Transamerica Life Canada Segregated Fund Lineup Changes

Transcription

1 Transamerica Life Canada Segregated Fund Lineup Changes FAQ and related information Transamerica regularly reviews the investment offerings in its segregated funds contracts. As a result of our most recent review, we will be making changes to the segregated funds that will result in a streamlined and more focused investment offering. This document contains answers to frequently asked questions and specific information related to the 2013 Transamerica Life Canada (TLC) segregated fund changes. Contents TLC SEGREGATED FUND CHANGES AND INFORMATION... 2 COMMISSIONS... 5 POLICYHOLDER PACKAGE... 7 OTHER DOCUMENTATION/REPORT/COMMUNICATION... 8 TAX IMPLICATIONS FOR NON-REGISTERED POLICIES FEES OPERATION NOTES FOR ADVISOR USE ONLY

2 TLC SEGREGATED FUND CHANGES AND INFORMATION Which segregated fund contracts are affected by the changes? GROWSafe 94, GROWSafe 97, GROWSafe 99 and GROWSafe 2 (GS2). Notes: GROWSafe 94, 97 and 99 are referred as GROWSafe (GS). On the client statement, the following wording is used to designate the contract type: GROWSafe 1 GS194, GROWSafe 1 GS197, GROWSafe 1 GS199 and GROWSafe 11 GS299 NN segregated fund contracts (e.g., IMS), TGIF, Five for Life (5FL), imaxxgif, TIP, BIG, Seg 1(72), Agent s Plan, imaxx Fund mutual funds and the Alliance Segregated Fund (i.e., CI GIF, BPI Legacy I & II, TD GIF II, AIC Segregated Funds) contracts are not affected by the changes. What are the segregated fund changes, and do policyholders have any special rights? For the Canadian Short-Term Bond Fund: fund name change only. For all other funds: termination of funds and automatic reallocation of assets to new funds. The new funds are a class of certain segregated funds currently available in TGIF. Funds changes at a glance: Current fund lineup and fund names: funds that will be terminated New funds and fund names Investment objective 1 Canadian Bond Fund Transamerica Canadian Bond GIF GS/GS2 100/100 Similar 2 Canadian Balanced Fund Transamerica Canadian Balanced GIF GS/GS2 100/100 Similar 3 Transamerica imaxx Canadian Fixed Pay Fund Transamerica Canadian Fixed Pay GIF GS/GS2 100/100 Similar 4 Canadian Equity Fund Transamerica Canadian Equity GIF GS/GS2 100/100 Similar 5 Global Growth Fund Transamerica Global Growth GIF GS/GS2 100/100 Similar 6 International Balanced Fund Transamerica Canadian Balanced GIF GS/GS2 100/100 Not similar 7 TOP Conservative GIP Transamerica Canadian Balanced GIF GS/GS2 100/100 Not similar 8 TOP Balanced GIP Transamerica Canadian Balanced GIF GS/GS2 100/100 Not similar 9 TOP Growth GIP Transamerica Global Growth GIF GS/GS2 100/100 Not similar 10 U.S. Balanced Fund Transamerica Canadian Balanced GIF GS/GS2 100/100 Not similar 11 U.S. Bond Fund Transamerica Canadian Bond GIF GS/GS2 100/100 Not similar 12 U.S. Equity Fund Transamerica Canadian Equity GIF GS/GS2 100/100 Not similar Whether or not the new fund is deemed to have a similar investment objective to the corresponding terminating fund, Transamerica will facilitate both transfers and withdrawals without fees and charges from terminating funds. 2

3 TLC SEGREGATED FUND CHANGES AND INFORMATION Why is Transamerica terminating these funds? Eliminating redundancy and potentially reducing costs to policyholders Overall, with each fund termination, policyholders of a terminating fund will become part of a larger corresponding new fund class. Policyholders of the funds will potentially benefit by having administrative and operating costs spread across a greater pool of assets. In addition, each new fund that is considered to have a substantially similar investment objective as its corresponding terminating fund would generally attract the same type of policyholders. As a result, each such fund termination will contribute towards reducing redundancy across the Transamerica segregated fund lineup, while policyholders will continue to hold funds that reflect their risk and investment preferences. What is the total number of segregated funds available by contract before and after the changes? Number of funds available GROWSafe 94, 97, 99 and GROWSafe 2 Prior to the fund change date 13 After the fund change date 6 What is the final list of funds that will be available after the fund change date? Transamerica Canadian Short Term Bond GIF GS/GS2 100/100 Transamerica Canadian Bond GIF GS/GS2 100/100 Transamerica Canadian Balanced GIF GS/GS2 100/100 Transamerica Canadian Fixed Pay GIF GS/GS2 100/100 Transamerica Canadian Equity GIF GS/GS2 100/100 Transamerica Global Growth GIF GS/GS2 100/100 When will the changes to the GROWSafe and GROWSafe 2 segregated fund investment lineup occur? Changes will occur on or about May 10,

