The Medicus Pension Plan™ (Medicus) brings together Scotiabank’s deep expertise in pensions, investment and governance with MD Financial Management’s (MD’s) commitment to physicians’ financial well-being. Together, we’re creating a multi-employer pension plan that’s the first and only plan of its kind designed exclusively for incorporated physicians.
Large, industry-wide pension plans that pool risk continue to thrive in Canada and provide plan members with benefits for their lifetime in retirement, as well as other desirable features such as survivor benefits and inflation protection. Through Medicus, these benefits will now be available to incorporated physicians.
How it works
In a multi-employer pension plan like Medicus, a group of employers come together to participate in and contribute to the same pension fund. In this case, the participating employers are physicians’ professional corporations.
Eligibility requirements include being a physician, being incorporated and having a qualifying income.
Advantages for plan members
A multi-employer pension plan, like Medicus, offers many benefits for incorporated physicians and their family members, including:
- delivering predictable lifetime retirement income,
- pooling investments, longevity and economic risk among all plan participants,
- providing access to investments not typically available to individual investors, and
- providing valuable survivor benefits to spouses and dependants.
In their dual role as employer and plan member, participating incorporated physicians will enjoy an added layer of financial peace of mind knowing they are contributing to a pension plan that will provide a predictable income stream in retirement, which can complement a broader financial portfolio.
How the Medicus Pension Plan is unique
Medicus is notably different from registered retirement savings plans (RRSPs), tax-free savings accounts (TFSAs), registered retirement income funds (RRIFs) and individual pension plans (IPPs):
- Medicus provides physicians with a predictable lifetime retirement income, including options for continuing all or a portion of that lifetime income for a spouse’s lifetime after the physician’s death (surviving spousal benefit).
- Each participating physician’s pension is calculated according to a formula related to personal earnings drawn from their corporation each year.
- Medicus pools investment and longevity risks across all participating members. This significantly reduces risk for plan beneficiaries and helps ensure that they don’t need to worry about outliving their retirement assets.
- All contributions are invested in a single trust fund, managed and overseen by an Administrative Board that includes physician-member representatives.
- Medicus assets are invested over a long horizon, not over one individual member’s lifetime. This investment horizon, as well as the expected size of the pension fund, allows for more diverse investment opportunities.
- A large pension fund creates economies of scale and helps lower fees, resulting in more efficient use of each dollar contributed to the plan.
Similar to other multi-employer pension plans, a plan surplus (i.e., when plan assets exceed plan liabilities) may be used to improve plan benefits, such as providing cost-of-living increases. In the event of a plan deficit (i.e., plan liabilities exceed plan assets), benefits may be reduced to ensure the long-term sustainability of the plan.
The plan will be subject to regulation under pension benefits legislation and will be registered with the Financial Services Regulatory Authority of Ontario and the Canada Revenue Agency.
Strong governance and reduced risks
An independent Administrative Board will be formed to serve as the legal administrator of the Medicus Pension Plan and oversee day-to-day administration. The Administrative Board will be accountable for overseeing a prudent funding model with the objective of building up sufficient reserves to withstand plan risks.
The Administrative Board will be part of a robust governance structure that fulfills all regulatory requirements. This appointed fiduciary oversight body will comprise representatives that include 50% plan member representation.
A deeply knowledgeable pension-plan management team has been established to support the Plan Sponsor Committee and Administrative Board in their respective roles to help provide a robust governance, administration and investment framework.
This governance structure is similar to those of leading Canadian jointly sponsored or multi-employer public sector pension plans.
To achieve successful administration of the pension plan, MD and Scotiabank have partnered with LifeWorks, Canada’s largest administrator of employee pensions and benefits, to provide administrative services to the board.
LifeWorks is a world leader in this arena, serving more than 1,400 plans covering over 7.5 million participants. For more information, please visit lifeworks.com.
To be eligible to participate in the Medicus Pension Plan, physicians must be employed by a medical professional corporation or other eligible entity*.
Incorporated physicians contribute, via their professional corporations, to the Medicus Pension Plan trust fund, which is managed by the Medicus Pension Plan Administrative Board of Trustees.
Each corporation contributes 18% of pensionable earnings paid to its enrolled physician employees (where pensionable earnings are capped at $171,000 in 2022).
Each participating physician’s pension is calculated according to a formula related to pensionable earnings drawn from that physician’s corporation each year.
Each member earns a benefit of 2% of capped pensionable earnings for each year in the plan. In 2022, the annual maximum benefit accrual is $3,420. If this annual maximum benefit amount is earned for 30 years of service in the plan, it would equal an annual pension of over $100,000 paid for the rest of the physician’s life on retirement.1
Plan members have options to continue all or a portion of plan income for a spouse’s lifetime (surviving spousal benefit).
As the plan evolves, MD and Scotiabank will be working with their many partner organizations who represent the interests of physicians across the country on the rollout of the Medicus Pension Plan.
The plan is expected to launch for broader enrolment of Canadian physicians in 2023 after all applicable regulatory approvals have been obtained.
Working together to benefit physicians
We’re excited to support physicians and help add to their retirement-planning options. We look forward to helping physicians retire with increased peace of mind.
For more information
If you have any questions, or wish to receive additional information, please contact your MD Advisor** or the MD Trade Centre at 1 800 267-2332 (Monday to Friday, 8 a.m. to 8 p.m. ET).