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11 hours ago, la marzocco said:

Saw this elsewhere: https://www.ctvnews.ca/canadian-doctors-ask-for-proper-pension-plan-1.408068

  • Many doctors in Europe have access to group pension plans. The U.K., for instance, has an exemption in its tax law that acknowledges that fee-for-service doctors working in the National Health Service aren't regular small business people, since they can't set their own fees. So they have government-backed, defined-benefit pensions.
  • The doctors argue that every other health professional organization that works under the Canada Health Act is treated like a union and gets paid a pension from its union by the government. But physicians are locked out. What's more, they say, doctors across Europe have group pension plans, but Canadian laws prevent them from doing the same.

.. so I am partly wishful thinking at 11pm at night hoping one day I would see a proper pension plan lol

This seems like an easy enough exception to make, where everyone wins (doctors get a pension, government gets some goodwill, more people in the country are saving appropriately for retirement...). Why hasn't it been done already?

This has to cost someone something. Who?

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7 minutes ago, jfdes said:

This seems like an easy enough exception to make, where everyone wins (doctors get a pension, government gets some goodwill, more people in the country are saving appropriately for retirement...). Why hasn't it been done already?

This has to cost someone something. Who?

The government. The very definition of a defined benefit pension plan is that the plan sponsor must bear the economic risk - i.e., for physicians to have a guaranteed income on retirement, someone must bear the risk in the event of economic downturns and making sure the fund is adequately funded, which in this case would be the government. These plans are risky for the government because they would be 'on the hook' in the event there are funding gaps - that is, as determined by actuaries based on mortality tables, current contribution rates and future withdrawal rates by retired physicians etc. 

DB pension plans are increasingly uncommon and the only providers left for DBPP are like to be the government as many private companies got spooked by the recessions when they were on the hook to have to top up the pension plan. Pension liabilities from DBPP eventually weighed down the business to the point of insolvency during the recession so most private companies offer defined contribution pension plans - where the risk resides with the employee as they do not guarantee income on retirement - whatever the fund earns, you get, regardless if there is a recession. 

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11 minutes ago, jfdes said:

This seems like an easy enough exception to make, where everyone wins (doctors get a pension, government gets some goodwill, more people in the country are saving appropriately for retirement...). Why hasn't it been done already?

Among other reasons, the above-the-fold headline in the Toronto Star the next day would be "Taxpayers on hook for billions in doctor pensions.  Average physician makes $300,000 per year."

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Pretty sure that doctors' salary would fall if they get a pension plan (this would be ok for the non-savvy investors; it would suck for the doctors who could beat the pension plan's earning rate). It would also increase the burden on the government, and doctors' pension plans suddenly become political issues as we've seen with teachers/nurses.

Also, I'm not sure how DB pensions work, but if you die, does your estate receive a payout valued at whatever you've contributed * the appreciation rate, or is that money just lost? Another argument against a pension.

Mind you, I wouldn't mind a pension :D

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Just now, insomnias said:

Also, I'm not sure how DB pensions work, but if you die, does your estate receive a payout valued at whatever you've contributed * the appreciation rate, or is that money just lost? Another argument against a pension.

Mind you, I wouldn't mind a pension :D

If you die, your spouse/common-law partner would get a survivor benefit until he or she passes as well. I don't believe you get paid a lump-sum to your estate.

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3 minutes ago, insomnias said:

Pretty sure that doctors' salary would fall if they get a pension plan (this would be ok for the non-savvy investors; it would suck for the doctors who could beat the pension plan's earning rate). It would also increase the burden on the government, and doctors' pension plans suddenly become political issues as we've seen with teachers/nurses.

Provincial medical associations and CMA can use this as a bargaining tool in the next iteration of negotiations - in lieu of fee increases, we will change the law and allow physicians to have a pension plan or at least contribution into HOOPP for example for Ontario doctors who are independent practitioners. 

The thing here is really just access to another retirement tool - sure physicians can invest and 'beat' the institutional investor like HOOPP, but being barred from having a pension plan under the Canada Health Act is very illogical and unreasonable imo.