4 TLC SEGREGATED FUND CHANGES AND INFORMATION Are the changes affecting any of the universal life (UL) contracts? No. GROWSafe and GROWSafe 2 segregated fund are not available in UL. How did Transamerica choose the new funds? Various criteria were considered when choosing the new funds and determining which would correspond to each of the terminating funds. Where the new fund has similar investment objectives, this was the main factor. Where the investment objective was not similar, the main factor was the fund investment category, e.g., equity, balanced or bond. Will the management of the TOPs portfolio be moved to CI Investment Inc. (the same approach as for the TOPs in TGIF, 5FL, imaxxgif and TIP)? No. TOP Conservative GIP, TOP Balanced GIP and TOP Growth GIP in GROWSafe and GROWSafe 2 will be terminated and reallocated to funds that are managed by Aegon Capital Management (ACM). Will the new funds and the new name for the Canadian Short-Term Bond Fund have the same fund name structure as the one that was introduced in fall 2012? Yes. In order to easily identify the funds that belong to the contract, the following fund name structure will be used: Transamerica + fund name + GIF (Class 2* if applicable) + contract name + guarantee level. *Class 2 introduced in November 2008 is being maintained. Example: Transamerica Canadian Bond GIF Class 2 GS94 100/100 Transamerica Canadian Bond GIF Class 2 GS97 100/100 Transamerica Canadian Bond GIF GS99 100/100 Transamerica Canadian Bond GIF GS2 100/100 4

5 COMMISSIONS Do any of the changes affect commissions? Yes. Transamerica is stopping the special program that was put in place in April 2010 for GROWSafe 2 that doubled DSC trailer compensation. Why is Transamerica stopping the special program for the GROWSafe 2 DSC trailer compensation? In January 2012, we announced a shift in our strategic focus to our life insurance products. Offering a special compensation program for one segregated fund contract is not in line with our strategic focus. The revised DSC trailer that will be introduced on May 10, 2013, is in line with the DSC trailer that is currently being paid on some other Transamerica segregated funds. What is the change to the GROWSafe 2 DSC trailer commissions? Effective May 10, 2013, the commission structure will be as follows (regardless of the age of the DSC units): 0.375% of the fund value per year. Please review the document entitled Addendum to Transamerica Compensation Guide for Advisors (DCC1376 3/13) for details. DSC No load Trailer commissions GROWSafe 2 DSC trailer for GROWSafe 2, effective May 10, 2013: 0.375% of the fund value per year No changes GROWSafe 94, 97, 99 No changes No changes Deposit commissions GROWSafe 94, 97, 99 and GROWSafe 2 No changes No changes Notes: A trailer is also known as a service fee. No load is also known as Low Load Sales Charges (LSC), and in some contracts is also referred to as Fee Category B. Deferred Sales Charges (DSC), in some contracts, are also referred to as Fee Category A. GROWSafe 94, 97 and 99 deposit commission and trailers: there is no change in the commission structure. The commission structure will follow the current commission structure. GROWSafe 2 DSC deposit commission, no load deposit commission and no load trailers: there is no change in the commission structure. The commission structure will follow the current commission structure. 5

6 COMMISSIONS Does the new trailer apply to all DSC funds? Yes. The new GROWSafe 2 DSC trailer commission is applicable to all funds available under the GROWSafe 2 contract. If the trailer commission is paid on a policy anniversary basis, and the policy anniversary date falls after May 10, 2013, will an exception be allowed? No. The new GROWSafe 2 DSC trailer commission is effective May 10, There are no exceptions. The trailer that is paid is determined by the holdings on the anniversary date only. If the trailer commission is on a calendar-quarter basis, will the new commission be applicable at the end of June 2013? Yes. The new GROWSafe 2 DSC trailer is effective on May 10, and the trailer is prorated daily. 6

