HOOPP Expands Its Plan to Self-Employed Physicians in Ontario
The Healthcare of Ontario Pension Plan will allow self-employed doctors to join starting in January, giving incorporated physicians and their staff a new option to earn defined-benefit retirement income from one of the province’s largest pension funds.
HOOPP’s new eligibility rules will give tens of thousands of physicians a choice to join the plan, after years of advocacy from groups that represent doctors. Until now, individual doctors who incorporated their own practices weren’t able to join HOOPP because they are effectively the employer as well as an employee of the practice, which blurred a key distinction in the way contributions are made.
Many of Ontario’s doctors have no formal pension plan and are saving and planning for retirement on their own, even though some financial-services companies offer suites of products tailored to physicians, such as Bank of Nova Scotia, which acquired MD Financial Management in 2018, and pension service provider Blue Pier.
Physician Nick Voudouris has spent his 34 years in practice maximizing contributions to his registered retirement savings plan and tax-free savings account, and also benefited from some real estate transactions, to build a retirement nest egg. “I went on the assumption that no one was going to help me and I had to do it myself,” he said.
Dr. Voudouris is one of 10 doctors who are partners at Thornhill Medical Centre in north Toronto who are collectively considering joining HOOPP, though they are still waiting for more details, he said. Joining the plan likely won’t make sense for Dr. Voudouris, who is 64, even though he said he has no plans to retire any time soon. “For the older physicians, like me, we missed the boat on this,” he said. “Would I have loved to have had a defined-benefit pension plan? Oh my gosh, would I love that, sure.”
But for doctors who are earlier in their careers – the youngest at the Thornhill clinic is 30 – “this is the wave of the future,” Dr. Voudouris said. “For the younger people … this could really transform people’s view of being in family practice, could mean more people wanting to stay in family practice because they have a nice benefit plan,” he said. “I think it’s a great thing.”
HOOPP started out providing pensions to Ontario’s hospitals, and has since added hundreds of smaller health care employers as medicine is increasingly delivered through community practices and clinics. The pension plan now manages nearly $113-billion for more than 670 employers and 460,000 members, including nurses, medical technicians, food-services and housekeeping staff, as well as doctors who are salaried employees at a HOOPP employer. Until now, however, doctors with their own practices weren’t eligible.
HOOPP’s work to bring doctors into the fold started in earnest last year with research that included speaking to doctors and their financial advisers about how to fairly structure eligibility for physicians. The pension plan will soon allow medical professional corporations, or MPCs – a common way for doctors to incorporate their medical practices – to come on board as employers.
“What we are trying to do is have more health care workplaces join our plan in Ontario and grow our plan in that way, and this was a community that we thought we could solve for and add a pension option for that group of people,” Rachel Arbour, HOOPP’s head of plan benefits, design and policy, said in an interview. The plan needed to figure out how self-employed physicians could enroll on terms that are “consistent with the way the rest of our members join,” she added.
Incorporated doctors who choose to join, including those who run their own practices, work in clinics or provide services from a hospital, will have to make both the employer and employee contributions to the plan. Anyone employed by the MPC, such as nurses or administrative staff, will also be given a chance to join.
Because HOOPP members earn pensions based on their highest five-year period of income, the pension plan needed to make sure self-employed doctors couldn’t secure larger pensions by raising their income for five years and taking a lower salary in other years. To be fair to all members, HOOPP’s solution is to establish a physician’s baseline employment income when they join, then limit how much it can rise or fall in later years for the purpose of calculating benefits, though a doctor’s actual income can exceed the limit.
The Ontario Medical Association has been advocating with HOOPP to allow incorporated physicians to join “for a number of years,” OMA chief executive officer Kimberly Moran said in an interview. The association represents more than 43,000 physicians, medical students and retired doctors, including 26,000 incorporated doctors who will soon be eligible to join.
“We’re expecting a lot of interest in this,” Ms. Moran said. “I think doctors are going to appreciate that they have another way to have more certainty for their retirement.”
