The member profiles presented here are intended to illustrate the features you may wish to consider before contributing to an AVC account. The profiles are loosely based on frequently asked questions by members.
David and his wife Bernadette live in Durham region. David works for a municipal traffic department and has contributed to OMERS for 16 years. He is 38 and Bernadette turns 40 later this year. They own their home and their son plays hockey and lacrosse. They make regular payments to their child's registered education savings plan (RESP), they recently started a tax-free savings account (TFSA) at the suggestion of their local bank manager and they make monthly contributions to their RRSPs.
David is considering an AVC account primarily because he likes the reputation of OMERS for long-term investment growth.
To afford his biweekly contributions without putting stress on the family finances, David will likely reduce contributions to his RRSPs and use the money to contribute to an AVC account. If David wants to modify or stop his automatic AVC contributions at any time, he can do so through myOMERS, or by calling OMERS Client Services.
What may be right for David may not be right for you, so carefully consider how the AVC option may fit your plan to save for retirement.
Lynn is a 34-year-old Children's Aid caseworker who owns her own home in the Waterloo region. Like many people her age, Lynn is focused on her career. So let's face it, talking about retirement savings opportunities has as much appeal to Lynn as watching paint dry.
What does resonate with Lynn is that the fees and expenses are on a cost-recovery basis. This has Lynn's attention because she appreciates good value. Lynn is considering making the minimum $40 monthly contribution because for her it's relatively painless and tax-deductible. The minimum automatic contribution to an AVC account is about the cost of a medium double-double per day—and that's more appealing than watching paint dry.
What may be right for Lynn may not be right for you, so carefully consider how the AVC option may fit your plan to save for retirement.
Brent is 51 and is approaching 30 years as a firefighter in northern Ontario. In addition to his OMERS defined benefit pension, Brent has prepared for retirement by buying several investment properties and creating a small deck and fence-building business.
During his career as a firefighter, Brent has banked a large number of sick days and expects to collect about $30,000 as a sick-leave gratuity when he retires. He is considering the option to invest that lump sum in an AVC account. When he retires next November, he plans to put his $30,000 in an RRSP account with his bank, because he has contribution room, and then transfer the amount to his AVC account during the January 1 to April 30 window. Brent doesn't expect to need the funds for at least 10 years, and understands that he can access some or all of the funds in an AVC account during the first six months after retirement and during the annual March/April withdrawal window thereafter.
For Brent, the fact that the fees and expenses are offered on a cost-recovery basis is a key factor in his decision and well worth the trouble of setting up an RRSP account, then later transferring his money to an AVC account.
What may be right for Brent may not be right for you, so carefully consider how the AVC option may fit your plan to save for retirement.
Mary is very good at saving her money. The 57-year-old librarian from Windsor is a big baseball fan and knows that consistency at the plate wins games. Mary brings that same sensibility to her plan to save for retirement. She prefers to invest her RRSPs in fixed-income assets like GICs that yield lower but guaranteed returns.
Mary is not risk-averse when it comes to baseball—for instance she admires a well-executed squeeze play during a low-scoring game—but she doesn't like risk when it comes to her retirement savings. Mary considered the AVC option but she doesn't want to invest her additional retirement savings in something that may fluctuate in value, because she wants a steady income and is considering early retirement.
What may be right for Mary may not be right for you, so carefully consider how the AVC option may fit your plan to save for retirement.
Neilson wonders whether he'll need retirement income in addition to his OMERS and govern¬ment pensions. He's not alone. The amount Neilson will need will depend on his family commitments, his health and lifestyle. As well, he knows that people are living longer and Neilson's lifespan will also determine how long his additional retirement income needs to last.
Neilson has worked for an Ottawa-area school board as an accountant for 26 years. He and his partner are taking a serious look at their retirement savings needs and Neilson, who'll be 59 next spring, is considering the AVC option primarily because he has always had confidence in the OMERS Fund investment strategy. He read the latest annual report and noted with interest OMERS asset mix policy to move more assets to private market investments. Over the long term “…an asset mix with greater exposure to private market investments is better positioned to generate strong, predictable returns and consistent cash flow with reduced risk to meet the Plan’s funding requirements.”* As Neilson sees it, with an AVC account, he stands to benefit from this strategy.
*OMERS 2010 Annual Report, Focus: Today and Tomorrow, page 23
What may be right for Neilson may not be right for you, so carefully consider how the AVC option may fit your plan to save for retirement.
After a career as a municipal building inspector, Allan retired a few years ago and began his second career as the proud owner/operator of a bed and breakfast near Kingston. The 61-year-old enjoys offering his brand of Eastern Ontario hospitality, which includes his wife Lisa's amazing home cooking.
Their business income and their CPP pensions, plus Allan's OMERS pension is more than enough to meet their income needs. They don't expect to need their RRSP funds for another seven years. Allan is considering transferring a portion of his RRSPs to an AVC account, in part because of OMERS investment strategy. His RRSP account is held primarily through his financial adviser, who is also a long-time friend.
Allan can transfer some or all of his RRSPs to an AVC account any time during the transfer window, from January 1 to April 30. He can begin the transfer through myOMERS by downloading and printing the forms for the other financial institution, or by calling OMERS Client Services. The difficult part for Allan will be telling his financial adviser that he wants to transfer some funds from his RRSP account.
What may be right for Allan may not be right for you, so carefully consider how the AVC option may fit your plan to save for retirement.
What may be right for the members in these profiles, may not be right for you, so carefully consider how the AVC option may fit your plan to save for retirement.