1

The Common Good Retirement PlanA retirement security initiative for Canada’s nonprofit and charitable sector

OverviewMay 2019

2

The problem

~850,000 Canadian non-profit sector workers do not have a

workplace retirement plan

47% of non-profit workers do not have stable, full-time work

$3,000 median savings for Canadian households age 55-64 without

workplace pensions

33

What is the Common Good initiative?

Common Good is a project of a coalition of philanthropic foundations, nonprofit leaders, social-purpose businesses, and retirement security experts.

Our goal is to enhance retirement security in the nonprofit and charitable sector. Our main goal is to establish a high quality, nationally portable collective retirement income plan for the sector.

44

Why does this matter?

Help workers retire with dignity after a lifetime

serving others

Reduce financial anxiety –a leading source of stress for Canadians – and build

financial resilience

Improve attraction and retention within Canada’s

not-for-profit sector

Reduce wealth inequality by serving a group that has

been underserved by traditional financial

services

5

Funding coalition

Who is behind Common Good?

6

Who is behind Common Good?

Steering Committee

Alan Broadbent

Founder and Chair, Maytree

(chair)

Rahima Mamdani

VP Human Capital, United Way Greater

Toronto

Liz Mulholland

CEO, Prosper Canada

Owen Charters

CEO, Boys & Girls Clubs of

Canada

7

Who is behind Common Good?

Champions Council

Colette MurphyAtkinson

Foundation (chair)

Debbie Douglas OCASI

Alison BrewinVantage Point

Peter Chapman Responsible Investment Advocate

Adil DhallaCentre for Social

Innovation

John StapletonOpen Policy

Ontario

Franca GucciardiMcCall MacBain

Foundation

Tim JacksonSHAD

David MitchellCalgary Chamber

of Voluntary Organizations

Meghan MooreLoran Scholars

Foundation

Liz O’NeillBoys & Girls Clubs Big Brothers Big

Sisters Edmonton

Ann WheatleyCooper Institute

PEI

Penelope Rowe Community

Sector Council Newfoundland

Lee Rose Community Knowledge Exchange

Paulette SeniorCanadian Women’s

Foundation

Lindsay Huginholtz Sherk

Sport Matters

Richard ShillingtonSocial Policy Expert

& Researcher

James StauchInstitute for Community

Prosperity, Mount Royal University

Catherine Ludgate Vancity

Wanda Morris CARP

8

Who is behind Common Good?

Expert Advisors

Edward WaitzerFormer Chair, Ontario Securities Commission

Keith AmbachtsheerDirector Emeritus, International Centre for Pension Management, University of Toronto

Technical &Operations

Partner

§ Mission-driven retirement security firm focused on expanding access to good retirement plans

§ Includes former executives from Canada’s leading public pension plans

§ Would serve as Common Good’s initial plan administrator

9

BCON

SK / MB

ATLANTIC

QC

AB

TERRITORIES

81 Committed Employers

10

Internationally recognized as an innovative portable benefit

1111

Process followed since public launch in May 2018

Sector consultation

Regional roundtables

National survey

Detailed consultation paper

7 cities

5 provinces

Employers

Workers

Pension experts

Sector leaders

Download at www.commongoodplan.org

1212

Common Good key features: contributions

too expensive

What we heard Proposed design

• Contribution levels are flexible for both employers and workers

• Can be either mandatory or voluntary for workers

• Minimizes compliance and administrative burden

73%

Main barriers to employers offering a plan

commitment is too financially risky

50%

consistency of funding / revenue

84%

Source: Pollara Strategic Insights, “Retirement Benefits and Security in the Non-profit Sector: Survey Results” (2018)

1313

Common Good key features: eligibility & portability

portability between jobs

What we heard

• Portable from job to job and into retirement

94%

can stay in the plan post-retirement

94% • Post-retirement options to turn nest egg into stream of income

open to all sector workers, including freelancers

• Open to sector employees, freelancers, and spouses

89%Sector workers said they want…

Source: Pollara Strategic Insights, “Retirement Benefits and Security in the Non-profit Sector: Survey Results” (2018)

Proposed design

1414

Common Good key features: structure and governance

plan legally required to act in your interest

What we heard

91%

Board of directors

Service providers (plan administration, investment

manager(s), custodian)

Not-for-profit corporation

overseen by expert board

79%

Sector workers said they want…

Source: Pollara Strategic Insights, “Retirement Benefits and Security in the Non-profit Sector: Survey Results” (2018)

