amount of his most recent prescription.”

And at least one major company is covering employees for medical marijuana in very specific circumstances. In March 2017, Loblaw Companies Limited and Shoppers Drug Mart announced in an internal staff memo that effective immediately it will be covering medical pot under the employee benefit plan up to a maximum of $1,500 per year for about 45,000 employees.

Claims to insurance provider Manulife “will be considered only for prescriptions to treat spasticity and neuropathic pain associated with multiple sclerosis and nausea and vomiting in chemotherapy for cancer patients,” said Basil Rowe, senior vice-president of human resources at Loblaw Companies Ltd., owner of Shoppers, in the memo.

“These are the conditions where the most compelling clinical evidence and literature supports the use of medical marijuana in therapy,” explained Loblaw/Shoppers spokesperson Tammy Smitham. “We will continue to review evidence as it becomes available for other indications (conditions).”

Since cannabis does not yet have a Drug Identification Number recognized by insurers, it isn’t covered under typical drug spending. However, it will be covered through a special authorization process where plan members will pay and submit their claim after, said Smitham.

The move could trickle down to other Canadian employers and their benefit plans and even set a precedent, Paul Grootendorst, an expert on insurance and reimbursement and director of the division of social and administrative pharmacy in the Leslie Dan Faculty of Pharmacy at the University of Toronto told the Toronto Star.

Written by Sheryl Smolkin
	Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.