The promise of a stable pension could help smaller practices attract and retain high-quality employees such as nurses and support staff, Dr. Voudouris said. And for doctors, “you can concentrate on doing your job and you don’t have to worry.”
Listen to Dr. Voudouris, he knows what he's talking about.
This is fantastic news for many doctors in Ontario who are now eligible to join HOOPP's pension plan, and many will also be able to offer all their employees a HOOPP pension plan as well.
Earlier today, HOOPP issued a press release on how it is expanding access to retirement security for more healthcare workers in Ontario:
TORONTO, December 10, 2024 - The Healthcare of Ontario Pension Plan (HOOPP) is pleased to announce that effective in January 2025, eligible physicians in Ontario will be able to join its defined benefit pension plan. Opening the pension plan to physicians is another way that HOOPP is helping Ontario’s healthcare workers build the foundation for a financially secure retirement.
This new development will allow incorporated physicians who run their own practices, provide services from a medical clinic or provide services from a hospital to enrol in HOOPP.
“With over 460,000 members and 670 participating employers in Ontario’s healthcare community, we know the value that members and employers receive by being part of HOOPP,” said Rachel Arbour, HOOPP’s Head of Plan Benefits, Design and Policy.
“Over the past six decades, membership in HOOPP has continued to evolve and grow. We are now ready and able to take another step towards providing retirement peace of mind for even more healthcare workers in Ontario.”
Eligible physicians who are incorporated under and receive employment earnings from what’s known as a Medicine Professional Corporation (MPC) will have the option of joining HOOPP. The MPC would become a HOOPP employer and the incorporated physician and other employees who work for the MPC would be eligible to join the Plan. The College of Physicians and Surgeons of Ontario says more than 24,000 physicians in the province are incorporated. HOOPP is a valuable component of a strong retirement strategy and giving physicians and their staff the option of joining the Plan is a way to support recruitment and retention of key healthcare professionals across the province – including those in smaller and more remote communities.
HOOPP is one of Canada’s strongest and most reliable pension plans. At the end of 2023, the fund’s net assets rose to an all-time high of $112.6 billion. For every $1 that HOOPP owes in current and future pension benefits, the Plan had roughly $1.15 in assets as of Dec. 31, 2023.
Are you an incorporated physician who is interested in joining HOOPP? More information will be available on hoopp.com on January 2.
About the Healthcare of Ontario Pension Plan
HOOPP serves Ontario’s hospital and community-based healthcare sector, with more than 670 participating employers. Its membership includes nurses, medical technicians, food services staff, housekeeping staff, and many others who provide valued healthcare services. In total, HOOPP has more than 460,000 active, deferred and retired members.
HOOPP operates as a private independent trust, and its Board of Trustees governs the Plan and Fund, focusing on HOOPP’s mission to deliver on our pension promise. The Board is made up of appointees from the Ontario Hospital Association (OHA) and four unions: the Ontario Nurses’ Association (ONA), the Canadian Union of Public Employees (CUPE), the Ontario Public Service Employees' Union (OPSEU), and the Service Employees International Union (SEIU). This governance model provides representation from both employers and members in support of the long-term interests of the Plan.
Alright, earlier today I had a chat with Rachel Arbour, HOOPP’s head of plan benefits, design and policy, to go over this news.
I want to begin by thanking Rachel for taking some time to talk to me and also thank Scott White, Senior Director, Media Relations and External Communications for setting up this call on short notice.
Scott kicked things off by noting that in my discussion with CEO Jeff Wendling at the end of September on his retirement plans and more, I told Jeff it would be great if HOOPP can offer Ontario's physicians a HOOPP pension plan and he said something was in the works.
And here we are not even three months later so my remark was pertinent.
I told Rachel that a few of my friends who are free agent physicians and work in Ontario were asking me this morning if it makes sense to look into this given they are 10 or 15 years away from retirement.
