Ellen Roseman podcast

Hi, my name is Sheryl Smolkin. I’m a lawyer and a journalist. Today I’m pleased to be kicking off the Saskatchewan Pension Plan’s new series of interviews with financial experts. My first guest is Ellen Roseman.

Ellen is a journalist and author of five books who has been advocating for the consumer rights of Canadians for the past 35 years. She is a Toronto Star columnist, a fellow blogger on moneyville.ca and she has her own blog “On Your Side.” In January, she was featured on an episode of CBC Marketplaces called “Canada’s Worst Customer Service: Store Edition.”

But Ellen is also passionate about financial literacy and she has been teaching courses in investing and personal finance in the University of Toronto’s Continuing Studies Department since 2004. She also does Financial Basics workshops at Ryerson University. Financial literacy is what we are going to talk about today.

Q. Ellen, why do you think Canadians are so uneasy about their money skills?

A. We don’t learn much about money in school. In the past we used to learn from our parents but today many parents are uneasy about their money management skills and they’re not sure how to bring up their kids with good habits. It has also become a lot more complex and intimidating. For example, look at the number of retirement plans and many of the tax rules are getting more complicated

Q. How important is it to educate our children about money? When should parents start?

A. It’s probably good to start at a young age – like when children are younger, they tend to think that using the ATM is like the lottery and it’s free. You can also go to the grocery store and explain how much different items cost. It’s a delicate balance, but I think it’s a good idea to get your children used to using money and open a bank account at around 6, 7 or 8 years old.

Q. What resources are available to parents to help them educate their children about money?

A. The Canadian Banker’s Association put together a whole network of websites including their own and those of other financial institutions called “There’s something about money.” There are also a lot of financial institutions that have children’s resources on their own websites like Canada Saving’s Bonds. In addition, all the big banks are pretty good about having places where kids can read up and play money games. The approach is almost as entertainment rather than true education, because they learn through being interactive and playing

Q. The Federal Task Force on Financial Literacy recommended over a year ago that provincial and territorial governments put financial literacy into the formal education system. To what extent, if any has progress been made in the implementation of this recommendation?

A. British Columbia led the way even before the Financial Literacy Task Force because they have a compulsory course in Grade 10 and they make great use of the Financial Consumer Agency of Canada’s resource called “The City.” It’s interactive and it lasts for about 18 or 20 hours. Teachers use it in their classes

Manitoba and Ontario decided rather than one course in high school, they wanted to integrate financial education throughout the school system. So starting at about Grade 3 or 4 and going all the way to the end of high school, they introduce it it into things like math, economics and other courses. This process is harder and takes longer.

It’s going quite well in Manitoba, but Ontario is having some problems. A lot of teachers don’t feel very comfortable about teaching about financial issues.

Q. In one column you suggested that financial literacy means saying no to business interests in the schools. Can you tell me a little bit about why this is a concern and what the alternatives might be?

A. We already have a lot of business interests targeting schools. For example, Visa Canada wants to introduce a course about responsible spending. The course is totally sensible but the sponsor is aiming to get kids indebted by the age of 18, continuing for the rest of their lives

The Canadian Banker’s Association has a program where they send banker’s into schools to talk to students about money just as a one-time thing. But there is a little too much emphasis on RRSPs which really isn’t relevant to 16 or 18 year olds. There should be more about basic budgeting skills, deciding between a want and a need, and making sure not to overspend.

Q. Even if financial literacy programs become standard fare in high schools, how can we ensure the programs are engaging and interesting for young people so they don’t just tune out?

A. Make it relevant to people’s lives and the issues they’re experiencing at the moment.

Children in high school have some immediate needs. They need to know about the cost of post secondary education and how much that will be in dollars and cents. Who is going to pay for it? How do you manage a student loan? How do you pay for transportation? What’s the cost of all the gadgets they buy? Why it doesn’t make sense to buy with a credit card if you’re still paying it off a few years later and yet you’re ready to move onto the next device.

Q. You have been teaching basic investment concepts to adults for many years. What do you tell them about the role of a financial advisor, and the questions they should ask before signing on with one?

A. It’s very important for people to have a good financial advisor. Five to 10% of Canadians can actually be their own financial advisor but the rest need some financial advice.

