SAVE TOWARDS. and find out how the GOVERNMENT CAN HELP YOU PAY FOR IT

Transcription

1 HERITAGE EDUCATION FUNDS RESP GUIDE REGISTERED EDUCATION SAVINGS PLAN Over a 40-year period, a university graduate earns $915,840 more than a college graduate and earns on average $1.4 million more than a high school graduate.1 1 Council of Ontario Universities, University Works: 2015 Employment Report SAVE TOWARDS your child s post-secondary EDUCATION and find out how the GOVERNMENT CAN HELP YOU PAY FOR IT

2 2 THE COST RESP GUIDE HOW MUCH WILL IT COST? The estimated cost of a 4-year undergraduate degree from a Canadian university in 2034 could exceed $126, Year of Birth Year of School Entrance 4-Year Program without residence 1 4-Year Program with residence $63,248 $126, $60,591 $122, $58,048 $118, $55,610 $ 115, $53,275 $111, $51,038 $ 108, $48,895 $ 104, $46,842 $101, $44,875 $ 98, $42,991 $ 95, $41,186 $ 92, $39,456 $ 90, $37,800 $ 87, $36,212 $ 84, $34,692 $ 82, $33,235 $ 79, $31,840 $ 77,550 Today s average cost of a 4-Year program beginning in 2015/ $27,994 $ 70,979 $32, /2016 The cost of a 4-year program in 2015/2016 at the University of Toronto is $32,900. This covered basic tuition fees and compulsory incidental fees. 3 Additional costs of living, such as living at home or away from home, transportation costs, purchasing meal plans versus preparing food are not included in the amount listed. 1 These amounts are calculated using the average annual increase of 4.38% in the total cost of tuition and compulsory and/or incidental fees for 4 years of undergraduate studies between and Source: Canadian Centre for Policy Alternatives, Statistics Canada, September The total costs of living expenses and accommodation for the 2013/2014 academic year was approximately $10,000. The average annual increase has been calculated using the average rate of inflation for Canada over the last 25 years of 2.07% and the total of 4 years of living expenses and accommodation has been added to the total cost of 4 years of undergraduate studies. Source: The Globe and Mail, May 2014; 3 Source: University of Toronto website

3 RESP GUIDE ABOUT RESPS 3 ABOUT RESPS AND HERITAGE BENEFITS AN EDUCATION SAVINGS VEHICLE An RESP is an education savings plan that is registered by the federal government, through the Canada Revenue Agency. INCLUDES GOVERNMENT GRANTS The Canada Education Savings Grant ( CESG ) provides up to $7,200 per child 1. The Canada Learning Bond ( CLB ) provides up to $2,000 per child for qualifying families 1. Provincial government grants and incentives are available to qualifying families depending on family net income and/or residency. OFFERS TAX BENEFITS Investment earnings on contributions up to $50,000 are taxsheltered until withdrawn by the student (beneficiary), taxed in the student s tax bracket. OFFERS LOWER RISK INVESTMENTS Subscribers contributions and government grants are conservatively invested in lower risk fixed-income securities such as bonds and GICs that typically earn a competitive risk adjusted return. PROVIDES MORE POTENTIAL INCOME Income (earned in the plans) is pooled, and may be invested in a diversified portfolio of corporate bonds, Canadian equities, US and Canadian Exchange Traded Funds ( ETFs ). The aim of this investment strategy is to increase returns through diversification of products and stock market exposure. INCLUDES ELIGIBLE SCHOOLS Students can attend full-time or part-time programs in Canada or abroad. Eligible institutions include all universities, community colleges, CEGEP 2, private vocational schools, distance education and correspondence courses 1. IF BENEFICIARY DOES NOT PURSUE POST-SECONDARY EDUCATION Subscribers will receive their net contributions after the maturity date. There are many options available if the student does not pursue post-secondary education, including transferring to another child, transferring money 3 to an RRSP, RDSP or withdrawing the income as an accumulated income payment 1. ANYONE CAN START SAVING Parents, grandparents, other family members and friends can all help to save towards a child s post-secondary education. 1 Certain conditions apply. See prospectus for full details. 2 CEGEP means Collège d enseignement général et professionnel. 3 You may also be allowed to withdraw and transfer the accumulated income of up to $50,000 of earnings per subscriber from your RESP to your RRSP or spousal RRSP.

