Launch of retirement savings plan offers hardworking Canadians a chance to retire with dignity
SEIU Healthcare announces My65+, the first retirement plan designed for Canadians earning less than $50,000 per year
TORONTO, Feb. 22, 2017 /CNW/ - Today, SEIU Healthcare announced the first retirement plan aimed at the needs of modest earning Canadians. The My65+ plan is designed to be low-fee, portable, and structured to preserve government benefits.
"We asked our members what their number one challenge was, and the resounding answer we heard was retirement security," said Sharleen Stewart, President, SEIU Healthcare. "At SEIU Healthcare, we firmly believe that everyone deserves to retire with dignity, including the millions of Canadians who we know stretch their dollars to go as far as possible, every single day."
Starting July 1, 2017, My65+ will be open to SEIU Healthcare members and their family members.
Facts about My65+
- Designed for working Canadians with no workplace pension earning less than $50,000 per year
- Low, transparent fees
- Portable – stays with the member from job to job and into retirement
- Structured to preserve government benefits in retirement, allowing members to keep their Guaranteed Income Supplement
- Open to SEIU Healthcare members and their families
- Contributions can start as low as $25 a month
- The plan can provide 3-4 times more retirement value for money than a typical RRSP
- More information about My65+ can be found at my65plus.ca
"Retirement plans and products available today do not serve modest earning workers well," said Stewart. "We have created My65+ to address the financial realities and concerns of our members and many other hardworking Canadians."
ABOUT SEIU HEALTHCARESEIU Healthcare represents more than 55,000 healthcare and community service workers across Ontario. The union's members work in hospitals, home care, nursing and retirement homes, and community services throughout the province. SEIU Healthcare has a strong track record of improving wages, benefits and working conditions for healthcare workers, supporting the training and development needs of its members, and strengthening standards in the management and delivery of patient and client care. www.seiuhealthcare.ca
Supportive Third Party Statements
The Daily Bread Food Bank
"Mainstream RRSPs just don't pass the logic test for people earning less than $50 thousand per year," said Gail Nyberg, Executive Director of Daily Bread Food Bank in Toronto. "They need a savings plan that won't end up costing them money in their most vulnerable time of life. SEIU's plan allows them to hold on to all the retirement income they're entitled to, and that makes so much sense."
Aspen Institute Financial Security Program
"SEIU's My65+ will provide an innovative, low-cost option for hard-working families to build private savings for retirement. It has the potential to serve as a much-needed model to expand coverage for low- and moderate-income workers across Canada, as well as in the U.S., where nearly one-half of private sector workers lack access to a retirement plan at work." – Jeremy Smith, Director at the Aspen Institute Financial Security Program
Canadian Centre for Policy Alternatives
"This plan is a concrete step forward that will help workers in precarious jobs save for their retirement. It has an innovative approach, using tax policy to benefit low-wage workers. It is tailored to increasing retirement security and incomes for low-wage workers who take care of vulnerable Ontarians." – Sheila Block, Senior Economist, Canadian Centre for Policy Alternatives
Background on My65+
- Low fees. My65+'s costs are significantly lower than the costs of a retail mutual fund, and lower than even those of many large pension plans. Plan members pay 0.22% for investment costs and a flat fee of $7 per month for administration. Over a lifetime, this can save a typical SEIU member about $100,000 in fees when compared to the average Canadian mutual fund, with fees of 2.2%. My65+ discloses all fees to plan members, providing a higher level of transparency than what is required by regulation, so that members know exactly what they are paying.
- Preserves government benefits. My65+ is registered as a Group Tax Free Savings Account (TFSA) with the Canada Revenue Agency. The TFSA has been identified by anti-poverty advocates and experts as the optimal regulatory category for Canadians with modest incomes to use for retirement savings. This is because withdrawals from a TFSA in retirement do not result in a reduction or "clawback" of Guaranteed Income Supplement (GIS) benefits, which approximately one third of Canadians rely on as part of their retirement income. By contrast, withdrawals from RRSPs and Registered Pension Plans result a reduction of GIS benefits of 50 cents on the dollar.
- Portable. My65+ stays with the member from job to job and into retirement, allowing members to continue to benefit from the plan's low fees and members-first approach as their life changes. The plan allows members to contribute directly from their bank account, or through payroll deduction from their employer, provided their employer is a participant in the plan. Unlike many employer-sponsored plans, My65+ also allows members to stay in the plan after they retire. Over time, SEIU Healthcare intends to explore adding simple options for members to convert their nest eggs into a steady stream of income, while maintaining some flexibility.
- Members first. Like a pension plan, My65+ has a fiduciary duty to serve the best interests of members. The plan will be overseen by a dedicated non-profit board comprised of a mix of SEIU representatives and external experts, and following best-in-class governance principles based on lessons learned from some of the world's leading pension plans. This board's sole purpose will be to deliver retirement security to plan members. Independent research shows that good governance and the presence of a fiduciary standard can make a significant difference in the retirement security of plan members.
- Simplicity. Unlike many financial products, which can be complex, opaque, and overwhelming, My65+ is simple. Investment choice is limited to a suite of low-cost "target date" funds, which offer a diversified portfolio of high-quality equity and fixed-income investments that automatically adjust as the member ages. These funds are increasingly the default investment choice for many large defined-contribution plans in the US and Canada. My65+ will be administered using a digital, secure, self-serve approach that makes enrolling easy and allows members to make changes and receive communications online.
- Open membership. Membership in My65+ is open to all SEIU Healthcare members and their family members, including spouses, children, and parents. As My65+ is rolled out, SEIU Healthcare will explore opportunities to make the plan available to a broader membership, so that more working people can benefit from its unique features.
SOURCE SEIU Healthcare