Rachel told me the program launches on January 2nd and there will be specialists at HOOPP who will help physicians and their financial advisors answer all their questions.
She added this: "We think it will make sense, we appreciate that physicians start their careers later and potentially work a bit longer."
Interestingly she also shared this tidbit:"Our average, a HOOPP retiree has less than 20 years of service at their point of retirement. You can see the figure in our annual report every year, I don't have the specific number but it's around 18 years."
I asked Rachel to give me a background on this latest program, how it came to fruition and also asked her why is this only an an Ontario program and doesn't cover all physicians across Canada.
She replied:
Sure, I can answer all those questions. The Healthcare of Ontario Pension Plan is focused as you know on serving the Ontario healthcare community, so we only operate in Ontario for Ontario employees. That's why this isn't across Canada initiative, our focus is on the province of Ontario.
We are constantly and actively seeking to add new healthcare workers to our plan.We add new employers every year. We started off with hospitals and now have almost 700 employers in our plan (across the healthcare industry).
And what we have done is we looked at opportunities to add more healthcare workers and thought this is a group of people who were not previously easily able to join our plan.
There are physicians already part of HOOPP, these are the salaried employees of our existing employers. Sometimes it's in a hospital setting, sometimes it's in a health clinic setting.
But largely the model (for most physicians) is they're not salaried employees as where they perform their services, most operate as independent businesses.
She went on to explain some technical difficulties they encountered with these independent physicians:
We had some technical difficulties with this group of healthcare workers and we had to figure out a way where it made sense for them to join our plan.
There are two technical difficulties. The first is an Income Tax Act one which is to be a member of a pension plan you have to be an employee of an employer.
That is why this is targeting physicians who operate through medical professional corporations (MPCs)
And as you know, your pension in a registered pension plan has to be based on your employment income.
The second technical difficulty we had to work through is the differences between a physician who works for a medical professional corporation and determines their employment income year-over-year as it compares to the typical member of our plan who is a salaried employee of an employer and there is a separation between them and their employer as it pertains to their year-over-year earnings.
HOOPP is a plan that offers a pension on your highest five consecutive years of income. We wanted to ensure as we let this population into the plan, they were participating like our other members so there couldn't be an advantage or disadvantage to them because of their relationship to their employers.
I asked Rachel how many physicians in Ontario have these medical professional corporations:
I don't know this personally but the College of Physicians and Surgeons tells us it's more than 24,000 (the Globe article states the Ontario Medical Association represents more than 43,000 physicians, medical students and retired doctors, including 26,000 incorporated doctors who will soon be eligible to join).
I noted this is potentially a big group of people with a lot of money and I asked her what if a physician has been working 10-15 years and has way over a million in RRSPs/ TFSAs in their corporation, can they divert these assets straight to HOOPP to manage and increase their pension payout?
Rachel responded:
What they can do, if it makes sense for the MPC to join us as an employer and the physician to join us as a member. What we will do is as we take income from their corporation, employment income, that income will be subject to pension contributions just like any employee and employer in HOOPP and they're going to build a pension in HOOPP based on that income from their professional corporation.
What we have done, we have some restrictions in place as to how much that income can go up and down year-over-year without affecting that physician's service in our plan.
But it's not possible for someone to transfer assets into HOOPP, you're accruing a pension into HOOPP for your year-over-year service
Importantly, she confirmed what I thought, whatever investments a physician has amassed in their corporation cannot be transferred over to HOOPP as part of of a way to beef up their pension payout, which makes sense since soon to be retired physicians would cash out of all their investments for the safety and security of a HOOPP DB pension for the rest of their life.
However, Rachel did note the following:
If the physician was taking employment income from their corporation for the last few years and chooses to join HOOPP, we do have a process for buying back periods of eligible service. Any member who joins HOOPP would be able to do that, but it will really depend on that individual structure on how that physician set up their corporation for the last number of years.
What we are really focused on is having physicians join us for go-forward service.