4 4 THE GRANTS RESP GUIDE GOVERNMENT PROGRAMS Today, many parents take advantage of Canadian Government Grants to help fund their child s post-secondary education. CANADA EDUCATION $7,200 SAVINGS GRANT LIFETIME MAXIMUM PER ELIGIBLE CHILD CANADA EDUCATION SAVINGS GRANT (CESG) 1 Paid on first: $2,500 of annual contribution $500 of annual contribution Net family income $44,701 2 or less More than $44,701 2 to $89,401 2 Over $89,401 2 Basic CESG 20% = $500 20% = $500 20% = $500 Additional CESG 20% = $100 10% = $50 nil Annual total 40% = $600 30% = $550 20% = $500 Lifetime maximum $7,200 $7,200 $7,200 $2,000 CANADA LEARNING BOND LIFETIME MAXIMUM PER ELIGIBLE CHILD CANADA LEARNING BOND (CLB) 1 Initial payment when opening the plan $500 Annual CLB payment years 1 15 $100 Lifetime maximum $2,000 1 Certain conditions apply. See prospectus for full details. 2 This amount is indexed each year based on the rate of inflation.

5 RESP GUIDE KEY RESP BENEFITS 5 THE BENEFITS OF STARTING EARLY 1 The EARLIER your child is enrolled in an RESP, the LONGER your savings have time to grow. Start SAVING today and benefit from the POWER OF COMPOUND GROWTH. $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 START EARLY. SAVE OFTEN. STAY INVESTED. $40,000 $30,000 $20,000 $10,000 $0 Newborn Age of child when starting RESP contributions Income earned on RESP contributions CESG Income earned on CESG 1 This hypothetical illustration is based on annual non-insured contributions of $2,500 and exclude fees. The income that would be earned is assumed to be a hypothetical rate of 5.50% gross per annum, compounded monthly, over 18 years.

6 6 KEY RESP BENEFITS RESP GUIDE THE BENEFIT OF GOVERNMENT GRANTS & TAX SHELTERING 1 This is a hypothetical illustration to demonstrate the advantages of tax sheltering and the Canada Education Savings Grant, which are the key benefits of investing in an RESP investment product vs. in a non-resp investment product 1. Over 18 years you could gain $23,000 or MORE! The total value of your investments may increase if you qualify for the additional Canada Education Savings Grant, Canada Learning Bond, and/or province-specific grants and incentives. $91,265 Value Of Investment after 18 Years $68,184 Value Of Investment after 18 Years $23,184 $6,309 $7,200 $32,756 $45,000 $45,000 NON-RESP INVESTMENT PRODUCT (NOT Tax-Sheltered) 5.50% Growth Your total personal contributions over 18 years in a non-resp investment product Compound income earnings on your investment in a non-resp investment product RESP INVESTMENT PRODUCT (Tax-Sheltered) 5.50% Growth Your total personal contributions over 18 years in an RESP investment product Compound income earnings on your investment in an RESP investment product Maximum CESG of $7,200 2 Compound income earnings on CESG 1 This hypothetical illustration is based on annual non-insured contributions of $2,500 and exclude fees. The income that would be earned is assumed to be a hypothetical rate of 5.50% gross per annum, compounded monthly, over 18 years. For the non-resp investment product, an annual individual income of $65,000 is assumed and an Ontario-based tax rate of 24% has been applied to the income earnings. Individual circumstances and actual results may vary. 2 This assumes the basic CESG which is equal to 20% of the total annual contributions to a maximum of $500 per eligible child, per calendar year. Certain conditions apply. See prospectus for full details.

7 RESP GUIDE THE SOLUTION 7 WILL YOUR CHILD DEPEND ON STUDENT LOANS? A $27,994 student loan will result in $49,280 REPAYMENT 1 Including interest! $21,286 $27,994 Cost of post-secondary program in 2015/2016 $27,994 2 RESP $12,420 3 contributions + Income on contributions + Government Grants 4 + Grant income 5 OR Interest $27,994 1 Student Loan LOAN This hypothetical illustration demonstrates the key benefit of investing with an RESP versus obtaining a student loan. You Have Options Who will fund your child s education? $ $ Borrow the money Mortgage your home Pay-as-you-go Let your child earn the money or depend on student loans Withdraw funds from your personal savings, retirement funds or investments Start saving with an RESP The average Canadian student debt load is approximately $27,000 6 It will take a graduate on average 10 years to pay off student loans 6 In alone, more than 400,000 students borrowed money 6 60% of students graduate with some form of debt 6 1 The student loan repayment schedule is based on a 14.5 year timeline where the graduate takes advantage of the 6-month grace period. Interest has been calculated using prime (3%) + 5%. Source: CanLearn Loan Repayment Estimator as of October This example illustrates how much you may need to contribute to an RESP for a newborn child, invested over an 18 year period, to achieve a hypothetical end result of approximately $27,994 required for post-secondary education. This amount includes RESP contributions, the Canada Education Savings Grant (CESG) and income earned thereon. The lifetime maximum for the CESG is $7,200 per child. Certain conditions apply. See prospectus for full details. 3 This amount is calculated as $60 per month for 18 years and excludes fees. 4 Certain conditions apply. See prospectus for full details. 5 Income is calculated as a hypothetical rate of 5.5% growth (net of fees) as interest rates vary for different investment products and over time. 6 Sources: CBC news, March 2014; The Globe and Mail, May 2013; Canadian Centre for Policy Alternatives, September 2013.

