Frequently Asked Questions
BlackRock has created a new version of its LifePath target date funds for the Common Good Plan and other plan sponsors that offer group defined contribution retirement arrangements through a non-insurance platform. The new LifePath Target Date Funds will include very similar, but not identical, investment holdings and adopt asset allocation methodology that is used by Blackrock for its existing LifePath target date funds. BlackRock’s existing Canadian LifePath target date funds are the market leader in Canada for target date funds, have been in operation since 2007, and have over $32 billion in assets under management. Because the BlackRock funds that have been created for the Common Good Plan are new, they do not currently have a performance history. Performance history for the new LifePath Target Date Funds will be available on the fund fact sheets (available during the enrollment process and on the plan’s online dashboard) in the future.
Founded in 1988, BlackRock is the world’s largest asset manager, with over $8.67 trillion USD in assets under management, including managing over C$200 billion in assets for Canadian clients. The firm’s purpose is to help more and more people experience financial well-being. Steeped in innovation, BlackRock pioneered target date funds in 1993 with the launch of LifePath Portfolios. As the fastest growing target date fund manager in Canada with over C$30 billion in assets in its LifePath products, BlackRock has been serving Canadian investors since 2007, and today offers investment management services to over 65,000 defined contribution plans, reaching more than 35 million participants.
A target date fund offers a balanced investment portfolio within a single fund, and the investment mix is calibrated by the investment manager based on a retirement date. BlackRock LifePath Target Date Funds are professionally managed, diversified portfolios and are structured to reduce risk as the ‘target date’ approaches.
You can learn more about LifePath Target Date Funds in this video.
With registered accounts, including TFSA, RRSP, and RRIF accounts, you can designate how your investments are transferred to your beneficiaries or your spouse as a successor upon your death. The assets in your accounts can be paid directly to the beneficiaries you designate on the account documentation, bypassing your estate.
Beneficiary designations for the Common Good Plan apply individually to the TFSA, RRSP and RRIF accounts (if applicable), and do not need to be the same person for all three accounts.
If you want your spouse or common-law partner (“spouse”) to be your sole beneficiary, you can designate your spouse for all three accounts – you would need to complete the beneficiary designation process individually for each account.
If you are married or common-law, designating your spouse as the “successor holder” (TFSA) and “successor annuitant” (RRIF) simplifies the process of transferring assets from your TFSA and RRIF to your spouse upon your death. This means your spouse would take over your accounts upon your death. They would then have to:
- Transfer the benefit to their own account on a tax-deferred basis if they are also a member of the Common Good Plan.
- Transfer the benefit on a tax-deferred basis to another TFSA or RRIF outside of the Common Good Plan.
If you are married or common-law, you can designate your spouse as the “beneficiary” for your RRSP. Upon your death, your spouse can transfer the assets of your RRSP to their own account either within or outside the Common Good Plan to continue the tax deferral. Generally, only a spousal beneficiary is permitted to directly transfer the assets of a bequeathed RRSP and continue the tax deferral.
If you wish to designate a non-spouse as your beneficiary for any one or more of your accounts, you can list the beneficiaries individually for each account. If you choose this option, your beneficiaries will receive a cheque in the event of your death. There is no direct transfer of funds for “beneficiaries.”
If you do not designate any beneficiary for your Common Good Plan assets, the Common Good Plan will pay assets to your estate.
You can read this educational article for more on beneficiary designation.
The Common Good Plan savings strategy will be impacted by the age you say you want to retire. By changing your retirement date, your contributions to the plan and target date fund may need to be adjusted so you can still achieve your target retirement income. You will also need to consider the impact this may have on your government benefits (Canada Pension Plan and Old Age Security).
There are rules on when certain retirement payments must begin. Your RRSPs must be converted to a RRIF no later than the end of the year you turn 71, at which time minimum payments must be made. You can elect to convert to a RRIF earlier than age 71 to meet your retirement needs. Your TFSA is flexible, and you can start receiving retirement income at an age that accommodates your needs.
