Why The Saskatchewan Pension Plan Is Worth A Look

If the company you work for doesn’t offer a pension plan or group RRSP, or you are self-employed, and you’re not interested in spending a lot of time reading and researching about investing, consider the Saskatchewan Pension Plan.

Related: Lifetime Pension vs. Commuted Value

You don’t have to reside in Saskatchewan to join this pension plan.

What is the Saskatchewan Pension Plan?

The SPP started over 25 years ago.  It is open to any Canadian resident between the ages of 18 to 71.  Members are allowed to contribute up to $2,500 annually, or transfer up to $10,000 a year from an existing RRSP.

You must have contribution room inside your RRSP.  This usually isn’t an issue as most people have tons of available contribution room.  All new contributions are tax-deductible just like a regular RRSP.

It is suitable for pension amounts received from former employers.

How do you contribute?

You can sign up for the Saskatchewan Pension Plan online, or download an application and mail it in.  Once you are assigned a plan number you can make your contributions.  You can either go old school and mail in cheques, or set up a pre-authorized payment plan to have your contributions taken out of your account.  You can also set up a payment plan through your VISA or MasterCard (and get points at the same time).

Related: 5 Misconceptions About Retirement Planning

Is this a good plan for you?

The SPP is simple and easy to use.  So simple, in fact, that there are only two investment options to choose from – a balanced fund (60% stocks, 40% bonds) and a money market fund.  Not surprisingly, most assets are held in the balanced fund.

Administration fees are low compared to other mutual funds.  Unlike other financial institutions, the SPP is not set up to make a profit.

There are no fees to join, annual fees, or charges to change your contributions – only the management fees.

Contributions are voluntary.  There’s no obligation if some emergency comes up and you want to skip a contribution.

It offers competitive returns.  The average rate of return since the Saskatchewan Pension Plan began is approximately 8% per year.  Check the rate of return here to compare with your own portfolio.

Disadvantages of the plan

The main disadvantage is the low annual contribution limit unless you start when you are younger.  Otherwise, it works best as a supplemental plan to what you already have.

Related: Why I Became A DIY Investor

There is a limited choice of investments.

Funds are only available when you turn 55 years of age (like a locked-in RRSP), so there is limited flexibility for withdrawals.

No advice is offered.


The Saskatchewan Pension Plan offers a pension plan so everyone can save for his or her retirement.  It works like a defined contribution pension plan.

It’s ideally suited for the self-employed, or those who work in small or medium sized companies that don’t offer pension plans.

If you are interested in learning more about the SPP, visit their website.

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  1. CanadianDaniel on September 11, 2013 at 6:14 am

    Many thanks for posting this gem. As an Ontario-based freelancer, I would have never considered what appears to be a relatively safe retirement vehicle; I would have assumed it was restricted to Saskatchewan residents. Those past rates of return are also helpful!

  2. William on September 11, 2013 at 6:27 am

    What advantages does this plan have over a self directed RRSP, say a simple TD e-series RRSP? Choice appears to be limited in the case of the plan featured. Is that considered beneficial?

    • Sandi on September 11, 2013 at 7:51 am

      It depends on the management fees, which are bloody difficult to find on the website. If they’re low enough, then the benefit is the same as participating through a employer-sponsored DC plan: very low management fees. If the management fees aren’t very low, then the lack of annual fee is sort of interesting, but not a distinct advantage when compared to TD e-series.

      • Sandi on September 11, 2013 at 9:37 am

        Oh boy. SPP just got back to me, and the management fees have averaged 1.05% over the last five years and were 1.1% last year. Compare that to TD e-series index funds which run around 0.50%.

  3. Jambo411 on September 11, 2013 at 8:29 am

    My company has used SSP for the last 3 years. The MER quoted originally was 1%. I only have one employee registered and she has utilized the annual $10,000 transfer in feature to fill out the plan. She has other RRSPs but this requires no time to manage and will allow some flexibility later by buying an annuity with this plan.

