Author Topic: Great West Life RRSP's - How to manage MER's  (Read 2810 times)

Rockies

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Great West Life RRSP's - How to manage MER's
« on: November 13, 2016, 07:51:28 PM »
I've been a long time lurker of this thread and now am a first time poster. 

I've just received a new job that matches my 5% RRSP contribution with 10.2% (awesome!), and I've been topping that up with an extra 3% to hit an 18% contribution. This is better than my old job that only matched up to 2% so I am very happy. The one thing that bums me out about this is that my organization's provider is Great West Life. As you may know, they seem to have fairly high management fee's (stated at 0.8% for their index funds, but I am not sure if there are other hidden fee's).

Are any members of this forum in a similar situation? How to you manage when you are forced into these relatively higher fee fund companies? Do you transfer the money out every year to somewhere cheaper? What are the rules regarding this?

Also if anyone is with Great West Life and has some suggestions for good low cost funds I'd love to hear them. The strange thing about them is that a lot of their funds seem to have very small amounts of capital invested, and others contain multiple mutual funds inside of them.

Heckler

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Re: Great West Life RRSP's - How to manage MER's
« Reply #1 on: November 13, 2016, 09:45:31 PM »
Find out your vesting policy and transfer out fees.  Select the lowest cost GWL index fund and collect your employer match there for a year or until the employer match is vested and transfer it out to a self directed account. 

Thats how I run my work Sunlife RSP.  Employer matches, vesting immediately and once a year I can transfer out for free to buy Vanguard ETFs in my self directed RSP .  This way I get the match, reduce my income tax at source. 

Rockies

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Re: Great West Life RRSP's - How to manage MER's
« Reply #2 on: November 13, 2016, 10:01:48 PM »
Thanks for your input! I am wondering if you can define/explain vesting? Its not a concept I am familiar with.

Heckler

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Re: Great West Life RRSP's - How to manage MER's
« Reply #3 on: November 13, 2016, 10:33:36 PM »
My employer match is vested immediately - I can take ownership of the amount as soon as its deposited.  Some employer plans require you to hold the amount for a year or longer before you "own" it.

http://www.investopedia.com/terms/v/vested-benefit.asp

sieben

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Re: Great West Life RRSP's - How to manage MER's
« Reply #4 on: November 15, 2016, 05:40:21 PM »
Hey Rockies,

I also have an RRSP with GWL that is managed by my employer where they deposit my profit share.
In my case GWL gives me 1 free transfer every year (Not sure if your company has set up something differently).
So a few days after my company deposits the money in my RRSP I give GWL a call and have them transfer everything in my GWL account to my Questrade account.
It's a pretty painless process and usually only takes about 15 minutes.

I have the money put into a Cash account in GWL when my company deposits it. Fees are low and it limits market volatility till I can transfer it out.

The only difference I could see with your situation is that you are dealing with a match and not profit share. I'd ask your HR about vesting.

Hope this helps!

Rockies

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Re: Great West Life RRSP's - How to manage MER's
« Reply #5 on: November 15, 2016, 09:07:00 PM »
Awesome, I appreciate the advice. Its nice to know that I don't have to be stuck at GWL forever and can open a Vanguard account.

sieben

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Re: Great West Life RRSP's - How to manage MER's
« Reply #6 on: November 15, 2016, 09:40:27 PM »
You bet! My money usually spends all of a couple days in GWL before it gets shuttled off somewhere with a few less fees ;)

Goldielocks

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Re: Great West Life RRSP's - How to manage MER's
« Reply #7 on: November 16, 2016, 01:56:20 AM »

 How to you manage when you are forced into these relatively higher fee fund companies? Do you transfer the money out every year to somewhere cheaper? What are the rules regarding this?


Yes.  Transfer out as soon as it vests without penalties.  Read your benefits package, it should say.

I have Manulife, so similar....

A couple of bonus items with these-- 
1.  there is no cost to rebalance / transfer money between funds for me, within the account, so I use it more actively to rebalance my entire portfolio, which contains funds outside of it that charge ten dollar trading fees.

2.  The management fee on the fund was written up a bit differently than mutual funds are traditionally charged, and it was lower than it first appeared to be.  They called it something other than an MER, at first I thought it was an additional fee, but it was actually lower management admin fee than the MER charges for same funds outside of the group plan.   Still a lot more than vanguard, but it helped a bit.

3.  okay one more, the tax stub at year end has a lot of tax accounting all done in one form.