Many of the people out there dispensing financial advice are working for big banks and other financial institutions. They are basically sales people who get incentives to accumulate as many assets under management and they encourage them to borrow to invest. Their whole expertise is about the accumulation phase, which is building up assets towards retirement but there’s a big gap once people retire or are about to retire. Many financial advisors are not skilled in how to keep more after-tax income in your pocket.

Check their references to make sure they’re registered. Do online research

Make sure they listen. If they’re diagnosing and recommending before they get to know you that usually means it’s some kind of off the shelf solution instead of a custom approach.

Finally, don’t get too friendly with them. Once your lives get too intertwined it’s pretty hard to fire them. Friendship should never interfere with a business relationship.

Thanks Ellen. It was a pleasure to chat with you. I know Saskatchewan Pension Plan members will be eagerly awaiting the release of your new book 99 Ways to Fight Back and they will also want to check out your Toronto Star articles and your blogs on moneyville.ca and ellenroseman.com.

Tim Calibaba podcast

Hi,

My name is Sheryl Smolkin. I’m a pension and benefits lawyer and journalist. Today I’m continuing with our series of interviews with the people behind the scene at the Saskatchewan Pension Plan

Tim Calibaba has an extensive background and experience in many aspects of the financial services industry going back more than 30 years.  In 2009 he received a designation from the prestigious Institute of Corporate Directors, Rotman School of Business, University of Toronto.

Currently he is serving as a member of the Board of Trustees for the Saskatchewan Pension Plan. He is also on the Boards of Directors of both Stone Investment Group and independent wind energy firm, Kineticor Renewables Inc.

Today Tim is going to answer some questions about how the Saskatchewan Pension Fund is invested.

Welcome Tim. Thanks Sheryl.

Q.  Tell us a little more about your investment background and experience.

A. Well, I’ve been in the mutual fund industry for many years. I started my own business back in 1986 in Saskatchewan. At that time we were just a small Saskatchewan based-company only operating in that province. Since then we expanded over a 20 year period from British Columbia right through to Ontario.

When we sold our business and merged with Berkshire Investments we had 400 advisers across Canada and over $4 billion in assets under management. As an independent mutual fund dealer, we were primarily focused on looking for the best investment managers for our clients’ money.

Q. What role do the Trustees have in investing funds deposited by SPP members?

A. Well, the first thing the Board has to do is set what is called the Investment Policy Statement. So we make a decision about where we want the funds allocated to from the standpoint of various countries, the portion in stocks, bonds, real estate – that sort of thing.

We set the policy and then we search for the best managers to fulfill that policy and make those investments on behalf of our customers. Then we basically follow through on the selection and monitoring of those managers.

Q.  What style of investing does the Board adhere to?

A. The Board has always had a very diversified style. One of our two managers is Greystone and that company has a growth style. The other manager is Leith Wheeler in Vancouver which has more of a value investment style.

As part of those styles then we also allocate to different countries, so we have a portion invested in international funds and the U.S. We feel that diversification is very important with a combination of styles and allocation of assets on a global basis.

Q. How does the Board monitor and get advice on investments?

A. The Board meets quarterly and at every quarterly meeting we have our independent consultant Aon Hewitt who does the management research for us. They review the manager’s performance – not just of our managers but of other managers that are available to pension funds and they report to us every quarter how our managers are doing and if there is any changes at their firms we should be worried about. And at every meeting we bring in one of the managers as well as Aon Hewitt so we can talk to them face to face.

Q. How has the SPP balanced fund performed as compared to market benchmarks over its 25 year history?

A. It’s actually done very well. It’s had a performance of 8.2% for 25 years which is pretty outstanding and approximately one percent better than the benchmark. Part of the reason is the low cost and efficient operation.

With the expense ratio around one percent it obviously helps the investors.

Q.  Why do you think SPP is a good investment to build retirement savings for members?

Well first of all, I think you have to look at the 25 year history. A fund that has been around that long and has done that well has obviously proven itself and that’s important if you are looking for a place to invest your money for retirement.

We have also have a low management expense ratio, as I mentioned before. We have a very diversified style with the two different management styles and we are diversified internationally with a real estate and bond component. So I think overall we have a very strong portfolio. With the balanced approach it does help to minimize the effects of the ups and downs in the market.

We also have a pension plan available to small business owners that is very low cost and very simple for any business, whether Saskatchewan based or outside of Saskatchewan to participate in.

Thanks very much Tim. I appreciate that you were able to take time from your busy schedule to talk to us today.