  4. M. O'Byrne on September 11, 2013 at 9:12 am

    The 8% over 25 years is interesting but it would be more helpful to see it over the past few years.

  5. Bernie on September 11, 2013 at 10:18 am

    The fund averaged 5.4% over the past 10 years (2003-2012) and 2.7% over the past 5 years (2008-2012).

    • Bernie on September 11, 2013 at 10:23 am

      I should add this is a very conservative fund with middle of the road performance.

  6. Wanda on September 11, 2013 at 10:37 am

    Obviously your article on the SPP is paid by SPP. My husband and I joined the SPP in 1990. Contributions were set at $600 each per year.

    The last three years profits were in the negative. Initially it was projected if you contributed $50 a month for approximately 25 years your pay back would be about $500 a month upon retirement.

    Well, I can tell you exactly what our pension subsidy actually is. My husband gets a cheque for $50 a month and I get a cheque for $ 53.16. Nothing less than a bad joke.

    Stay away from this pension plan. They have lost too much money. Increasing the contributions is to compensate for bad investments and poor returns.

    And yes I did tell them my thoughts when we decided to take the pension out, before they could lose anymore of it.

    Thank you. Print this in your article. I would gladly pay for it.

    • Echo on September 11, 2013 at 10:43 am

      @Wanda – I can assure you this post was not sponsored by the SPP. I’m very sorry for your bad experience and I’ve sent a note to the SPP so that hopefully someone will respond here.

      • Mike on February 18, 2015 at 10:40 am

        With $600/year and annual growth rate of 8%,
        assuming 2.5% annuity rate, after 25 years you would have been getting a total of $220 a month roughly.

  7. Katherine Strutt on September 11, 2013 at 11:54 am

    I’d like to take the opportunity to respond to Wanda’s comments about the SPP.

    A link to the Plan’s rates of returns were in this blog. The last 3 years of returns were:
    2012: 8.45%;
    2011: -1.01%;
    2010: 9.4%.

    The Plan’s investment returns are competitive and are based on market returns of the investments. The Board reviews investment management performance on a quarterly basis.

    Pension estimates are prepared on a regular basis with the best information we have at that time. Estimates are based on member contributions, their age when they retire, expected returns and expected interest rates. Annuity rates are based on industry standard calculations and are reviewed by the Plan’s actuary on a regular basis.

    Members may receive a monthly pension from the Plan or may transfer their funds to a financial institution. The current low interest rate environment has meant that annuity rates are also historically low. The plan is very flexible and members have a number of options when they retire, which can be at any age between 55 and 71.

    The Plan’s return to June 30, 2013 is 7.15% and this is competitive with other conservative balanced funds available in the market place.

    Katherine Strutt
    General Manager
    Saskatchewan Pension Plan

  8. Boomer on September 11, 2013 at 1:45 pm

    First I would like to thank Katherine Strutt for her enlightening comments.

    With the intermittent talk of Pooled Retirement Pension Plans (PRPP) meant to fill the gap left by the elimination of many employer pension plans, it was interesting to me to see that the little-known SPP has been in existence since 1986.

    I would like to make clear that I have never been paid to promote products and it is not my intention to recommend any particular investments or strategies. I can provide you with information – the rest is up to you.

    Obviously, the SPP is not for everyone. People can find more suitable investments for them that have more growth, higher returns and lower expenses.

    But, what about the thousands of Canadians that have no pension savings – often with lower incomes – have no interest in doing research for appropriate investments, don’t have a financial advisor relationship, or have not been served well by advisors charging high fees while providing abysmal returns?

    DIY investors often fiddle too much with their investments and also lose out on good returns by doing so.

    I think this plan can be a reasonable option.

  9. Be'en on September 11, 2013 at 7:05 pm

    I wish I knew about this a long time ago…

  10. Lindsey @ Sense & Sensibility on September 12, 2013 at 1:19 am

    This is a really great post – I had no idea something like this existed for Canadians. As you say, using this as a supplementary income for people with no pension plan. Thanks for sharing.