The Common Good Plan is a portable savings program designed to make retirement easier and more affordable for Canadians, regardless of their age. By combining group purchasing power, digital technology, and world-class retirement research, the plan has the potential to deliver up to 3x the value for money of a typical individual approach to saving for retirement.
While most investment options on the market focus on accumulation of assets, the approach for the Common Good Plan is based on monthly retirement income. The plan does all of this with lower fees and a legal duty to administer and manage the plan in the plan members’ best interests.
As the sponsor of a Common Good Plan, you would be responsible for:
- Supporting Common Wealth, the plan provider, with the distribution of plan materials
- Working with Common Wealth to facilitate employee education sessions
- Providing Common Wealth with an up-to-date file of eligible employees, including information to support payroll deduction processing
- Providing Common Wealth with a payroll file that contains member and, if applicable, employer contribution details and remitting contributions to the custodian, Canadian Western Trust
This plan is meant for all! This means that anyone who works for a Canadian employer who has joined the plan is eligible to join as a member.
There is no maximum age limit to join the Common Good Plan, although members cannot contribute to a TFSA if they are under 18 years old. Members can contribute to an RRSP as long as they have available contribution deduction room or until December 31st of the year they turn age 71.
Members must be Canadian residents for tax purposes in order to join the plan.
Yes! The benefit of the Common Good Plan is that members have the option of contributing to a TFSA. There is no age restriction for contributing to a TFSA, which allows members over the age of 71 to contribute to the Common Good Plan. Even if employees are drawing down their RRIF contributions, they can still contribute to their TFSA. In addition, unlike RRIF requirements, there is no obligation to draw down TFSA funds.
The plan is available to all full- and part-time employees of an employer. Non-standard workers are eligible to join the plan through an association, not an employer, and would cover their own monthly membership fee. The plan is also open to spouses/common-law partners of an employee, and they would cover their own membership fee.
Yes! The Common Good Plan is designed for all Canadians. The plan makes it as easy as possible for every member, regardless of their age or income level, to get on a path to retirement success and stay on track. The plan supports this goal through saving and investment strategies and options, low fees, plan portability, and tax and government benefit optimization.
No.
Our team can definitely help you with that. We can work with your team to understand your current plan and come up with a strategy for switching.
There are a few different roles when it comes to managing the Common Good Plan:
Common Wealth is the plan provider. This means they provide and maintain a self-service platform, provide administration and recordkeeping services in respect of the Common Good Plan, support member communication and education sessions, and respond to member and employer inquiries.
Canadian Western Trust (CWT) is the custodian and trustee for the plan. They are responsible for holding and safeguarding the assets of plan members, as well as maintaining the registration of the plan with the Canadian Revenue Agency (CRA).
BlackRock is the investment provider and fund manager for the plan. Plan members can invest their contributions by selecting one of BlackRock’s nine target date funds.
It means that Common Wealth, the plan provider, has to act in the best interests of plan members.
As the plan sponsor, you will be required to sign two agreements. The first agreement is a Sponsor Agreement with the Common Good Plan custodian, Canadian Western Trust Company (CWT). The agreement outlines the roles and responsibilities of each party. For example, it outlines that CWT is responsible for holding and safeguarding the assets of plan members and for maintaining the registration of the plan with the CRA.
The second agreement is a Service and Fee Agreement with Common Wealth, the plan administrator (and provider). This agreement details your responsibilities as the plan sponsor, as well as Common Wealth’s. For example, obligations related to communications, administration, fund access, fees, and privacy of information are outlined in the agreement.
The Common Good Plan is a group retirement plan composed of a group Registered Retirement Savings Plan (RRSP), a group Tax-Free Savings Account (TFSA), and a group Registered Retirement Income Fund (RRIF).