Mark Stockford podcast

Hi,

My name is Sheryl Smolkin. I’m a pension and benefits lawyer and journalist. Today I’m continuing our series of interviews with the people behind the scene at the Saskatchewan Pension Plan.

I’m pleased to be talking to Mark Stockford. Mark is an independent insurance broker with 4 employees. He offers his staff the Saskatchewan Pension Plan as part of their employee benefits package.

Welcome Mark.

Hi Sheryl, thanks for having me.

Q. How long has your group been part of the Saskatchewan Pension Plan?

A. I believe we first started in March 2003.

Q. Why did you decide to get involved with SPP?

A. Well, we wanted to provide our employees with an RRSP program allowing them the opportunity to accumulate retirement funds at a faster rate. We match their contributions and hopefully it improves employee retention.

Q. So why did you select SPP as opposed to a Group RRSP from a financial institution.

A. I believe in supporting the local and provincial economy and this is a local, provincially operated pension plan.

Q. How many of your employees are enrolled?

A. We have all our employees involved. When they are first hired there is a six month waiting period and then we offer it to them. To date, everyone who has had the chance has jumped at it.

Q. You mentioned that you match contributions. Tell me a little more about that.

A. It’s an employee benefit I want to offer to my employees, so on a monthly basis we have money taken out of our account and 50% is charged back to the employee via payroll deduction.

Q. You said you contributed $50/month when the contribution limit was $600/year but you are in the process of upping that?

A. Yes. We have been advised by SPP that they can now accept annual deposits up to I believe $2,500, so to make it easy we’ve gone to $200/month. We are paying $100 of that, so each employee will have the benefit of $2,500/year.

Q. Some employers may find the amount of paperwork they have to fill out to administer a pension plan overwhelming. Does this apply to the SPP?

A. Actually it’s very simple. Originally when we signed up for it was a one page application each employee filled out, and Kindersley insurance supplied a monthly withdrawal authorization form to SPP along with a void cheque.

Since then it’s just been a matter of us sending emails to the SPP contact regarding any changes. SPP supplies the statements and income tax receipts for each employee. All I have to do is provide the information on the T4s for the employees. SPP makes it very easy for me, as the employer.

Q. What feedback have you had from employees regarding the opportunity to participate in SPP at work?

A. They’ve been very happy with it. Any time we’ve offered it to employees there has been no question that they have all wanted to participate. We don’t make it compulsory. It’s something they can do if they want.

It seems to be a good RRSP option. The returns in the past have been good. It’s been a little bit slower in the last few years with the economy but it’s been good.

Q. Have you disucced your participation with other employers, and what kind of a reaction do you get from them?

A. I’ve spoken to some people in town. Some seem interested. Some are already doing it. Of course, there are others who don’t see the benefits. But I feel the benefits to my operation are great. The employees like working here. They see the benefit and its one more reason not to leave Kindersley insurance.

Mark, thanks so much for taking the time to talk to me today. I’m sure other employers and their employees will be very interested in the reasons why you offer the Saskatchewan Pension Plan to your employees.

You are welcome, Sheryl.

Warren Wagner podcast

Hi,

My name is Sheryl Smolkin. I’m a pension and benefits lawyer and journalist. Today I’m continuing our series of interviews with the people behind the scene at the Saskatchewan Pension Plan. I’m talking to Warren Wagner, Chair of the Saskatchewan Pension Plan Board of Trustees.

Warren is currently the Regional Director for Saskatchewan of the Canadian Diabetes Association and previously for 35 years he was a Regional General Manager with the Canadian Imperial Bank of Commerce.

Welcome, Warren.

Thank you Sheryl.

Q. Warren, what is the Board’s role in the operation of the SPP?

A. Like other pension plans we have a Board of Trustees that is responsible for insuring that the plan acts in accordance with good governance and fiduciary responsibilities. So really our responsibility is to make sure that the members of the plan have their interests protected and the goals and objectives of the plan are carried out.

Q. How are Board members appointed?

A. The Saskatchewan Pension Plan’s Board is appointed on the recommendation of the province’s Minister of Finance. The appointments are then made by an order-in-council of the Saskatchewan government.

Q. How long is the term for each member?

Typically it is three years. Usually people serve on the Board for one or more terms, hopefully to provide their continuing experience and knowledge of the plan.

Q. The SPP is 25 years old this year. What do you think are some of the most important developments over the past 25 years?