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4 minutes ago, la marzocco said:

Provincial medical associations and CMA can use this as a bargaining tool in the next iteration of negotiations - in lieu of fee increases, we will change the law and allow physicians to have a pension plan or at least contribution into HOOPP for example for Ontario doctors who are independent practitioners. 

We've just seen how that will play out. 

Docs: "In lieu of fee increases, let us incorporate."

Provincial governments: "Sure!"

Federal government [mechanical breathing sound, ominous music in the background]: "I am altering the deal.  Pray I don't alter it any further."

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1 minute ago, ploughboy said:

We've just seen how that will play out. 

Docs: "In lieu of fee increases, let us incorporate."

Provincial government: "Sure!"

Federal government [mechanical breathing sound, ominous music in the background]: "I am altering the deal.  Pray I don't alter it any further."

.. yup.. def got royally * there LOL 

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21 minutes ago, ploughboy said:

We've just seen how that will play out. 

Docs: "In lieu of fee increases, let us incorporate."

Provincial governments: "Sure!"

Federal government [mechanical breathing sound, ominous music in the background]: "I am altering the deal.  Pray I don't alter it any further."

Yeah, I mean I understand the desire for a thought free retirement option, but I don't trust any of the parties involved to actually do a good job at it. Every time you are tempted to not learn a big aspect of something in your life the universe will show up and punish you in some fashion (case in point would actually be MD Financial ha). 

I LIKE the fact that as a physician I am actually a businessman as well. I want that level of control - I want to be able to decide how much I want for retirement, and when I retire. You get a pension and then you will 100% be working until it fits into their rules. I want to be able to diversify. I get that others don't want all that control but you can use your income to set up effectively a pension plan in about a day with an number of investment centres if you want. 

and of course our billings (not salary - we are not salaried for the most part ha) will drop if we get a pension. Every time we surrender control we get slapped around as a result. At best it would be some cost neutral situation (except again we would lose from freedom). 

 

Edited by rmorelan

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18 minutes ago, rmorelan said:

Yeah, I mean I understand the desire for a thought free retirement option, but I don't trust any of the parties involved to actually do a good job at it. Every time you are tempted to not learn a big aspect of something in your life the universe will show up and punish you in some fashion (case in point would actually be MD Financial ha). 

I LIKE the fact that as a physician I am actually a businessman as well. I want that level of control - I want to be able to decide how much I want for retirement, and when I retire. You get a pension and then you will 100% be working until it fits into their rules. I want to be able to diversify. I get that others don't want all that control but you can use your income to set up effectively a pension plan in about a day with an number of investment centres if you want. 

and of course our billings (not salary - we are not salaried for the most part ha) will drop if we get a pension. Every time we surrender control we get slapped around as a result. At best it would be some cost neutral situation (except again we would lose from freedom). 

I guess that's what happened when pathologists accepted to be salaried where radiologists continued to be FFS. Pathologists took a haircut, but have a nice DB pension.. true, there is that loss of flexibility and one does get 'boxed' into the rules of the game when a DBPP is set up.

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Just now, la marzocco said:

I guess that's what happened when pathologists accepted to be salaried where radiologists continued to be FFS. Pathologists took a haircut, but have a nice DB pension.. true, there is that loss of flexibility and one does get 'boxed' into the rules of the game when a DBPP is set up.

There pension isn't bad for sure - they have to work a long time for it of course which is fair. My calculations may be off but I think rads come out ahead both in the short and long game there - with the price of absolute certainty being removed. I can see how people would go either way on the issue. 

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44 minutes ago, rmorelan said:

Yeah, I mean I understand the desire for a thought free retirement option, but I don't trust any of the parties involved to actually do a good job at it. Every time you are tempted to not learn a big aspect of something in your life the universe will show up and punish you in some fashion (case in point would actually be MD Financial ha). 

I LIKE the fact that as a physician I am actually a businessman as well. I want that level of control - I want to be able to decide how much I want for retirement, and when I retire. You get a pension and then you will 100% be working until it fits into their rules. I want to be able to diversify. I get that others don't want all that control but you can use your income to set up effectively a pension plan in about a day with an number of investment centres if you want. 

 and of course our billings (not salary - we are not salaried for the most part ha) will drop if we get a pension. Every time we surrender control we get slapped around as a result. At best it would be some cost neutral situation (except again we would lose from freedom). 