You, as the plan sponsor, pay a fee of $10/month for each employee who is enrolled in the plan. This fee covers:
- Common Wealth’s digital retirement planning technology
- Employer service (e.g., onboarding, payroll deduction)
- Member service (e.g., inquiries, one-on-one member support)
- Education for you and your employees
Members pay a fee of 0.6% of assets. For comparison, the average mutual fund fee in Canada is over three times higher at more than 2% per year. This low fee for the Common Good Plan can make a dramatic difference in how much money members save for retirement. These are all-in fees, which cover:
- Investment management
- Plan administration
- Custodial fees and other costs associated with running the plan
Members who join as individuals, or leave their employer but remain in the plan, pay a fee of 0.7% of assets and a $3/month membership fee.
Transaction and processing fees of $75 per transaction are charged for fund withdrawals or transfers out, and death and marriage breakdown processing. For non-sufficient funds (NSF) transactions, the fee is $40.
We don’t charge any fees to transfer existing RRSP or TFSA assets into the Common Good Plan, although the financial institution a member is transferring out from may have fees associated with the transfer of those funds.
No, provincial taxes will be charged on all fees based on your province of residence.
The fees negotiated for the Common Good Plan are considerably lower than average investment management fees that Canadian retail investors pay. According to the Investment Funds Institute of Canada, the average Canadian investment fund has fees of about 2.1% of assets. In contrast, the Common Good Plan provides investment management services, plus all other retirement services offered by the plan for its members, for a total of 0.6% of member assets and $10/month per member.
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These low fees are a big part of what makes the Common Good Plan different from others in the market and directly impact retirement outcomes for members. The high fees typical in Canada can eat up over half of long-term investment gains, and you can take a look at this tool to learn more.
Low fees for members are a big part of what differentiates the Common Good Plan from others in the market. We have worked hard to offer such low rates, and have leveraged things like:
- Group purchasing power. We can get a better deal because services and products are being purchased on behalf of a large group.
- Digital technology. We don’t have the same legacy costs as traditional financial institutions like banks and insurance companies.
- A commitment to putting members first. Keeping fees low so that plan members can keep more of their retirement income is one of our core principles.
After five years, the employer fee will rise with inflation each year. This provision is included to ensure that the plan’s pricing stays constant relative to inflation over time. Low fees for both employers and employees are a key and core part of our philosophy and value. Any changes to the fees will be done openly and transparently, and with accessibility to employers and impact on members as our main focus and priority.
Plan members can select from one of a series of BlackRock target date funds, which provide a mix of equities, fixed income, and real assets. The fund is matched to each plan member’s expected retirement date, and the asset mix is automatically adjusted to become more conservative as they get closer to that date.
Target date funds are professionally managed, diversified investment funds, meaning investing in a BlackRock LifePath Fund can provide an all-in-one investment solution at any age.
Each fund holds a number of underlying investments – from stocks to bonds, including U.S. and global markets, as well as real assets such as real estate and infrastructure – creating diversified funds with one main objective: helping to manage a member’s investment risk throughout their working years and into retirement.
When a member is young and far from retirement, the investment mix is more aggressive to help their investments grow. As they approach retirement, the fund automatically shifts to a more conservative allocation with the goal of preserving the member’s savings. When they arrive at their desired retirement date, the fund shifts to an investment mix to help the member retain spending power through retirement.
Yes.
The Common Good Plan is interested in offering something thoughtful on responsible investing, also known as ESG (Environmental, Social, and Governance), as part of our plan. The plan’s funds are managed by BlackRock, which manages more than $8.67 trillion in assets and serves more than 35 million investors. BlackRock is committed to evaluating sustainability insights and data across all of its investment processes and focusing on its dedicated investment stewardship activities.
BlackRock is currently researching ESG options in Canada and is looking to evolve the target date fund portfolios in the near future. We will continue to work with BlackRock to explore opportunities to integrate more responsible investing components into the plan’s investment program.