  11. fiscally fit on September 12, 2013 at 11:01 am

    People are going to crucify me for this but… a low MER is not important. It is only important if you are not receiving the appropiate excess return or risk mitigation that goes along with the MER.

    More than anything people really need to determine what level of risk and volatility they can take from their investments, and search for the best return based on that.

    I do beleive that people need to focus on making their own pension plan to supplememtn their income, but they should be focusing on tax efficiency more than on the actual investments. Dropping from above $43561 taxable income to below is the easiest 7% rate of return you will ever make haha

    end rant 😉

    • William Sims on September 12, 2013 at 12:21 pm

      This is only true under the doubtful assumption that the SPP earns a higher return than other less expensive (lower MER) alternatives, by at least as much as the difference in the MERs.

      • fiscally fit on September 12, 2013 at 12:33 pm

        or reduces the risk/volatility by a sufficient amount to out perform the benchmark (or similar risk profile investments) or give the same return with a lower risk profile.

        The essence of investing is maximizing your return for a given level or risk. We are asking people to decide if the pension plan is a good fit for them yet many DIY investors can’t even quantify how much risk they have in their own portfolio… let alone ask them to properly compare that to a benchmark or another option.

        • William Sims on September 12, 2013 at 12:36 pm

          and you know that SPP does this?

          • fiscally fit on September 12, 2013 at 2:58 pm

            Does what, compare this investment option to other options with the same risk profile? The SPP is required to report their alpha, beta and std dev, but this information is useless if you don’t know this information for your own portfolio, correct? How would you knoow if it is a viable alternative if you can’t properly compare it to your own investments?

  12. Katherine Strutt on September 12, 2013 at 1:45 pm

    The SPP has a long history of low administration fees as the Plan pays all of its own expenses. The fees are paid out of investment earnings, with the balance distributed to members. Keeping costs down benefits all members. In addition, members get access to investment managers and investments they may not be able to on their own.

    Small business owners like the Plan as we handle all administrative details for them. They can offer a pension plan to their employees and perhaps this will help them retain and attract employees.

    As a snapshot, the Plan’s benchmark for the balanced fund is as follows:
    Canadian equities: 19%
    U.S. equities: 18%
    Non North American equities: 18%
    Canadian Bonds 42%
    Short term investments 3%

    More information about the Plan can be found on the website: http://www.saskpension.com or by calling the toll-free line at 1-800-667-7153.

  13. William Sims on September 12, 2013 at 3:16 pm

    It seems to me that a vanilla portfolio of 20% Canadian TSX ETF; 20% U.S. S&P (or a broader index) ETF; 20% ROW ETF; and 40% Canadian Bond ETF, of the kind that can easily be built either with TD e-series ETFs or by combining ETFs from iShares, Vanguard or BMO, would yield approximately the same level of risk, a lower overall MER and thus higher earnings than the SPP. Alternatively there are mutual funds at ING that do approximately the same thing as the SPP at about a 1% MER (plus GST) (Streetwise Balanced Portfolio). I originally asked why I would or should be interested in this product and have seen nothing to suggest why anyone would feel it dominates any of the very simple alternatives available.

    • Boomer on September 12, 2013 at 3:29 pm

      @William Sims: You are discounting the fact that there are thousands of people that don’t think a brokerage account is for them, don’t understand how mutual funds work, have never heard of ETFs, iShares or MERs – and don’t want to know. The simplicity of the SPP could be just right for them.

      Not everyone is a sophisticated investor who can work out a portfolio themselves to suit their needs. I’m supposing that you are knowledgable enough about investing that you would NOT be interested in this product – but maybe some people would be.