8 8 ABOUT HERITAGE RESP GUIDE WHO WE ARE Why choose Heritage as your Registered Education Savings Plan provider? OVER 50Years OF EXPERIENCE Heritage Education Funds is a Canadian owned company and is one of the leading distributors of group Registered Education Saving Plans ( RESPs ) with over 50 years in RESP experience. Our large network of RESP Representatives have been helping families save for their children s post-secondary education since OVER 440,000 BENEFICIARIES Our subscribers include parents, grandparents, family members and family friends across Canada. Together we have empowered over 440,000 students with post-secondary education. $2.42 Billion IN ASSETS Heritage Educational Foundation (the Foundation ) is a not-forprofit Canadian corporation governed by its board of directors. The Foundation has $2.42 billion in assets under management as at October 31, $1.54 Billion IN PAYOUTS 1 As of October 31, 2015, the Foundation has paid out over $1.54 billion to subscribers and beneficiaries since inception. $100 Million PAID OUT IN THE LAST 4 YEARS The Foundation has returned over $100 million a year over the last 4 years, to subscribers and beneficiaries in principal, educational assistance payments and sales charge refunds, exceeding $200 million in 2014 and LOWER RISK INVESTMENTS Subscribers net contributions and government grants are invested in stable, lower risk investments that earn a competitive risk adjusted return. RESP income has more earning potential through investments in a mix of corporate bonds, Canadian equities, US and Canadian Exchange Traded Funds ( ETFs ) that trade on a stock exchange in Canada that have a designated rating 2. 1 These payouts consist of subscribers contributions (less applicable fees), refunds of sales charges, educational assistance payments ( EAPs ) (consisting of the beneficiary s share of pooled income or self-determined income, government grants and income on government grants) and top ups of the EAPs. 2. Certain conditions apply. See prospectus for full details.

9 RESP GUIDE WHO WE WORK WITH 9 WHO WE WORK WITH FOUNDATION AND REGISTRAR Heritage Educational Foundation DEPOSITORY Scotiabank TRUSTEE AND CUSTODIAN RBC Investor Services Trust PORTFOLIO ADVISERS CIBC Wood Gundy Guardian Capital Scotia Institutional Asset Management TD Asset Management Inc. and Yorkville Asset Management Inc. SCHOLARSHIP PLAN DEALER & INVESTMENT FUND MANAGER Heritage Education Funds Inc. INSURANCE PROVIDER Sun Life Assurance Company of Canada EXTERNAL LEGAL COUNSEL McMillan LLP AUDITOR KPMG LLP (Chartered Professional Accountants)

10 10 HERITAGE PORTFOLIO RESP GUIDE HOW IS MY MONEY INVESTED? Heritage offers a smart approach to investing to give you peace of mind: Your contributions and government grants are 100% invested in various lower risk investments that typically earn a competitive risk adjusted return. To increase your returns over the lifetime of the plan, pooled income that is earned may be invested in a mix of equities. Canadian equities US and Canadian ETFs Investment-grade corporate bonds Income Contributions less fees Principal Government Bonds (federal, provincial and municipal) Guaranteed Investment Certificates ( GICs ) Mortgage backed securities and guaranteed mortgages

11 RESP GUIDE HERITAGE PORTFOLIO 11 CURRENT ASSET WEIGHTINGS Heritage Plans, Asset Weighting for the period ending October 31, % 3.9% 3.3% 1.5% 30.2% Sector Allocations % of Market Value Federal Bonds 30.2% Provincial Bonds 25.2% Equities 24.2% Principal Protected Notes 11.7% Bank Deposits / GIC 3.9% Corporate Bonds 3.3% 24.2% 25.2% Short-Term Investments 1.5% THE VALUE OF LONG-TERM SAVINGS Beneficiaries of the Heritage Plans received a 5.32% 2 effective rate of return. 5.32% 2 Effective rate of return over the total life of the plan. 1, 3, 5 and 10-year annual compound returns as at October 31, 2015 are 3.31%, 3.34%, 4.11% and 4.54%, respectively Source: Heritage Educational Foundation 2. The effective rate of return calculated as the sum of all EAPs for the 2012 beneficiary group of the Heritage Plans (ie. for the 2012 maturity year, EAPs paid in 2013, 2014 and 2015), assuming all are paid to the qualified student, the sales charge refund where applicable and the maturity refund divided by the total contribution for a one unit plan for a child under the age of one. Past performance is not indicative of future results.

