Why self-employed doctors' wait for retirement 'peace of mind' is almost over

Fifty-year wait nears end with the launch of new MD Financial and Scotiabank pension plan

Why self-employed doctors' wait for retirement 'peace of mind' is almost over

Self-employed Canadian doctors, who have been waiting for decades for their own pension plan, will have it within a year after Scotiabank partnered with MD Financial Management to create the first multi-employer pension plan to boost physicians’ retirement security. 

“MD Financial was created over 50 years ago, in large part to support physicians’ retirement and give them financial peace of mind, so they could focus on their patients and know their finances were looked after,” Daniel Labonte, President and CEO of MD Financial Management, told Wealth Professional.

“That’s really the DNA of our organization, so this pension plan is a really fantastic complementary solution to what we’ve been doing for five decades in terms of achieving that outcome.”

Given that life expectancies are increasing around the world, he said it’s becomingly increasingly difficult for physicians to know if they have enough assets to last a lifetime if they retire at 65.

The new Medicus Pension Plan will allow professionally incorporated physicians – primarily those currently self-employed in clinics or specialists who are not salaried in a large organization – to pool their risk, so they can have predictable income in retirement and benefits for loved ones.

Given that there are almost 75,000 incorporated doctors in Canada, Simone Reitzes, Managing Director of the Medicus Pension Plan at Scotiabank, said pooling their funds could also provide them with access to asset classes or more sophisticated investment strategies than they could access on their own. Pooling their money means they can also invest for a much longer horizon, and receive better incomes, than they might have as an individual who was about to retire.

MD Financial and Scotiabank have been working on this long-desired plan for three years and are excited about the opportunities it will provide physicians as a Canadian first.

“We had the ability to combine MD’s knowledge of physicians and expertise around financial planning for physicians with the scale and capabilities of on organization like Scotiabank,” Labonte said. “We were able to join forces and offer a solution because we could pull together those capabilities and have the scale, ability, expertise, and knowledge base specific to physicians to do it.”

Reitzes said the plan will provide physicians with a predictable monthly retirement income because it pools the investments as well as longevity and economic risks among all plan participants.

“That makes it an extremely efficient vehicle for saving for retirement and for providing protection, not just in the form of that predictable lifetime pension, but continued financial protection for their families in the form of benefits payable to the estate as well as a spousal pension,” she said.

The founders hope the program will attract young physicians starting their careers as well as experienced physicians considering retirement, who will be able to choose the plan option they desire for themselves and their families.

But, the new plan must still be registered with the Canadian pension regulators. Then Lifeworks, Canada’s largest pension administrator that is also a project partner, must complete the system implementation. Medicus will invite a small group of founding members to join the plan and then open it for physicians’ investment in the first half of 2023.

“We expect a number of physicians will be interested in this project because it’s offering some really differentiated value that they’ve been looking for,” said Labonte, “and it will provide them with the kind of peace they’ve been seeking.”