      • fiscally fit on September 12, 2013 at 5:18 pm

        well said. I would bet that most “knowledgeable” DIY investors who bawk at the SPP don’t even track their personal beta alph or std dev…. in which I would advocate that this is the perfect thing for them haha 😉

  14. William on September 12, 2013 at 8:04 pm

    Sorry your arguments are too deep for me. You are willing to pay a higher MER for the same degree of diversification you could get elsewhere, because you are provided a standard deviation? Seems quite”knowledgeable”.
    On the other hand, I agree that for those with little knowlege of investing a plan like SPP or the ING balanced fund is superior to being sold a balanced portfolio of MFs at a Chartered Bank. While in the later case the “beta alph or std dev” would be about the same as for the SPP or ING balanced fund, the MER would be higher and the return would be lower. The lesson is to invest in a well diversified portfolio with the lowest MER possible. Certainly the SPP beats some alternatives but it is not the best.

  15. fiscally fit on September 12, 2013 at 9:09 pm

    You missed the point. I am simply stating that most DIY investors can’t even determine the alpha, beta, or std deviation of their own portfolio. How can you make investment decisions if you don’t know these things? Or at the very least, how do you know if you are even doing a good job (better than the chartered bank PMs or those at the SPP)?
    Sidenote, I would love to see the Alpha of a sample of DIY investors portfolios. (if you can’t calculate this number, you shouldn’t be a DIY investor ;))

    • William Sims on September 12, 2013 at 9:52 pm

      Sorry, but I think you are missing the point. Equally well diversified portfolios like the SPP and say the ING balanced mutual fund will, since they also have similar MERs and similar holdings, have similar alpha’s. On the other hand a combination of TD e-series ETFs could easily be concocted that would yield a higher alpha, merely due to the lower MER. The lesson is still to invest in a well diversified portfolio with the lowest MER possible, even if you have no idea of what an alpha is.
      Once again my original query was based on a lack of knowledge about the SPP. While I now do not believe it would enhance my situation (I actually have a good DB pension), I can understand that it serves a purpose, much like the ING balanced MF.

      • fiscally fit on September 12, 2013 at 11:59 pm

        great discussion guys!

        I agree with the SPP and the ING but disagree with the comparison of those things to the e series (actually mutual funds). Assuming the risk level is the same (one is a balanced with less risk/volatility the other is equity indexes so they are not)no matter how you spin it, the e series will always lag the benchmark index. Where as the other has chance to exceed the benchmark. There really shouldn’t be situation where you are looking at choosing an index fund or a balanced fund regardless of MER. Two separate risk profiles.

        I also believe that if you don’t know what alpha or beta or std deviation or quartiles etc. you are not qualified to be a DIY investor. These are basic concepts of asset management. But I do think programs like the SPP are amazing

        • Bernie on September 13, 2013 at 7:10 am

          Wikipedia defines a mutual fund “as a type of professionally managed collective investment vehicle that pools money from many investors to purchase securities”.

          Whether you choose the balanced fund or short term fund offered by SPP or one of the funds offered by TD series or ING understand that these are all mutual funds!

  16. William on September 13, 2013 at 6:29 am

    TD e-series funds are passively managed index funds that mimic various indexes, including the TSX, the S&P 500, the MSCI EAFE, as well as a fund that mimics the Canadian DEX Universe Bond Index. It would be quite easy for even non-sophisticated investors to put together a portfolio representing 20% Canadian market, 20% U.S., 20% International (Non-North America) and 40% Canadian bonds, which is pretty much the asset mix for the ING balanced fund and the SPP. The difference being that your portfolio using TD funds would have a much lower MER. This doesn’t mean that the TD e-series approach is the best. In fact you can concoct a similar portfolio with an even lower MER.
    With regard to your emphasis on alphas and betas, you must realize that these statistics are all based on historic data. They tell you something about excess returns and risk in the past. As any good mutual fund company will tell you: past performance is no guarantee of future performance. Having said that I do not think it is a complete waste of time to have some knowledge of alphas and Betas since it will at least tell one if current excess returns are a result of undue risk (as believers in efficient markets would argue it tends to be). But to argue that everyone should be able to calculate these statistical artifacts to be a DIY Investor is going too far. Properly diversify your portfolio and minimize your MER and you will do at least as well as the market and likely better than SPP or ING, with or without knowledge of alpha and beta.

