What is a target date fund?

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.

Is there a risk that the fees will increase in the future?

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.

How can Common Good offer a low rate of 0.6%?

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.

How do these fees compare?

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.

What paperwork is required for joining the plan?

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.

Who will oversee and manage the Common Good Plan?

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.