HOOPP pension plans

[jfdes]

58 minutes ago, la marzocco said:

Incorporated physicians who do not want to participate in Canada Pension Plan contributions can pay dividends instead of salary. But, I am wondering how prevalent the practice of opting out of CPP is? I would imagine the incorporated physician would want to contribute, no?

I thought the tax changes the federal government is going to bring in will reduce the ability for physicians to do that now. Or did they back-pedal?

3 hours ago, la marzocco said:

Qualitatively, one alleviates oneself from the financial headache of retirement planning, that's a big win imo. As much as one can try to actively manage one's own funds through financial advisory services and what not, it is hard to mimic or achieve the same level of returns of an institutional investor like HOOPP. 

It's less the active management part (index funds are good enough) and more the employer matching part that would really interest me

btw, is HOOPP defined benefit or defined contribution? The formula posted earlier makes it look like DB, but not sure...

[la marzocco]

11 minutes ago, jfdes said:

I thought the tax changes the federal government is going to bring in will reduce the ability for physicians to do that now. Or did they back-pedal?

I wasn't aware there being such a proposal? That would be punitive imo. 

11 minutes ago, jfdes said:

It's less the active management part (index funds are good enough) and more the employer matching part that would really interest me

I disagree - the real investment opportunities are in infrastructure that pays royalties or dividends, and that's what HOOPP and other institutional investors are after and can truly distinguish themselves from indices/ETFs. Indices/ETFs allow you to invest in a manner that matches the market, not outperforms the market. Where HOOPP and other institutional investors have the capacity and potential to do so. Investing so that the returns matches the market is good, but outperform/the potential to outperform is better.

11 minutes ago, jfdes said:

btw, is HOOPP defined benefit or defined contribution? The formula posted earlier makes it look like DB, but not sure...

DB

[Let'sGo1990]

4 hours ago, marrakech said:

According to this link, average FPs in Québec earn more ~280K and in Ontario even more ~360K.  Not sure if the data is valid though, since it refers to pay as "salaries" on the graph, even though in the text it makes a distinction.  OTOH, I'm not sure if the income would be disproportionately higher in one practice setup vs another - 230K with pension would correspond to easily 320K+ in gross earnings. 

The Ontario number is wrong. The 360k figure was thrown around by the liberals to mislead the public when negotiations were going sour. IIRC, they got that number by taking the total amount of money paid to physicians by the province and dividing it by the total number of physicians in Ontario. That is flawed because not all physicians make the same amount, and it does not account for overhead or differences in hours worked between doctors. It was incredibly slimy of them and they knew exactly what they were doing.

The true median is closer to ~230k before overhead for family physicians in Ontario who billed at least >100 000 (meaning that not all of the part time doctors were included).

 

[shikimate]

On the HOOPP website it reports 10 year return of 9.55% and 20 year return of 9.01%, not bad but not necessarily much better than SP500 historical return.

I think HOOPP is a good choice in some circumstances. 

1) someone who enjoys working as an employee

2) someone who's not keen to manage their own investments

3) Liberal government keep attacking incorporation and make it less and less attractive

I think some downside of HOOPP is

1) fund could become underfunded in future

2) salary position has significant tax liabilities (about 41% average rate if salary = 300K, ouch)

3) could affect changing employment to a job outside of HOOPP

4) can only retire at 55 or later. What if my goal is to retire at 35?

 

So my impression is that a combo would be nice. You work part time for a hospital and contribute to HOOPP, meanwhile do part time work outside HOOPP as incorporation. Use your corporation for retirement between age 35-60, and HOOPP as retirement >60.

[brady23]

Do family physicians actually make $250,000 on salary working at a CHC? 

I would rather be salaried than FFS to be honest, even if FFS gives you a bit more. 

[brady23]

10 minutes ago, Let'sGo1990 said:

The Ontario number is wrong. The 360k figure was thrown around by the liberals to mislead the public when negotiations were going sour. IIRC, they got that number by taking the total amount of money paid to physicians by the province and dividing it by the total number of physicians in Ontario. That is flawed because not all physicians make the same amount, and it does not account for overhead or differences in hours worked between doctors. It was incredibly slimy of them and they knew exactly what they were doing.

The true median is closer to ~230k before overhead for family physicians in Ontario who billed at least >100 000 (meaning that not all of the part time doctors were included).

 

Thank you for this information.

Do you have a link to this information?

[Let'sGo1990]

On 3/14/2018 at 4:38 PM, brady23 said:

Thank you for this information.

Do you have a link to this information?

 

The info about the 360k is online. Off the top of my head, the budget for docs is around 11 billion in Ontario. There are ~30 000 physicians in the province. That gives you ~366k which is close to the number the liberals were throwing around.