7 POLICYHOLDER PACKAGE Will the policyholder package be sent to all affected policyholders? Yes. Policyholders need to be informed of the changes that are happening to their segregated fund lineup. When will policyholders be notified of the changes? Yes. Policyholders packages need will to be mailed informed out of beginning the changes on March that are 12, happening to their segregated fund lineup. What is included in the policyholder package? Yes. The package Policyholders includes need to be informed of the changes that are happening to their segregated fund lineup. policyholder letter Schedule A: a detailed list of changes affecting each contract Schedule B: information on policyholders options Is the policyholder package the same for all segregated fund product/contracts? Yes. No; however, Policyholders most need packages to be are informed the same. of the Please changes refer that to the are following happening table. to their segregated fund lineup. GROWSafe 94, 97, 99 and GROWSafe 2 Policyholder letter Schedule A Schedule B (options) The letter is the same for all contracts. Schedule A is not the same for all contracts. It is based on the contract. There are four versions of schedule A: GS94, GS97, GS99 and GS2 Schedule B is the same for all contracts. 7

8 POLICYHOLDER PACKAGE Where can I find an electronic sample of the client communications? Yes. Please Policyholders visit need to be informed to find of the a copy changes of the that policyholder are happening communications. to their segregated fund lineup. What are the policyholders required to do? Yes. Policyholders should need read to their be informed package of carefully the changes and review that are their happening options, to as their detailed segregated in Schedule fund B, lineup. with their advisor. OTHER DOCUMENTATION/REPORT/COMMUNICATION Where can I find the investment objectives of the funds that will be available after the fund change date? Please visit for a list of available funds and their investment objectives. Where can I find an electronic copy of the fund code mapping for the terminated funds (a list of the funds that will be terminated and where the assets will be reallocated)? Please visit to review Schedule A for each contract. As noted above, there are four versions of Schedule A. 8

9 OTHER DOCUMENTATION/REPORT/COMMUNICATION Can I obtain a list of my clients who are affected by these changes? Yes. No specific Policyholders list is available. need to be To obtain informed more of the information, changes that please are use happening FUNDcom to their or webcappow. segregated fund On webcappow, lineup. you will be able to see the fund family your clients are invested in, and this will indicate the changes to which your client s policies will be subject. Which Fund Fact documents are being updated or created? Yes. At Policyholders the time of the need policyholder to be informed mailing, of the following changes that Fund are Fact happening pages will to be their created: segregated fund lineup. o Transamerica Canadian Bond GIF GS/GS2 100/100 o Transamerica Canadian Balanced GIF GS/GS2 100/100 o Transamerica Canadian Fixed Pay GIF GS/GS2 100/100 o Transamerica Canadian Equity GIF GS/GS2 100/100 o Transamerica Global Growth GIF GS/GS2 100/100 At the time of the fund change date, the following Fund Fact document will be updated: o Transamerica Canadian Short Term Bond GIF GS/GS2 100/100 Will there be a financial statement for the funds that are being terminated? Fund financial statements are not required for segregated funds that are terminated prior to the financial statement date. Financial statements could still be produced, but it would be at Transamerica s discretion. Notes: Separate financial statements for GROWSafe and GROWSafe 2 will no longer exist. The financial statement that will now be produced will combine segregated funds under the following contracts: TGIF, Five for Life (5FL), imaxxgif, TIP, BIG, Seg 1(72), Agent s Plan, GROWSafe and GROWSafe 2. For the December 2012 financial statement, the Canadian Short-Term Bond Fund in GS/GS2 will be listed under the financial statement for TGIF, 5FL, TIP, imaxxgif, BIG, Seg 1(72) and Agent s Plan. 9

10 TAX IMPLICATIONS FOR NON-REGISTERED POLICIES Are there any tax impacts for policyholders as a result of these fund changes? Yes, for the following change: termination of a fund and the automatic reallocation of assets to a new fund. The automatic reallocation of fund units and transfers and/or withdrawals from non-registered policies is a taxable event, meaning a capital gain or loss will be realized by the policyholder. These will be reported on the 2013 T3 slip (or T3/R16 slip for Quebec residents). The disposition of the underlying funds will create fund capital gains or losses that will be reported to non-registered policyholders as a notional distribution. These will be reported on the 2013 T3 slip (or T3/R16 slip for Quebec residents). Notes: Segregated fund termination and reallocation cannot be done on a tax-deferred basis. There is no tax impact for registered policyholders of the terminating funds as a result of these fund changes. The Canadian Short-Term Bond Fund name change is not a taxable event. FEES Policyholder s redemption fees Can the policyholder choose to redeem prior to the fund change date? If yes, are there any redemption fees for the policyholders? Yes, policyholders can choose to redeem prior to the fund change date. For the funds that are being terminated, no redemption fees (e.g., DSC) will be charged for withdrawals made between March 12, 2013, and May 10, This applies only to fund units acquired prior to March 12, 2013, or units acquired pursuant to an existing PAC agreement until May 10, Redemption fees will be charged on all units surrendered from the Canadian Short-Term Bond Fund and on units surrendered from any other fund where there was a transfer from this fund after the notice of fund changes. 10