I asked her if there's a cutoff for buying back periods of eligible services (like no more than 5 years) and she said:
We at HOOPP don't have a cutoff, it's really a matter of if the member meets the requirements and is eligible to buy back periods of eligible service. That's another place where we enter the technicalities of the Income Tax Act that has rules for registered pension pans over what service someone can purchase.
If a physician joins HOOPP and has been operating under the same MPC they joined HOOPP with over the last ten years, and drawing an employment income of let's say $50,000 for the last several years, once they've joined us, they can apply to purchase that service for the last ten years.
Rachel wanted to be clear however that this is the exception they expect to see, not something they expect to see in massive quantities.
I noted that most of my physicians buddies tell me MPCs aren't worth it for younger physicians starting off and paying off big expenses like a mortgage, school debts, etc. but it becomes worth it when a physician is more established and it really depends on a few things.
The thing is if you want to be part of HOOPP and you're a young physician, well, you have an added incentive to create a medical professional corporation so you can start contributing to HOOPP early on and will be better off later on when you're ready to retire (my advice but talk to your advisor, obviously).
Rachel added:
Clearly in a pension plan it makes more sense to get more service because that will increase the benefit from the plan, but I joined HOOPP at almost 40 and I'm still quite happy to be accruing a pension in the plan for my years of service here (HOOPP employees contribute to their pension plan and have access to a DB plan, all part of the perks of working there).
I think it will be up to each individual physician to work with their financial advisors to figure out if and when it makes sense for their MPC to join HOOPP as an employer and for them to join us as members. That's a decision any employer makes to join our plan.
Rachel told me when the program launches in early January, they will have very detailed information on HOOPP.com and that material is intended to help physicians work with their financial advisors to see whether or not this makes sense for them.
Lastly, Rachel discussed that all employees of the MPC are eligible for a HOOPP pension:
One of the things we are looking forward are MPCs that are employing not just the physician but physician staff (nurses, technicians, administrative workers, etc).
This isn't just for the physician themselves. When an employer joins HOOPP, all of their employees are eligible to join our plan.
They will participate to HOOPP without this restriction on earnings we applied to the business owner. This part of joining HOOPP, all of your employees have the option to join the plan. All your new full-time employees have to join the plan and your part-time employees get the option on day one of the MPC joining the plan.
With our plan, employers are responsible for their employer contributions and members are responsible for their member contributions.
Contributions under our plan are set by the board of trustees and they have been steady since 2004 and we've announced that up to the end of 2026, 6.9% member contributions up to the YMPE and 9.2% above the YMPE and that's the member contribution rate. Employers pay 126% of the member contribution.
That's a wrap, I can now fire this off to all my physician friends eligible to join HOOPP and tell them to stop hassling me and get informed once the program launches at the beginning of the new year.
Once again, I thank Rachel Arbour, HOOPP’s head of plan benefits, design and policy, for providing so much detail on this new program and Scott White for setting up this chat.
For all you doctors in Quebec, BC, Alberta and elsewhere, you should be writing to your provincial pension plans and ask them to provide a similar program for you.
I can tell you physicians have enough on their plate to worry about, a safe secure retirement with a DB pension is something all physicians in Canada deserve, it's actually something all Canadians deserve!
Below, an internal document obtained by the Ontario Liberals shows millions of family doctors will likely retire within the next five years. The report also suggests 1-in-4 residents do not have a primary physician. Mark McAllister of City News reports.
And the Ontario Medical Association says we’re experiencing a perfect storm of physician retirements and resignations.
The situation is dire in Ontario, Quebec, Allberta and across Canada. We don't have healthcare, we have disaster care, you have to wait till you're sick and dying before you gain access to decent care.
I'm not being cynical, I have no family doctor and have been on the waiting list in Quebec for over five years. I just pay whenever I need something done urgently but it irritates me.
It makes me laugh when people tell me our healthcare system is the envy of the world (what a joke).
Anyways, that's a topic for another time, first let's get all physicians the pensions they deserve.
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