You do not need RRSP room to contribute to an AVC account. However in the following year, your automatic contributions to an AVC account will reduce how much you can contribute to an RRSP.
The fees and expenses of an AVC account are calculated on a cost-recovery basis and consist of investment and administrative components.
* For this illustrative example, we have assumed an investment management expense of 0.6%. The percentage for the past five years has ranged from just under 0.4% to just over 0.6%.
Yes. Since AVCs are part of the OMERS Plan (which is a tax-exempt registered pension plan) your AVC account balance is allowed to grow tax-deferred. As well, automatic contributions to an AVC account are tax-deductible in the year they are made (but not lump-sum transfers).
The unfunded liability or shortfall in the OMERS Fund does not affect AVC accounts. The existing unfunded liability is related to the defined benefit component of the OMERS Plan.
No. You can't write a cheque for your total annual contribution or make up missed payments. Catch-up payments to an AVC account can be made through a lump-sum transfer from a registered retirement vehicle, such as an RRSP. OMERS does not impose a minimum or maximum amount that can be transferred to an AVC account.
No, only RRSPs registered in the OMERS member's name can be transferred to an AVC account. An RRSP registered in the spouse's name cannot be transferred to an AVC account even if the OMERS member contributed it.
No. The tax-free savings account (TFSA) and other non-registered retirement savings cannot be transferred to an AVC account.
The MER is the fee that an investment fund company charges you, the investor, to manage a fund. We refer to this fee as an investment management expense. The MER for a mutual fund includes costs associated with managing investments, marketing and the compensation paid to the salesperson. There are no marketing expenses or sales commissions associated with an AVC account. The AVC program was created on a cost-recovery basis, so there is no profit margin built into the calculation of the fees and expenses.
For this illustrative example, we have assumed an annual rate of return of 7% and an investment management expense of 0.6%.
OMERS provides information sessions to help you understand your pension and maximize your retirement savings.
OMERS Client Services is available to help you. Contact arepresentative at 416-369-2444, or toll-free 1-800-387-0813.