All parties involved would have a fiduciary duty – a legal duty to put

member interests first

Proposed design

1515

Common Good key features: tax and benefits assistance

want help with minimizing taxes and maximizing government retirement benefits

What we heard

• Hybrid Group Tax-Free Savings Account (TFSA) / Group Registered Retirement Savings Plan (RRSP) structure

• TFSA to avoid Guaranteed Income Supplement “clawback”

• Help accessing Canada Pension Plan & Old Age Security

89%

not knowledgeable about government retirement

benefits (e.g. CPP, OAS, GIS)

44%

Source: Pollara Strategic Insights, “Retirement Benefits and Security in the Non-profit Sector: Survey Results” (2018)

Proposed design

1616

Common Good key features: investment choices and education

want investment choices that are professionally

selected

What we heard

• Investment choices selected by experts with a fiduciary duty to members, and specifically tailored for retirement

• Educational tools and supports tailored to the needs of sector workers

• Simple, digital-first member and employer service

78%

not knowledgeable about investments and retirement

planning

45%

Source: Pollara Strategic Insights, “Retirement Benefits and Security in the Non-profit Sector: Survey Results” (2018)

Proposed design

1717

Common Good key features: fees, costs and value

average cost of retail mutual fund1

The evidence• Much lower fees through

economies of scale, comparable to a large pension plan:

0.6% of assets member fee+$10/month employer admin fee

2.1%

Canada ranking in 2017 Morningstar survey on mutual

fund fees2

Sources: 1. Investment Funds Institute of Canada, “Monitoring Trends in Mutual Fund Cost of Ownership and Expense Ratios” (2017) 2. Morningstar, “Global Fund Investor Experience Survey” (2017)

Proposed design

AB/B-C+D+D-

1818

Lower fees make a big difference in the long run

Example of $150 invested monthly over 30 years

Common Good 0.6% + $10/mo

Fund 1.0% fee

$104,000

$99,000

Fund 1.5% fee

$93,000

Fund 2.0% fee

$86,000

Fund 2.5% fee

$79,000

*Assuming a 5% annual rate of return*The figures have been rounded for illustrative purposes

1919

How can non-profit employers participate in Common Good?

Supplement existing

workplace retirement

plan

Provide to all employees,

with employer contributions

Offer to employees on

a voluntary basis, without

employer contributions

2020

What next?

Seeking commitments-in-principle:

• Employers who will offer the plan (whether mandatorily or voluntary) to employees

• Public indication of support for the proposed plan, and intention to make it available to employees should it proceed

www.commongoodplan.org

Schedule a call

• Through commongoodplan.org• Or contact Connor Bays,

employer engagement lead, at cbays@cwretirement.com

2121

Recap

• A chance to help nearly a million workers

• A growing national coalition

• A proposed design based on extensive sector feedback

• Collective, non-profit retirement plans are more efficient

• Employer commitments to make the plan possible

2222

Appendix

23

How is Common Good different than a traditional (e.g. defined benefit) pension plan?

23

§ Defined benefit (promises a defined level of retirement income)

§ Risk of GIS clawback for lower-income members

§ Fixed member and employer contributions

§ Requires employer-employee relationship

Traditional DB plan

§ Worker must have relationship with participating employer(s)

§ If member terminates prior to retirement, value of accrued pension does not increase until potentially after retirement

§ Defined contribution structure with individual accounts

§ TFSA component to avoid GIS clawback

§ Flexible contributions for both workers and employers

§ Open to freelancers and other non-standard workers, as well as employees and spouses

§ Portable across Canada, even if member moves to nonparticipating employer (contributes through bank account)

§ If member stops contributing, assets continue to grow with investment earnings between the time a member stops contributing and starts their pension

2424

Non-profit, collective retirement plans deliver better outcomes

$810,000 per personNot-for-profit co-ops

with the necessary scale and scope offer the best hope of addressing the ‘too little value at too high a cost’ outcomes

- Keith Ambachtsheer, Pension Revolution

lifetime cost savings in a high-quality collective plan vs. a typical individual approach1

~$1M per person

efficiency difference between for-profit, retail plans and non-profit plans2

“

”

Sources: 1. Healthcare of Ontario Pension Plan, Ryerson Institute on Ageing, Common Wealth, “The Value of Good Pensions” (2018).2. Wilson Sy, “Measured Investment Inefficiency of the Australian Superannuation System” report to Australian Productivity Commission (2018).