    • fiscally fit on September 13, 2013 at 9:22 am

      I understand the point you are trying to make but I still disagree with you on a few points.

      Quantitative measurements are not necessary just an understanding of them? How are they not important? Without using these types of figure you are simply guessing. But this is indicative of an even bigger problem… and that is investing in something without actually understanding.

      For index investors, it is understanding that you will always underperform the index, guaranteed, 100% of the time. For more active investors it is not being able to calculate your own personal MER including trading costs, the cost of your time, cost of information, etc. For every investor it is not looking at maximizing the return given the level of risk you want to operate at. It is understanding that mutual funds or ETFs or stocks are not good or bad, they are simply different.

      Although there are no barriers to becoming a investor, and there shouldn’t be; if you can’t even track basic metrics in your own portfolio you lose all credibility in telling people what you should or shouldn’t be doing. This is simply because you can not validate what you are saying or make educated decisions based on guessing.

  17. William Sims on September 13, 2013 at 7:47 am

    But there are differences between mutual funds. Some funds are actively managed and some are passively managed. The latter generally having lower MERs. The TD e-series funds fall into that category. A better choice are ETFs (exchange traded funds), which are like passively managed index mutual funds (Index MFs follow some stock market index and are thus index funds and are passive since the management is not trying to beat that index.), but trade like a stock and often have even lower MERs than the TD e-series or other index funds. MERs are important since it represents a reduction to the rate of return of your MF. For example if you invest in the SPP at an MEr of say 1.07%, vs. a basket of ETFs that represent the same asset mix as the SPP, your risk is the same but in the later case you should be able to get away with an MER somewhat south of 0.3%. Say the alternate portfolio has an MER of 0.3%. Then over the long haul (assuming a very similar asset mix between the two) the alternate portfolio would yield 0.77% more each year. Doesn’t sound like much, but over 20 years that will represent about a 16% advantage for the alternate investment over the SPP.

    • Bernie on September 13, 2013 at 8:23 am

      William, everything you say is correct, the bottom line being when you have funds of similar holdings go with the lower fee (MER) fund. There is little argument with choosing index ETFs if you want ultra low fees with minimal investor input.

      The hassle with this approach is you need to become a DIY investor if you want to purchase ETFs. I would say the vast majority of individuals who choose SPP do it for the passive convenience of having everything done for you. They don’t care about the mediocre performance or the lack of fund options. The bottom line for them is it’s easy, relatively safe and requires little monitoring.

      For the record I am a DIY investor. I enjoy it, have been successful and would never consider funds like SPP, ING or any index ETFs. This works for me but is very much hands on! For most, one of the aforementioned funds would be the prudent choice.

      • William Sims on September 13, 2013 at 8:30 am

        I agree and SPP is certainly a solid step up from actively managed MF’s of the type many banks attempt to foist upon their clients.

      • Boomer on September 13, 2013 at 10:47 am

        @Bernie: Thank you,Bernie.

  18. fiscally fit on September 13, 2013 at 10:07 am

    and by the way guys, one of the best discussions in a long time!

  19. Ted on March 11, 2015 at 6:35 pm

    One point about the SPP you need to take into account is you can contribute to it by a credit card. If you have a cash back credit card that pays you 1-2% for example that impacts the view raised by some on this forum about MERs of comparable investments in index funds. The SPP is a vanilla type of investment that will give you a reasonable risk adjusted return over the long term. The manager of the plan, Greystone is very well respected. The SPP is not going to be attractive to people who like to look at their investments more than twice a year but for many people they could do a lot worse out there with money earmarked for retirement.

  20. Greg on May 24, 2015 at 9:08 pm

    For us, the credit card option of CPP is a god send! For my wife and I, we contribute $5000 annually together. Using my Aeroplan card, I can earn 5000 Aeroplan miles a year. Living in Nunavut, flying to Ottawa costs $2400 roundtrip. 15000 Aeroplan miles equals a free round trip ticket. So by investing in our RRSPs, we gain about $800 every year.

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