For more information on BlackRock’s approach to sustainable investing, you can check out the firm’s 2021 Stewardship Expectations, as well as BlackRock CEO Larry Fink’s focus on sustainability in his annual letter to chief executives.
The value of the target date funds can vary due to market performance. The purpose of target date funds is to help members invest for the long-term. It’s not a short-term approach, which would require a more aggressive investment strategy.
Target date funds are not guaranteed at any time, including at the target date, and will fluctuate based on stock market performance.
The investment manager for the Common Good Plan is BlackRock, the world’s largest asset manager. Founded in 1988, BlackRock has over $8.67 trillion USD in assets under management, including managing over C$200 billion in assets for Canadian clients. The firm pioneered target date funds in 1993 with the launch of LifePath Funds. BlackRock is the market leader in Canada for target date funds, with over C$30 billion in assets in its LifePath products, which have been serving Canadian investors since 2007. LifePath is used as the default investment option in some of Canada’s largest defined contribution plans.
A target date fund offers a balanced investment portfolio within a single fund, and the investment mix is calibrated by the investment manager based on a retirement date. BlackRock LifePath Target Date Funds are professionally managed, diversified portfolios and are structured to reduce risk as the ‘target date’ approaches.
You can learn more about LifePath Target Date Funds in this video.
BlackRock has created a new version of its LifePath target date funds for the Common Good Plan and other plan sponsors that offer group defined contribution retirement arrangements through a non-insurance platform. The new LifePath Target Date Funds will include very similar, but not identical, investment holdings and adopt asset allocation methodology that is used by Blackrock for its existing LifePath target date funds. BlackRock’s existing Canadian LifePath target date funds are the market leader in Canada for target date funds, have been in operation since 2007, and have over $32 billion in assets under management. Because the BlackRock funds that have been created for the Common Good Plan are new, they do not currently have a performance history. Performance history for the new LifePath Target Date Funds will be available on the fund fact sheets (available during the enrollment process and on the plan’s online dashboard) in the future.
Employees will receive an email with a unique link that they can then use to enroll into the plan. This link cannot be shared with anyone else and can only be used once.
If employees require additional assistance, they can contact a Common Wealth representative who can assist with any questions they may have at admin@commongoodplan.ca.
Employers can contact a Common Wealth specialist at employer@cwretirement.com for support.
Members can contact a Common Wealth specialist at admin@commongoodplan.ca for support.
Any matching employer contributions are considered a taxable benefit and must be reported on your annual T4s. If you’re not offering any matching contributions, then you won’t have any tax reporting responsibilities.
The minimum amount is $50 for a monthly or one-time contribution coming into the plan.
General contribution limits for RRSPs and TFSAs are set by the government and can be found here. Each person can view their individual contribution limits by logging into their CRA My Account or by looking on their latest notice of assessment under “Available contribution room for [YEAR].”
It is the responsibility of a member to ensure they do not exceed their limits under the Income Tax Act. Members will be solely responsible for any taxes or fines imposed if contributions exceed the RRSP or TFSA limits. We provide education to members about their limits as part of their account.
Members can set up a monthly savings plan, and make other contributions throughout the year as they would like. Monthly savings plans are pro-rated and capped at the annual contribution limits, but if members have more contribution room, they can make additional contributions as they wish.
The government allows people to hold multiple TFSA and RRSP accounts. This means that it’s up to each member to determine what happens to any other TFSA or RRSP accounts they hold. They can choose to transfer all of their funds into their new Common Good account (done directly within the platform) or keep them where they are.
If a member wishes to consolidate their RRSP and TFSA savings in the Common Good Plan, they can initiate a transfer from their online account, and our team will take care of the rest. A direct transfer has no impact on your contribution limits or tax implications.
No, as the Common Good Plan does not currently support spousal RRSPs.
Contributions to an RRSP are tax deductible.
