Financial services in Fredericton

A secure pension, and a question about what it will buy in 2050. CWCC works with Fredericton households, business owners and incorporated professionals on wealth creation, insurance and capital strategy. The firm is licensed to place insurance in New Brunswick with the Financial and Consumer Services Commission and matches you with an advisor licensed in the province. Every meeting is held online.

Where to start

Fredericton is the seat of the provincial government, and a very large share of its households are paid from a public payroll: the departments, the school districts, the health system, the University of New Brunswick and St. Thomas University. Around that sits a technology and cyber security cluster that looks nothing like any of it. Most financial advice is written for someone with no workplace pension at all. Choose the situation that looks most like yours.

What you get

Seven areas, one team, and your accountant and lawyer in the conversation when the question belongs to them.

• Wealth creation. RRSP, TFSA, FHSA and RESP, ordered around a pension rather than as though you had none.
• Capital strategy. Infinite Financial Sovereignty®, described below.
• Life insurance. Term, permanent and participating whole life, sized to what the pension will not do.
• Living benefits. Critical illness, disability and long-term care, read against what your employer already provides.
• Investment options. Segregated funds and education across the full menu available to Canadians.
• Group benefits. For your company, and a proper read of the plan you already have.
• Succession planning. Corporate shares, the Capital Dividend Account, and the plan that keeps a business in the family.

New Brunswick did something the rest of the country did not

If you work for the province, for a school district, or at a university here, your pension is very probably a shared risk plan. The New Brunswick Teachers’ Pension Plan converted to that model on 1 July 2014. The New Brunswick Public Service Pension Plan runs on it. The University of New Brunswick has one for its academic employees. Day to day operations for the provincial plans are handled by Vestcor.

A shared risk plan is not a defined contribution plan and it is not the traditional defined benefit promise either. It sits deliberately between them. Contributions and a funding policy are set so that the base benefit has a very high probability of being paid in almost every economic scenario the plan models, and by that measure these plans have been managed seriously and have performed.

What the plan text says, and what people hear, are two different things. The documents are unusually honest: they state that the plan does not provide an absolute guarantee, while explaining that the funding policy and reserve are built so that base benefits are secure in virtually all modelled scenarios. What most members hear is the word pension, and what they picture is the promise their parents had, where the employer carried the entire funding risk alone.

That difference is the reason this page exists. Nothing here suggests the plan is weak or that anyone should be alarmed. It suggests that a member should know which risks the plan carries, which risks the member now shares, and what the plan does not promise at all. Your plan administrator is the authority on your own plan, and the annual statement and member booklet are where the answers actually live.

The part that is conditional, and why thirty years makes it matter

Here is the feature that changes a retirement plan and is almost never discussed at the kitchen table. Under the shared risk model, cost of living increases are not automatic. Indexing and the other ancillary benefits are granted only to the extent the plan’s funded position allows, as determined by the trustees under the funding policy.

In a good stretch, increases are granted and a retiree barely notices the mechanism. In a poor stretch they can be reduced or not granted at all, and the pension continues to be paid in full while quietly buying less each year.

Over a retirement that may run thirty years or more, that is the difference between comfortable and careful. A pension fixed in dollars and prices that keep moving produce a slow, invisible squeeze that arrives at the age when a household is least able to respond to it by going back to work.

The planning answer is not dramatic and it is not a product pitch. It is to hold something outside the plan whose value is not fixed in the same way, so that the household has a second source it controls if the increases do not come. For some that is a registered portfolio. For some it is a paid house and a decision made early about whether it will ever be sold. For some it is a permanent policy with cash value that can be reached without asking anyone. Which of those fits depends entirely on the household, and the honest first step is arithmetic rather than a recommendation: what does this pension buy today, and what would it buy after twenty years of increases that arrived only sometimes.

There is one more piece worth checking while you are in the booklet. Find out what your plan pays to a surviving spouse, and what it pays after that. Most people have never read that page.

