Oaken Update – April, 2018

Our savings account is going paperless

We’re always striving to improve the experience our customers have with us, and providing them with more convenience and choice is often at the core of this. With that in mind, we’ve recently made some enhancements to Oaken Online Banking which will make managing investments even easier. Of particular note is that this now enables customers to select a preference for how they would like to receive their monthly savings accounts statements.

If you’re already an Oaken customer, you’ll be receiving a letter about these updates shortly, if you haven’t by now. But in the meantime, here’s an overview of what to expect:

View and download documents

All important documents relating to your investments can now be accessed through Oaken Online Banking. Just click on the “Documents and statements” tab at the top, and from there you’ll be able to view and download monthly savings account statements, year-end portfolio statements, 2017 tax slips, and all new GIC confirmations going forward.

Set up alerts

Want to be notified of new documents whenever these become available? We’ve taken care of that too. The “Alerts” settings can be found by clicking on the link that’s located just underneath the “Home” tab at the top. On this page, you can select which documents you’d like to receive alerts for, so that you’ll receive a notification by email as soon as these are added.

Choose how to receive monthly statements

Starting from July 2018, all Oaken Savings Accounts will be switched to electronic statements. This means that June statements will be the last ones to be automatically printed out and sent by mail. We understand that some customers may wish to continue receiving paper statements every month, so we’ve made that easy to request. All you have to do is update your preferences in Oaken Online Banking (via the “Documents and statements” tab), or you can send the tear-off portion included with the letter back to us, or simply get in touch and we’ll take care of it. However, please note there will be a charge of $2.00 per monthly paper statement issued from July 2018 onwards.

Manage other documents

You’ll still continue to get paper copies of all the other Oaken documents mentioned above by mail. But if you’d like to stop receiving those, you can simply go to your preferences in “Documents and statements”, and deselect the paper option for any of them. Of course, these documents can also be accessed and printed through Online Banking at any time.

In case you have any questions about these changes, please feel free to call us at 1-855-OAKEN-22 (625-3622), or drop by one of our locations.

Riffing on RIFs

Through your earning years, the two main registered accounts you need to be aware of are your TFSA and RSP. However, as you edge closer to retirement, it’s time to start looking closely at a different type of plan—your registered Retirement Income Fund, or RIF.

RIFs have been referred to as the place where RSPs go to die. That’s not entirely inaccurate, because you have to convert your RSP into either a RIF or an annuity once you reach the age of 71. Where you were once putting money into your RSP to save for retirement, you are now withdrawing money from your RIF to pay for your retirement.

The skinny on RIFs

Of course, just because you have a RIF, it doesn’t mean you have retired. You can still keep working well beyond 71, but you won’t be able to put any more money into an RSP (since it won’t exist any more), and you are obliged to take money out of your RIF.

Here are some more basic points about RIFs:

  1. RSPs aren’t the only source of assets in RIFs. You can also transfer money from pension plans and deferred profit sharing plans (DPSPs), but these kinds of contributions are subject to certain rules.
  2. You can’t add to your RIF, however you can have multiple RIFs.
  3. You can hold the same wide range of investments in your RIF that you can put into an RSP, such as GICs, stocks, bonds, ETFs and mutual funds. In fact, most people simply continue holding the same portfolio they held in their RSP, adjusting their asset allocation as they age.
  4. As noted above, you’re required to take money out of your RIF every year. There is a minimum amount set out by the Canada Revenue Agency, but no maximum. The minimum amount rises every year.
  5. If there are any funds left in the account when you die, they go to the named beneficiaries or the estate.

RIFs and financial planning

Once you’ve grasped the basics of RIFs, they’re easy to understand. However, the one key point to remember about RIFs is that they generally have a big impact on your tax situation. Figuring out what your tax-optimal withdrawal amount should be every year isn’t always easy. Whatever your tax situation, it’s advisable to consult an accountant or financial planner on how best to manage this important part of your portfolio in your retirement years.

Still awaiting a cure for pharmacare

One of the big highlights of the federal budget released back in February was the promise to develop a national pharmacare strategy. This is an issue with a long history in Canada. We’ve been talking about national pharmacare since the 1940s. But over the decades, a focus on hospitals and medical treatment—which are the big-ticket items in the health budget—meant that it never got implemented.

Today, Canada is the only developed country in the world that provides universal healthcare without also providing universal drug coverage. And the cost of pharmaceuticals is skyrocketing. On average, Canadians spent $1,086 per person on drugs in 2017, which translates into nearly $40 billion!

A strategy, but not a universal plan

At present, Canada has a patchwork of regulations covering drug costs. Each province has its own system, although they share similarities. People on social assistance are generally covered, as are low-income seniors, and those who face catastrophic drug bills (i.e. costs above a certain percentage of household income). Provinces are left to innovate as they see fit, and can tailor their systems according to their own goals. For example, this year Ontario adopted a system called OHIP+, which provides free medications for anyone under 24.

A lot of media coverage suggested the finance minister was laying the groundwork for a national pharmacare system. But in his public statements, he was careful to emphasize that he was proposing a strategy, not a plan. He established an advisory council to look at the issue, and hinted that his aim is to improve the current system rather than replace it with universal coverage. Specifically, his concern appeared to be the need to close gaps in coverage that leave some Canadians more vulnerable to hefty pharmacy bills than others.

What all this means is that you should do your due diligence when it comes to drug coverage, especially if you think you might have health concerns in a few years. What does your province pay for, and what do you have to pay? Did you recently move from one part of the country to another? If so, you’ll want to check what your coverage is now.

And when planning for the future, don’t expect that universal pharmacare will be with us any time soon. While it’s encouraging that the discussion around this is starting up again, you may want to look into private health insurance down the road. It may be a long time before pharmaceutical prices come down and Canada arrives at comprehensive coverage.

The lowdown on down payments

Taking out a mortgage to buy a home always begins with that crucial first step—putting money down. However, before taking that step, there are a few rules that home buyers need to know, as covered in our recent Oaken Blog post.

All mortgages in Canada require a minimum down payment. This is a rule that was put in place to provide stability for the mortgage market, as it requires owners to advance some of their own funds to encourage people to think carefully before taking on a large amount of debt. It also discourages them from walking away from it, should they find that their finances have become a bit tight.

To provide even more stability, the federal government also requires home buyers to purchase insurance on their mortgage if their down payment is less than 20% of the purchase price. Given the difficulty that some people might have in finding that 20% (especially in high-priced markets like Toronto and Vancouver), the rules also permit “gifted down payments”. This involves a third-party—typically a parent—contributing some of that cash, and is also subject to particular rules.

Knowing your options is critical to making the best long-term financial decision, so for a more detailed explanation of this topic, you can read the full Oaken Blog post here.

Spring reading

Warmer weather is finally on its way! So here are some interesting things to ponder while you take that invigorating walk in the sunshine…


This post is intended for informational purposes only. It is not to be considered financial advice. Always do your research before making any investment decisions.

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