  

Come on Dr Morlean...we all know you have no plans of retiring, ever :P

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Just now, PhD2MD said:

Come on Dr Morlean...we all know you have no plans of retiring, ever :P

Ha :) Can I say instead that I like the idea of being able to retire whenever? Financial independence then - there is something different about working but not actually having to work hehehe

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Just now, rmorelan said:

Ha :) Can I say instead that I like the idea of being able to retire whenever? Financial independence then - there is something different about working but not actually having to work hehehe

That's more like it you. You're all about the FI, not sure much the RE ;)

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I understand MD Financial used to be associated with National Bank (i.e. they'd offer LOC to med students through National Bank)

How was MD Financial's relationship National Bank? How will MD Financial's relationship differ with Scotia Bank with respect to Canadian Physicians?

I'm not very familiar of MD Financial's history. Were there previous banks associated with MD Financial before National Bank and Scotia Bank? I do understand they are a subsidiary(?) of CMA (i.e. CMA created MD Financial for Canadian physicians).

Interested to know why current physicians aren't too happy about the move. Will ask my staff

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15 minutes ago, FeelingTheBern said:

I understand MD Financial used to be associated with National Bank (i.e. they'd offer LOC to med students through National Bank)

How was MD Financial's relationship National Bank? How will MD Financial's relationship differ with Scotia Bank with respect to Canadian Physicians?

I'm not very familiar of MD Financial's history. Were there previous banks associated with MD Financial before National Bank and Scotia Bank? I do understand they are a subsidiary(?) of CMA (i.e. CMA created MD Financial for Canadian physicians).

Interested to know why current physicians aren't too happy about the move. Will ask my staff

it was arms length before - MD financial isn't a bank so if you get a LOC from them they need to actually have a bank to provide it which they then help you manage as an example. They would provide debit counselling, insurance etc and the bank on the other side would manage the actual loan etc. 

Now MD Financial is actually ACQUIRED by scotia. It is a branch effectively of their wealth management organization (as I understand it). Never before as clearly does MD Financial now have two masters - the physicians it has always being screaming up and down about being their top priority, and the bank that runs them.  As the saying goes you cannot really serve two masters.

The original vision, at least projected, was that MD Financial would be an arm of the CMA - serving doctors first and last without dramatic profit considerations. That actually wasn't the case but at least it could look that way on paper. This move now has put all the assets and information that MD Financial has about its clients in the hands of the bank. Doctors trusted them because they trusted the CMA.

Any profits that MD FInancial generates for scotia will be directly at the cost to doctors with them - that would be ok if they actually performed well overall. They don't really have a good track record though in that regard. They have been basically operating on the good will of being a part of the CMA and the automatic choice for doctors. They are another one of the many middle men in medicine that line up to take a slice of the pie as it were.

Scotia is extremely smart in this regards - now they have almost a cradle to grave  thing going on with a large high income group who as someone pointed out about don't bother to train themselves well with respect to money matters. They also get a lot of access to doctors right away - and access likely at schools they wouldn't otherwise. They give you the LOC, the mortgage, the investment products, the insurance.....all under the blessing and instead support of the CMA. I hoped that MD Financial would take on a more of an educational roll here. Maybe they will but banks don't have a history of educating people on why their products have major flaws. 

The company which people often just assumed as a part of the CMA was sold for 2.6 billion. No discussion, no vote, not warning. Now the next question is if that is really owned by the CMA, and we own the CMA when am I getting my large cheque - and I mean large. The answer is never because it isn't actually owned by the CMA and never was - it is just kind of a bit of illusion there and this move highlights that beautifully. 

 

 

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Off-topic, but I actually suspect the acquisition is a double-edged sword. I see this move increasing Scotia's market share (of physicians) dramatically. So on one hand, they have less incentive to offer good LOCs to med students, for example. RBC and the other banks, however, have a stronger incentive to improve their offerings now, since MD Financial seems to have a pretty strong grasp on the doctors (and maybe med students incl. incoming med students). Time will tell, though.

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