Financial fables: Properly pondering a pension
It’s Friday afternoon, and Dr. Sivakumar is wrapping up his clinic.
His last patient is Mr. Jones, a 68-year-old referred for a new diagnosis of atrial fibrillation (AF).
Reviewing the chart, Dr. Sivakumar notes that Mr. Jones visited his family physician last month with intermittent palpitations and lightheadedness. Blood tests were mostly normal except for reduced kidney function (eGFR). Mr. Jones’ medical history includes diabetes, hypertension, hyperlipidemia, rheumatic heart disease and stage 3B chronic kidney disease.
Anticoagulation is needed for Mr. Jones, given his CHA₂DS₂-VASc score of 3. Typically, direct oral anticoagulants (DOACs) are recommended to lower stroke risk. However, his history of rheumatic heart disease raises concerns. DOACs are not proven safe or effective for valvular AF, particularly in cases of rheumatic mitral valve disease. Inappropriately using them could lead to severe complications. Aspirin alone is no longer considered sufficient. The next step is confirming whether Mr. Jones’ AF is valvular or non-valvular to determine the best treatment approach.
As he thinks through Mr. Jones’ case, Dr. Sivakumar reflects on the similarities to financial decisions he’s currently facing. Earlier that day, he read an endorsement by his professional association for a new multi-employer pension plan (MEPP) designed for healthcare workers in Ontario. The plan seems promising, with a strong financial track record, but Dr. Sivakumar has questions. As a physician with a professional corporation, he wonders if the MEPP suits his particular needs. Unlike many hospital healthcare workers, he personally contributes 100% of his pension, without employer matching. He is concerned about whether his contributions and investment growth will adequately support his family after his death.
Dr. Sivakumar starts by questioning the guarantees of the MEPP. What happens to his savings—both contributions and growth—when he passes away? Will his family receive these funds, and if so, how much? He worries that his contributions may be pooled in a way that subsidizes other healthcare workers instead of benefiting his loved ones directly.
Flexibility is another concern. What if he has a bad financial year and cannot meet the required contributions? Will there be penalties? Can he access his funds in emergencies? These are critical questions, especially given the unpredictable nature of life and finances. Dr. Sivakumar is also uneasy about how market downturns might affect his pension—will his promised payouts be reduced if the MEPP’s investments perform poorly? Does he have any recourse if this happens?
The MEPP is designed for a wide range of hospital healthcare workers, many of whom are not incorporated. Dr. Sivakumar wonders if its structure truly aligns with his needs as a physician with a professional corporation. Does the plan offer the same advantages to him as it does to non-incorporated workers? He knows that differences in legal and financial circumstances could significantly impact the plan’s suitability.
While the association’s endorsement is reassuring, Dr. Sivakumar questions the depth of their research and expertise. Have they thoroughly compared this MEPP to other options available to physicians? Have they considered the unique needs of incorporated professionals? These unanswered questions make him cautious about rushing into a decision.
Reflecting on these concerns, Dr. Sivakumar sees parallels between evaluating the pension plan and managing his patients. Just as he carefully assesses stroke and bleeding risks for Mr. Jones, he must meticulously evaluate the risks and benefits of the MEPP. Both require a thorough understanding of individual circumstances and potential outcomes.
Dr. Sivakumar resolves to gather more information, consult with experts, and compare the MEPP to other available options. He knows that making an informed decision now is crucial for his financial well-being and his family’s future security. Much like the care he provides to his patients, his approach to his financial future must be thoughtful and evidence-based.
Dr. Vu Kiet Tran is an experienced physician hoping to banish the taboo of openly discussing financial security and wellness. He's the founder and host of the “How is my financial health, doc?" podcast.
Disclaimer: The Financial Fables series is entirely fictional.
