Do you have several registered retirement savings plan (RRSP) accounts?

When Save with SPP thinks back to the mid-1980s, when our first RRSP was started, we probably have had about 10 providers up to now. Presently, we are down to two. Sometimes it was because we bought RRSPs through a specific bank, sometimes we moved our self-directed RRSP from one provider to another.  That made us wonder. Is it better to have multiple RRSP accounts, or should we all try to consolidate them into one?

The MD Financial website lists four reasons why consolidation may work in your favour. MD Financial assists Canadian physicians with their retirement savings.

First, an article on their site explains, “it’s simpler to manage accounts at one institution.” And since most financial institutions charge fees, maybe one fee is better than many, the article adds.

It’s also easier to review all your investments if they are all in one place, the article notes.

“When all of your RRSP assets are visible in one spot, you can more easily confirm whether your investments are right for you,” the MD article notes. “This is especially true as you start to withdraw from those accounts to create income, or as you approach the end of the calendar year in which you turn 71, when RRSP assets need to be converted to a registered retirement income fund or used to purchase an annuity,” the article continues. Working from one account will make getting your retirement income flow less complicated, the article adds. “With multiple sources of savings to draw on, consolidating your RRSP assets with one financial institution can make it easier to manage your retirement income cash flow,” the article explains. “That way, you’re making RRSP withdrawals from just one institution,” the MD article reports.

An article from a few years back by Terry McBride of the StarPhoenix makes some similar points.

“Having separate RRSP accounts with various banks is not a very efficient way to achieve safety through diversification. By consolidating and using just one self-directed RRSP, you can hold marketable bonds, exchange traded funds (ETFs) or guaranteed income certificates (GICs) issued by any number of banks, trust companies or credit unions. You can have as much diversification and Canada Deposit Insurance Corporation coverage as you want. Savings in mutual fund management fees from consolidating can more than offset your self-directed RRSP administration fee,” notes McBride.

It will also make it easier for your executor if they have only one financial institution, rather than multiple ones, to deal with, the article adds. And as well, the article concludes, you will save a few trees (or emails) by not having as many statements to read.

The Motley Fool blog makes another interesting point about fees — if your various retirement accounts all are charged different fees, it may makes sense to consolidate within an account that has lower fees.

“Costly fees will hamper the growth of your savings,” the blog warns.

An article on the Marketwatch website says consolidation is a great way to put little pieces of pension from various jobs in your career into one spot, prior to retiring.

“While putting everything together, you may remember accounts you had completely forgotten about, such as a 401(k) (similar to a Canadian group RRSP) from an employer you were with for only a few years, or a pension benefit you may be eligible for based on the company’s requirements,” the article adds.

Do you have your retirement savings in multiple places? If you’re a member of the Saskatchewan Pension Plan, you can consolidate them within SPP. Under SPP’s rules, you can transfer in up to $10,000 from an RRSP each calendar year. Transferred funds will be invested by SPP at a low management fee, typically less than one per cent, and you’ll be able to keep an eye on your account whenever you want via My SPP. Check out SPP today!

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By Sheryl Smolkin

Over the last few weeks bloggers and mainstream media have been reacting to Finance Minister Joe Oliver’s surprise pre-election announcement of the government’s intention to add a voluntary component to the Canada Pension Plan. Here is sample of some of the buzz created by this proposal.

I wrote Voluntary CPP contributions will favour high earners on RetirementRedux and the blog was re-posted by John Chevreau on the Financial Independence Hub. I believe that too many questions remain unanswered and if voluntary CPP contributions are locked in until retirement, even when middle or low earners finally bite the bullet and set up a payroll savings plan, chances are they will opt for an RRSP or TFSA so they can get at the money in an emergency. Because employers probably won’t have to match contributions, there will be incentive for employees to contribute more money to CPP.

On Retire Happy, Jim Yih questions whether voluntary CPP contributions are a good idea. Yih also notes that the devil is in the details, and suggests that if there is no employer matching there is little difference between voluntary contributions to CPP or RRSPs (individual and group). Lower cost investing may be a plus but he says investors already have access to lower cost investments through Exchange Traded Funds (ETFs).

In the Globe and Mail, Bill Curry reports that the Conservative government rejected a voluntary expansion of the Canada Pension Plan five years ago as overly expensive and misguided, a history that is raising questions as to why it is now proposing that very idea. “This was rejected unanimously by our partners in the federation when we met and discussed the issue because it would not work and because the CPP would be unable to administer it,” Finance Minister Jim Flaherty told the House of Commons in September 2010.

In the StarPhoenix, Andrew Coyne writes Whether voluntary or mandatory, there is no need to expand the CPP. He says, “If people are saving about as much as they want to  now, then forcing them to save more in one way, through an expanded CPP, may simply result in an offsetting reduction in their other savings, in their RRSPs or TFSAs.” He also opines that those of modest means are already well-served by the existing CPP and the further you climb the income scale, the hazier the case for public intervention becomes.

And finally, a Toronto Star editorial says Harper’s pension ‘fix’ falls short. This piece suggests that by far the best way to forestall a retirement income crisis would be to expand and enhance the existing, highly acclaimed CPP, by upping the input from employers and employees alike. With $265 billion in assets and an enviable 18.3% return last year, the plan has expert management, huge scale and a low-cost structure. Employers and workers pay equally, to a combined maximum of just under $5,000 this year. It locks in contributions over the long haul and it provides a safe, predictable retirement income.

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