More pension options needed for self-employed: OMA

The Ontario Medical Association is petitioning the federal minister of finance to consider changing the Income Tax Act to help self-employed doctors to establish pension plans.

“Factors including an aging population retiring earlier, diminishing personal RRSP contributions and limited social security funding have led the OMA to call for more pension options to be made available for the self-employed,” OMA president Dr. Mark MacLeod said in a letter addressed to Minister of Finance James Flaherty. A copy of the letter, as well as an accompanying 15-page report in which the OMA argues its case, was provided to the Medical Post.

Dr. MacLeod continued, “Rebalancing the current structure which provides more options to employees is necessary to better support financial security in retirement, particularly for groups, associations and the self-employed. . . By allowing the self-employed to also benefit from the advantages of group pension plans, the government is providing more equitable options to the self-employed that comes at no cost,” he said.

The OMA submitted the documents as part of a department of finance-led public consultations into the future of Canada’s retirement system. Currently, the Income Tax Act prohibits the self-employed from participating in traditional pension plans, most of which require an employer—usually government or a large corporation—to sponsor them.

The OMA, which said more than 90% of Ontario doctors are self-employed, specifically promoted the idea of “affiliate pension plans.” It argued affiliate plans “would provide a more financially attractive option for the self-employed. As compared to group RRSPs, affiliate pension plans minimize risk while maximizing return on investment (and) provide more secure retirement income with greater insulation against market fluctuations.”

The report includes details of how the OMA would set up and run an affiliate pension plan for Ontario’s physician, presuming the pension changes it proposes are adopted.

(05/26/10)