12 12 THE HERITAGE PLAN RESP RESP GUIDE HOW DOES THE HERITAGE PLAN WORK? 1. Your contributions (less fees) 1 are returned at maturity. 2. Subscribers who selected the scholarship option will have up to 25%, up to 50% or up to 100% of sales charges 2,3 returned at maturity, depending on the scholarship option selected. 3. If you miss contributions and your plan is inactive at maturity, your plan will mature under the self-determined option so that you retain your contributions (less fees) and income. Maturity Enrollment Period Eligibility for CESG Contribution period Delay maturity up to July 31 st prior to the beneficiary s 21 st birthday Select pay-out option within 180 days of the maturity date, but no later than the maturity date. Maturity date may be delayed or advanced by up to 2 years 4 IF YOUR BENEFICIARY DOES NOT PURSUE POST-SECONDARY STUDIES, YOU CAN: 1. Request a refund of contributions less fees at maturity. 2. Change the beneficiary to another beneficiary Withdraw income as an accumulated income payment ( AIP ) 5 as taxable income. 4. Transfer the income to your RRSP or your spousal RRSP Request a rollover of income into an RDSP 4. 1 Please see prospectus for a full list and details of all fees associated with the Heritage Plans. 2 The amount of the sales charges returned to subscribers at maturity under each of the scholarship options 1, 2 or 3 will depend on the amount of funds available in the sales charges refund account. 3 Sales charges are not returned under the self-determined option. 4 Certain conditions apply. See prospectus for full details. 5 Accumulated income may be withdrawn as taxable income by the subscriber less an additional federal tax of 20% (12% federal and 8% provincial for residents of Quebec) or transferred to their RRSP or Spousal RRSP, up to a limit of $50,000 per subscriber (subject to RRSP contribution room).

13 RESP GUIDE THE HERITAGE PLAN RESP 13 EDUCATIONAL ASSISTANCE PAYMENTS (EAPs) SELF-DETERMINED OPTION Typically for students pursuing programs of study of less than 2 years. All plan income and government grants (if applicable) paid to the student. Subject to tax. EAP QUALIFICATION CRITERIA In Canada: a minimum 3 week program of study Outside of Canada:»» Full-time: minimum 3 week program of study at a university or minimum 13 week program of study at all other foreign educational institutions»» Part-time: minimum 13 week program anywhere in the world END 35 YEARS RESP Lifetime Limit SCHOLARSHIP OPTION Provides 3 payment options and is typically for students pursuing 2 to 4 year programs. OPTION 1 One payment in 2 nd year of studies OPTION 2 Payment in 2 nd and 3 rd year of studies OPTION 3 Payment in 2 nd, 3 rd, and 4 th year of studies 100% income, grant and grant income with EAP Up to 25% of sales charges returned at maturity 1/2 income, grant and grant income with each EAP Up to 50% of sales charges returned at maturity 1/3 income, grant and grant income with each EAP Up to 100% of sales charges returned at maturity Each EAP consists of a portion of government grants, income earned on government grants, income earned on contributions (less fees) and a non-discretionary payment to enhance an EAP 1. 1 This is a payment (non-discretionary) made to beneficiaries within a maturing beneficiary group, which represents: i) the amount remaining from plans that terminated and/or transferred out prior to their maturity date, less applicable refunds of sales charges (pre-maturity attrition) and/or ii) any EAPs that were not paid to beneficiaries due to ineligibility (post-maturity attrition). Please see prospectus for full details on pre- and post-maturity attrition.

