Managed Money Reporter Newsletter — Issue 291, February 2016


Editors: Carl Spiess & Allan McGlade


Featured Articles



RRSP Reminder – Tax Slip Mailing Dates

Carl Spiess

By Carl Spiess, CFP, CIM, FMA, FCSI, MBA

Since 2016 is a leap year, the RRSP deadline for 2015 contributions is February 29, 2016. Please see our online contributions page or contact us on how to make any last minute additions to your RRSP account.

We will be sending out RRSP receipts for most clients in early March. Tax slips for open investment accounts will follow the timing noted in our 2015 tax mailing brochure:

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Market update

February has continued the volatility we saw in mid-January. While the lows may be unsettling, they certainly present an opportunity for people making new RRSP and TFSA contributions.

Here are the big trends we are seeing:

  1. Lower rates: With more of the world starting to contemplate living with negative interest rates, perhaps the 2.2% we can get right now on Guaranteed Investment Certificates (GICs) will look like a great yield in the months ahead?
  2. Low oil prices: Which lead to a lower Canadian dollar.
  3. Dividend cuts: Most of the dividend cuts have been in the energy sector but the number of companies lowering their dividends is growing.

Our head of research recently gave us a presentation which has terrific details and analysis. Here is the synopsis:

And the full presentation is at:

For more market updates please see:

Please contact us if you have any questions on your investments.

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Recommended Reading

Beyond the ScotiaMcLeod Market commentaries above, here are a selection of other articles we've found helpful.

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Pensions: CPP & ORPP

We help clients prepare for and transition into retirement. Pension plans are a big part of this transition and there have been many headlines over the last few months about Ontario's proposed Ontario Retirement Pension Plan. Intended to complement Canada Pension Plan, details are being released about how the plan might function. Initially, it had been proposed to take effect Jan 1, 2017 for large employers. It has recently been announced that implementation is deferred until Jan 1, 2018. Ontario is seeking co-operation with the Federal Government to either increase CPP contributions or combine administration of ORPP with the CPP infrastructure.

CPP along with OAS make up key components of retirement income for Canadians. A good summary of these amounts can be found on Service Canada's website at:

CPP is intended to replace 25% of income for people earning up to $54,900. Employers and employees contribute 4.95% - an amount that has risen over the years since CPP was introduced. ORPP is intended to replace 15% of income but required contributions will only be 1.9% of income for employers and employees. Based on that ratio of benefits to contributions I have to wonder if ORPP's returns will be 56% greater than CPP which is already generally accepted to be well run.

Interestingly, one of the key benefits that are promoted about ORPP (and CPP) are that large pension plans should have low costs due to economies of scale. ORPP hasn't published any estimated costs. However, we can look at CPP to get an idea of how much it costs to run a huge pool of investments. From CPP's site we find:

CPP Analysis 2015 Costs Assets Ratio
External Managers 1,254 236,873 0.529%
Transaction Costs 273 236,873 0.115%
Operating Expenses

803 236,873 0.339%
Total Expense Ratio 0.984%
(www.cppib.com/en/public-media/faq.html)

So we could think of CPP as having a .984% management expense ratio – which is close to the average "F" class mutual funds we use in our managed account programs for high net worth clients. Like with mutual funds, CPP reports its 10 year 7.3% average annual return net of these fees (and I presume they are charged and include GST/HST).

Here is a more complete analysis from the Fraser Institute.

We'll be keeping an eye on the implementation of ORPP – many companies are reviewing the option of setting up Defined Contribution Pension Plans. Employer and employee contributions of 4% and 4% to a DC pension are considered "comparable" to ORPP and may give employees more confidence that their money being put aside is visible and efficiently managed.

We are of course happy to review your retirement savings and help with a retirement income projection based on the currently available government programs. Contact us to set up a review.

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Help with your taxes

Scotiabank is pleased to offer our clients a very handy tax refund calculator:

And to make doing your taxes easier, Scotiabank is offering a 20% savings on the purchase of Intuit turbo tax.

And if you need professional help with your taxes, consider Scotiatrust's tax services. We can refer you to our team of experts for help. For personal tax services, Scotiatrust's taxation services are a mid-priced fee-for-service division to which we are pleased to refer clients. Please see the attached brochure for details and contact us if you would like a fee estimate and referral:

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Recommended Link of the Month

The Investment Funds Institute of Canada recently published a piece in the Globe and Mail called the informed investor. It is worth a visit:

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Contact Us

T.  416.863.RRSP (7777)
     1.800.387.9273
F.  416.863.7479
E. carl.spiess@scotiawealth.com
    allan.mcglade@scotiawealth.com

ScotiaMcLeod is a division of Scotia Capital Inc., member of CIPF.

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