[ploughboy]

4 hours ago, la marzocco said:

Incorporated physicians who do not want to participate in Canada Pension Plan contributions can pay dividends instead of salary. But, I am wondering how prevalent the practice of opting out of CPP is? I would imagine the incorporated physician would want to contribute, no?

As an incorporated physician, if you pay yourself a salary you will get hit twice for CPP contributions.  There will be a source deduction from your salary, and your employer (ie your medicine professional corporation, ie you) will also have to remit an "Employer CPP Contribution".    The combined maximum yearly contribution is about $5000.

Maximum CPP retirement pension is roughly $1100 per month.  While better than a blow to the head, that probably won't keep you in the style to which you've become accustomed  whilst working.  Depending on personal circumstances, it might make more sense to keep the $5k/yr inside your professional corporation to (hopefully) grow there on a tax-deferred basis.

[indefatigable]

4 hours ago, Let'sGo1990 said:

The Ontario number is wrong. The 360k figure was thrown around by the liberals to mislead the public when negotiations were going sour. IIRC, they got that number by taking the total amount of money paid to physicians by the province and dividing it by the total number of physicians in Ontario. That is flawed because not all physicians make the same amount, and it does not account for overhead or differences in hours worked between doctors. It was incredibly slimy of them and they knew exactly what they were doing.

The true median is closer to ~230k before overhead for family physicians in Ontario who billed at least >100 000 (meaning that not all of the part time doctors were included).

I agree 360K seems high.  But even looking at the very first post of the thread below shows that Ontario FPs were at ~300K in 2012 (before overhead).  FPs haven't been a specific target as far as I know for fee cuts (which were more directed at higher paying specialties).

 

[Let'sGo1990]

2 hours ago, marrakech said:

I agree 360K seems high.  But even looking at the very first post of the thread below shows that Ontario FPs were at ~300K in 2012 (before overhead).  FPs haven't been a specific target as far as I know for fee cuts (which were more directed at higher paying specialties).

 

They used a physician feedback survey and the ICES report. I'm not sure how accurate those are.

If you want to see the source I'm talking about, log into your OMA account and search for "selected statistics on physician resources". There should be one search result. Take a look at the percentile chart which excludes all physicians billing <100 000. You will see that family doctors, at the 50th percentile, are billing ~227k before overhead.

[NutritionRunner]

14 hours ago, brady23 said:

Do family physicians actually make $250,000 on salary working at a CHC? 

I would rather be salaried than FFS to be honest, even if FFS gives you a bit more. 

I posted a link to the current job openings at Ontario CHCs and a couple of examples of postings for family physicians earlier.  If you click on the links I provided, you can check out the salaries for yourself.  But the numbers that I posted were accurate.  Here is one of those jobs for reference: https://www.aohc.org/job-posting/Physician-14

However, as I said, we have a hard time recruiting family physicians. Not all physicians or allied health team members enjoy working with the typical CHC population.  You really have to understand the social determinants of health and enjoy working with traditionally underserved and marginalized populations. I love CHC work and would hate working in a hospital setting, but I know plenty of health care providers who are the exact opposite!

[indefatigable]

10 hours ago, Let'sGo1990 said:

They used a physician feedback survey and the ICES report. I'm not sure how accurate those are.

If you want to see the source I'm talking about, log into your OMA account and search for "selected statistics on physician resources". There should be one search result. Take a look at the percentile chart which excludes all physicians billing <100 000. You will see that family doctors, at the 50th percentile, are billing ~227k before overhead.

The ICES report is completely legitimate - it contains all the gross billings in ON, including percentiles.  It shows that in 2009/10, the mean=median=~300K for FM (p.22-3 ICES source) before overhead.  The survey was used to determine overhead.  It could be that there are more part-timers compared to a decade ago or that different practice setups are somehow skewing the results.  Afaik, FM didn't have large cuts to their income (in ON).  

Unfortunately, I don't have access to the report - originally from ON, but not there now.  Across Canada, FM averages ~275K and ON makes up more than a third of the population.  

[rmorelan]

On 3/14/2018 at 2:49 PM, la marzocco said:

Incorporated physicians who do not want to participate in Canada Pension Plan contributions can pay dividends instead of salary. But, I am wondering how prevalent the practice of opting out of CPP is? I would imagine the incorporated physician would want to contribute, no?

doesn't seem like it - the return when you do the math isn't really worth it overall. I mean as others have pointed out just to start with it costs you twice as much as everyone else, has a maximum, and it is based in part on the number of years working which is less than most people because we are in school.....for a long time.

Not saying people don't but I don't think it is something to look at and go wow I got get in on that.