A. Good question. First of all, I think the fact that it has been in operation for 25 years is probably one of the most important features of the plan. In the financial industry there are a lot of plans, investments and programs that have come and gone, yet the SPP has proven to be durable, fairly stable and predictable.

When you look at the plan’s history and performance over the past 25 years, the SPP has returned in excess of 8% each year with nominal management fees. So you have a plan that is strong, simple to understand, well-managed and provides the opportunity for people and small businesses in the province of Saskatchewan and beyond to invest for the future.

Q. What is the Board’s vision for the SPP over the next 25 years?

A. What we really see is the opportunity for SPP to expand on the good things it is doing for the individual contributors today but also to become the small business plan of choice going forward.

There are about 70,000 small businesses in Saskatchewan, as an example, and the majority of these do not have a pension plan for their employees. The reality is that employers would like to have something to help their employees, but they need something that is simple, easy to understand, inexpensive and a plan that is not going to require a tremendous amount of their time to administer.

We’re happy to say the SPP meets all those criteria so we think that there is an excellent opportunity for the plan to grow by providing this good pension opportunity for both individuals and small businesses.

Q. Now the contribution levels were increased at the end of 2010. Do you envisage that going forward further increases might be in the cards?

A. At this point we are still very pleased that the contribution level was increased from $600 to $2,500 a year, which is a very significant increase. We’re just in the process of digesting that at this time. However, we have had discussions internally about the need to either look for indexing of that limit or requesting a staged limit increase over the next few years.

Thanks so much for answering my questions today. I’m sure both members and prospective members will be impressed with the sound governance structure in place at the Saskatchewan Pension Plan.

 

Thank-you Sheryl.

Katherine Strutt podcast

Interview Transcript

My name is Sheryl Smolkin. I am a pension and benefits lawyer and journalist. Today I’m kicking off our series of interviews with the people behind the scene at the Saskatchewan Pension Plan. I’m talking to Katherine Strutt, the General Manager of the Plan.

Welcome Katherine. Thanks Sheryl.

Q. Who can join the SPP?

A. Anyone between the ages of 18 and 71 can join the plan no matter where they live or work. So while most of our members are from Saskatchewan, anybody from the rest of Canada can also join and be part of the plan.

Q. Why do Canadians need a pension plan? Most of us are eligible for CPP and OAS, plus anyone with a house effectively has a chunk of savings.

 A. Well, if you think of retirement savings in Canada as a three-legged stool, on the first leg you have Old Age Security which is a universal program. On the second leg you have the Canada Pension Plan which is a workplace-based pension. And those two are the foundation for most people’s retirement savings. The third leg is individual retirement savings and that’s where the SPP fits in.

So it’s important to have some personal savings and the SPP provides a vehicle which is easy to use and gives members a strong return at a very low cost. Your home is a very important part of your personal savings but you cannot necessarily rely on that as your main source of funds for retirement.

Q. With an alphabet of savings options, why do you think Saskatchewan residents and other Canadians should consider the SPP as part of their retirement savings strategy?

 A. Well as I said, the SPP is simple and easy. We provide members with a true pension plan. That’s the difference between us and a Group RRSP. And you can’t get that anywhere else on a personal basis. Members get access to a large institutional plan for a fee of about one percent or less.

This would compare very favourably to retail mutual funds which typically would charge anywhere from 2% to 3%.

Q. How much can each member contribute?

 A.  Each member can contribute up to $2,500 per year based on their own individual RRSP limits. They can transfer in another $10,000 each year from an RRSP, a RRIF or an unlocked pension plan.

Q. How does an individual know where to put his money first – pay off debt? SPP? RRSP? TFSA? It’s a challenge to figure all of these out.

A. It sure is, and it is certainly a very individual decision, but I believe it isn’t an either/or proposition. People can be paying down their debt the same time as saving for their retirement through the SPP. As their financial situation improves, they can increase their contributions to the SPP.

Q. What if a plan member can’t afford to make contributions because of unexpected other expenses?

 A. That’s where the SPP is so flexible. If people need to stop making contributions for a while and then start up again, they can do so without penalty. It’s very flexible and very easy to use.

Katherine, thanks so much for taking the time to talk to me today. I know both members and prospective members will be very interested in your answers to my questions. 

 

Katherine Strutt Interview, December 2010

Katherine Strutt podcast, December 10, 2010