Family therapist Carol Mitchell believes so strongly in the Saskatchewan Pension Plan (SPP) that she signed up six of her family members and deposited money into their accounts.
"I decided to invest in their futures," she says. "Someday I'm going to die and they are not going to remember they spent the $100 I gave them on a sweater or a dinner out. But when it comes time for their retirements, they'll remember I believed in them and put money aside in their names."
SPP is a retirement savings option offering professional management and low annual fees. The plan is open to all Canadians between the ages of 18 and 71, and members can invest up to $2500 per year (subject to RRSP limits). Over the last 26 years, average returns in the balanced fund have been nearly 8 per cent with annual expenses averaging about 1 per cent.
Mitchell joined SPP in 2000, two years after her husband. "My husband joined in 1998 because it was one of the perks offered by his employer," she says. "I looked at his statements, and the earnings were better than I was getting at the bank so I decided to take out my own plan."
She makes maximum contributions to her own account every year and takes full advantage of the opportunity to move money from her personal RRSP into SPP. She enrolled her two grandsons in SPP when they turned 18, and subsequently made similar arrangements for her two daughters and two goddaughters.
Mitchell hopes her family members will continue to contribute to SPP above and beyond any further gifts she gives them; however, she recognizes that some years they may have other, more pressing financial priorities. "The flexibility to contribute whatever they can afford to SPP each year is one reason I really like the program," she says.
Mitchell turned 65 this year, but plans to keep on working and contributing to her own SPP account until age 71. Then she can opt for a lifetime pension, transfer the funds to a prescribed registered retirement income fund with a financial institution, or select a combination of both the annuity and transfer options.
SPP is the 28th largest defined contribution plan in Canada and has grown to over 32,000 members and more than 300 million dollars in assets.
The RRSP contribution deadline for 2012 is March 1, 2013. For more information, visit sppwork.ca or call 1-800-667-7153.