If you are in technology, or on contract, or both

Fredericton also holds a technology and cyber security cluster, seeded by the universities and by research work that stayed in the city. Those households sit inside the same housing market and the same schools as the public sector households, and their financial position is the opposite one.

There is usually no pension. There may be a group RRSP with a match, which is a good thing and is not a pension. Compensation may include equity that is worth a great deal or nothing. Contract and term work is common, including on campus, where term appointments and grant funded positions carry a genuine end date that a permanent employee never thinks about.

The order of operations for these households is unglamorous and it is the right one. Enough term protection while there is a mortgage and children at home. Disability coverage you own rather than coverage that ended with the last contract. An emergency fund sized to the gap between contracts rather than to a payroll cycle. Then the registered accounts, then everything else.

The specific trap here is insurability. Someone healthy at thirty five and between contracts assumes coverage can be arranged later, when things settle. Coverage is priced on health at the time of application, and the settling frequently takes longer than the health does.

The strategy

In almost any financing arrangement, someone supplies the capital and someone else owns the structure it moves through. Most people occupy neither role. Infinite Financial Sovereignty® is about changing which side of that you are on.

It draws on the educational approach known as The Infinite Banking Concept®, set out by R. Nelson Nash in his book Becoming Your Own Banker®. CWCC is not affiliated with, sponsored by or endorsed by Infinite Banking Concepts, LLC.

In practice: capital accumulates inside a participating whole life contract issued by a Canadian mutual insurer, on a tax-deferred basis, and you reach it through a policy loan from the insurer rather than by applying to an outside lender.

Why it reads differently against a shared risk plan. A member here already holds a large, well managed, entirely illiquid income stream whose adjustments are conditional. What that household usually lacks is not more income of the same kind; it is capital it can reach without permission, and a second source that is not governed by the same funding policy as the first. A participating contract answers both. That is a narrow claim and it is deliberately narrow.

Four points, without exception. A participating whole life policy is life insurance and not an investment. A policy loan is a real loan, it accrues interest, and it reduces the death benefit while it remains outstanding. Dividends are never guaranteed: they are declared annually by the insurer’s board. And this is insurance rather than a deposit account, so protection comes from Assuris, within its published limits.

The full mechanics, including an entire chapter on where the strategy does not fit, are set out in Infinite Financial Sovereignty®, Simplified.

For the business owner and the incorporated professional

Fredericton’s private sector sits alongside the public payroll rather than instead of it: professional practices, consultancies that sell to government and to the universities, construction, and technology firms of every size.

The pattern in an incorporated practice repeats wherever it is found. The corporation earns more than the lifestyle requires, the surplus stays inside because taking it out costs tax immediately, and it accumulates in company-held investments.

The Capital Dividend Account enters here. Where a corporation owns and is beneficiary of a policy, the death benefit generally credits the CDA by the excess of the proceeds over the adjusted cost basis, and that balance can be paid to shareholders as a capital dividend, generally free of tax subject to the rules in force. It depends entirely on how the policy is owned, and a policy held by the wrong entity can create a taxable shareholder benefit rather than the intended effect. It requires your accountant, your lawyer and us.

Where a business has more than one shareholder, a buy-sell clause with no funding behind it is a promise that the surviving shareholder will find several hundred thousand dollars in the year the business has just lost a principal.

Who this fits, and who it does not

It fits a pension member who wants to understand what the plan promises and what it makes conditional, a household ten years from retiring that would rather do the arithmetic now, someone with no pension at all who has never had that said plainly, or an incorporated professional with retained earnings.

It does not fit someone looking for a short-term investment. A participating whole life contract is a long-horizon instrument and the early years are the expensive ones. It does not fit someone who cannot sustain the premium in a difficult year. And it does not fit anyone hoping to be told that a strategy will outperform a market, because that is not a claim this firm makes.

The first meeting

Thirty minutes, online, no cost and no obligation. If you hold a pension, bring the most recent annual statement and the member booklet. Most of the useful conversation is in those two documents, and almost nobody has read the sections on indexing and on what is paid to a survivor.

Frequently asked questions