We will issue tax receipts for all ongoing and one-time contributions to the RRSP. Members will receive two tax receipts, one for all contributions made during the first 60 days of a taxation year and one for all contributions made during the last 10 months of the taxation year.
Contribution receipts are available in a member’s online account in the “My Document” section.
Part of the value that the Common Good Plan can offer its members is in the education they can access through the plan. This ranges from planning suggestions during enrollment, to a library of educational articles, and education sessions with specialists from Common Wealth, the plan provider. All of these resources are aimed at equipping Common Good Plan members with more and better information on saving for their retirement, so they can make the right decisions for their savings goals. Members can also reach Common Wealth support staff via email or phone (admin@commongoodplan.ca).
In addition to all of the above, you (as the employer and plan sponsor) can choose an enhanced onboarding package to give your team members access to a Common Wealth specialist to help set up their individual plan through a guided enrollment.
Common Good uses a member’s current income to determine a target retirement income that will allow them to maintain their current standard of living as they enter retirement. We help members understand how multiple sources of retirement income, including other savings, and government benefits will help them reach that target. We then provide members a personalized savings plan for today and over time (auto-escalation feature) in order to meet their retirement goals.
Members can log into their account and view their progress in the “My Plan” section. On this dashboard, they can view the current value of their TFSA and RRSP and the total contributions into the plan.
If a member is interested in seeing their progress towards their retirement income, they can click on the “This plan” section of the retirement income bar chart.
Members also receive an annual statement that is available online in their account, and they will receive an email notifying them when it becomes available.
Members can log into their account and view their transaction history in the “My Contributions” section. They can view any upcoming or past transactions, including withdrawals and fees.
Members can log into their account and view their current holdings and transaction history in the “My Investments” section. They can also select a different target date fund here.
Even after retirement, members will continue to reap the benefits of the Common Good Plan. They would still have access to the investment funds as part of the plan, which would automatically be adjusted (more conservative) according to their age and stage. They would continue to pay the same low fees as when they were employed. We’ll also provide support in turning their nest egg into actual retirement income by converting to and managing a RRIF. Members would still receive education on critical topics, such as how to access Canada Pension Plan (CPP), Old Age Security (OAS), and Guaranteed Income Supplement (GIS).
Members will be able to access their Common Good retirement income in a number of different ways. They include setting up a regular withdrawal based on a percentage of assets and/or a fixed pension-like payment. Members also have the option to withdraw funds in a lump sum or through a transfer to another TFSA, RRSP, or RRIF.
Unlike in a registered pension plan, the Common Good Plan offers flexibility when members can start receiving retirement income because it is composed of a RRSP/TFSA/RRIF. For example, members can start payments even as they are working part-time later in their career.
Members must convert their RRSP to a RRIF no later than the end of the year they turn 71, at which time minimum payments must be made. The TFSA is flexible, and members can start receiving retirement income at an age that accommodates their needs.
The plan will provide members with planning tools to assist with developing a retirement income plan – converting savings to income in retirement and integrating various income sources, such as government benefits.
You can let us know when an employee has left the plan through an updated employee info file. One of the unique features of the Common Good Plan is portability. This means that members actually have options if/when they leave their employer:
- Members can keep their accounts with Common Good and even continue to contribute to them directly from their bank accounts. There would be a change in the fees and who pays them: members who leave their employer but continue with the plan would be responsible for a $3/month membership fee + 0.7% of assets under management. If there are any employer matching contributions, those would stop at this time.
- Members can also decide to cash out of the plan and move their money to another TFSA or RRSP account. Once a member initiates a withdrawal of all of their plan assets, they are no longer eligible to participate in the plan, and there is a transaction fee of $75 to complete each transfer.
Yes. Members can initiate a withdrawal of their plan assets, either in part or in full, while they are still an active employee. The same $75 transaction fee would be applied.
It’s important to remember that withdrawing from RRSPs before retirement can result in negative tax implications, while withdrawing from a TFSA before retirement does not.