11 FEES Fund fees Is there an impact on management fees and MERs? Type of changes Termination of funds and the automatic reallocation of assets to new funds Fund name change (Canadian Short-Term Bond Fund) Is there an impact on management fees and estimated MERs? See details in the table below. Estimated MERs for the new funds can be found on the new Fund Fact pages. No impact. Fees for the continuing fund will stay as they are. Details are as follows: Current fund lineup and fund names: funds that will be terminated New funds and fund names Management fees and estimated MERs of the new fund 1 Canadian Bond Fund Transamerica Canadian Bond GIF GS/GS2 100/100 Same fees as the fund that is being terminated 2 Canadian Balanced Fund Transamerica Canadian Balanced GIF GS/GS2 100/100 Same fees as the fund that is being terminated 3 Transamerica Imaxx Canadian Fixed Pay Transamerica Canadian Fixed Pay GIF GS/GS2 100/100 Same fees as the fund that is being terminated 4 Canadian Equity Fund Transamerica Canadian Equity GIF GS/GS2 100/100 Same fees as the fund that is being terminated 5 Global Growth Fund Transamerica Global Growth GIF GS/GS2 100/100 Same fees as the fund that is being terminated 6 International Balanced Fund Transamerica Canadian Balanced GIF GS/GS2 100/100 Different. The fees will be the ones for the new Transamerica Canadian Balanced 7 U.S. Balanced Fund GIF GS/GS2 100/100 8 TOP Conservative GIP 9 TOP Balanced GIP 10 TOP Growth GIP Transamerica Global Growth GIF GS/GS2 100/100 Different. The fees will be the ones for the new Transamerica Global Growth GIF GS/GS2 100/ U.S. Bond Fund Transamerica Canadian Bond GIF GS/GS2 100/100 Different. The fees will be the ones for the new Transamerica Canadian Bond GIF GS/GS2 100/ U.S. Equity Fund Transamerica Canadian Equity GIF GS/GS2 100/100 Different. The fees will be the ones for the new Transamerica Canadian Equity GIF GS/GS2 100/100 For information on the estimated MERs (with taxes) for the new funds, please review the Fund Fact pages on the Transamerica website. 11

12 OPERATION NOTES Will the change impact fund codes? Yes. New funds will have new fund codes. Please visit fund changes to review Schedule A for each contract. There are four versions of Schedule A. The Canadian Short Term Bond Fund will keep its current fund codes. Will a confirmation of the transaction be mailed out? Yes, a transaction confirmation will be mailed to policyholders for both automatic termination and reallocation, as well as for requested transactions. How will the termination of a fund and the automatic reallocation of assets to a new fund be displayed on the policyholder s December 31, 2013, statement and on the confirmation of the transaction? The transaction will be displayed as a regular fund switch. Are there any restrictions related to FundSERV or wire order transactions? Yes, restrictions similar to those on direct (paper) trades (e.g., closed to deposits, withdrawals, fund transfers) are applicable to FundSERV trades. Transamerica will not accept any FundSERV wire trades after 4:00 p.m. ET on the Tuesday preceding the fund termination. For cut-off dates for direct trades, please refer to Schedule B. Schedule B can be found on the Transamerica website at fund changes What is the administrative procedure for order submissions? A summary of the changes will be sent to the distributor s back office outlining the changes and providing contact information. 12

13 OPERATION NOTES If there is an assignment on the terminated fund, will it be transferred to the new fund? A loan assignment will remain on the policy until discharged by the loan provider, regardless of the fund changes. Any requests to redeem without sale charges on a loan policy will require permission from the loan provider. Note: Loan assignments are at the policy level (and not at the fund level). Transamerica will inform the loan providers of the fund changes. Any amount that is allocated to a segregated fund is invested at the risk of the contract holder(s) and may increase or decrease in value. AEGON and the AEGON logo are registered trademarks of AEGON N.V. AEGON Canada ULC and its affiliated companies are licensed to use such marks. Transamerica and the pyramid design are registered trademarks of Transamerica Corporation. Transamerica Life Canada is licensed to use such marks. IP1523 3/13 13