14 14 KEEP IN TOUCH RESP GUIDE IMPORTANCE OF TWO WAY COMMUNICATION An RESP can be a long term commitment and, as in any relationship, it is important to communicate and keep each other informed. Heritage provides you with various documents by mail or electronically to keep you well informed about your plan: A WELCOME PACKAGE includes a trade confirmation and is issued upon enrollment. Your ANNUAL STATEMENT OF ACCOUNT is provided by the end of March. It covers the following key areas: Annual and lifetime activity of the plan Plan review and illustration of benefits Requesting delivery of plan documentation The Heritage Educational Foundation ANNUAL REPORT is available upon request by March 30 th. MANAGEMENT REPORT OF FUND PERFORMANCE AND AUDITED FINANCIAL STATEMENTS are available upon request by March 30 th. INTERIM FINANCIAL STATEMENTS are available upon request by August 31 st. GO BEYOND RECYCLING TO KEEP OUR PLANET GREEN. If you re looking for more ways to conserve the environment and save yourself time and money, receiving and viewing your documentation online can really make a difference. You can always access your Statement of Account and all annual publications at HeritageRESP.com. TAKE ACTION AND STAY INFORMED ABOUT YOUR INVESTMENT! Keep Heritage up to date should your personal and/or financial information change. Stay informed and ask questions about your plan. Stay on top of your investments by reviewing all reports, statements and materials we send to you.

15 RESP GUIDE NATIONWIDE PROGRAMS 15 LET US KNOW HOW ELSE WE CAN HELP YOU Our affiliated companies deliver great value to Heritage subscribers and beneficiaries through nationwide referral programs. HERITAGE FINANCIAL GROUP LIMITED 1 HERITAGE EDUCATIONAL FOUNDATION PORTFOLIO MANAGEMENT SERVICES REGISTERED EDUCATION SAVINGS PLANS The Heritage Plans and the Impression Plan MORTGAGE FINANCING SOLUTIONS Heritage Education Funds Inc. provides RESP solutions to those wishing to save for a child s future postsecondary education. Yorkville Asset Management Inc. provides investment solutions to high net-worth private client investors to Ontario, British Columbia and Alberta residents only. Heritage Lending Group Ltd. provides various mortgage solutions such as first or second residential mortgages and Home Equity Line of Credit ( HELOC ). 1 Independently owned and operated, FSCO # A member of the Heritage family of companies.

16 TESTIMONIALS When I was about one year old, my parents decided to invest the money they received from their family allowance into an RESP. I was not aware at that early age of the efforts my parents had to make to put money aside for my future, despite their modest income. Thanks to all their efforts, I will graduate this spring and I will be able to sleep without a care because I will have no student loan debt. Thank you Mom and Dad. VALERIE MICHAUD, Rivière-du-Loup, PQ My parents thought well ahead in planning to pay for my post-secondary education. I am going to make my parents proud by making effective use of their money and having a great career (my goal is to become a pharmacist). I am very lucky to be a Heritage beneficiary. SHRADDHA PATEL, Brampton, ON Growing up in a low-income family, I was raised to understand the value of money and work towards my own goals. Because of my Heritage RESP, I am halfway towards earning my degree to become a registered nurse. I cannot thank my parents enough for thinking about my education early in my life. CLAIRE HORTON, Fort Langley, BC Thanks to Heritage and my grandparents, I am able to pursue my professional dreams and volunteer my time to help great causes. I am pursuing medicine through a Bachelor of Science Major in Biology and I couldn t have done it without my RESP! JESSICA SCHNERCH, Winnipeg, MB All testimonials are, printed with permission, unsolicited and have not been compensated for their contribution. FOR MORE INFORMATION CONTACT: Heritage Education Funds Inc Sheppard Ave. E., Suite 700,Toronto, ON M2J 5B4 Phone: Toll-free: Fax: CustomerCare@HeritageRESP.com Heritage RESPs are scholarship plans issued under the sponsorship of the Heritage Educational Foundation. Units of Heritage RESPs are offered by prospectus only, a copy of which can be obtained from the registered dealer, Heritage Education Funds Inc. at HeritageRESP.com. These securities may not be appropriate for all investors and are subject to certain risk factors. See the prospectus for details. JOIN THE CONVERSATION Take a picture of the RESP Guide presented to you, and share it on social media with the #ShareHeritage hashtag to enter for a chance to WIN* a $100 Gift Card. Twitter.com/ HeritageFunds HeritageRESP.com Facebook.com/ HeritageFunds Heritage Education Funds (Heritage) is the trade name of Heritage Education Funds Inc. * No purchase necessary. Contest closes on December 31, 2016, with one winner selected quarterly. Open to age of majority residents of Canada. Skill-testing question required. Odds of winning depend on the number of eligible entries received. To enter or for full contest rules, visit: HeritageRESP.com/Join-The-Convo-Contest-Rules 2015, Heritage Education Funds Inc HST-ENG/12.15