Information Session Group Savings and Retirement Plan. Vincent Millar Financial education specialist

Transcription

1 Information Session Group Savings and Retirement Plan Vincent Millar Financial education specialist

2 Today s agenda Context Summary of your plan details Let s talk about retirement Investment options Enrol in your plan My Client Space 2

3 Context Good news! Your employer is offering this plan to you to help you save for your retirement. By participating in the McGill simplified pension plan, you benefit from the following: Quality of service Easy-to-use Web tools Quality of investment options Competitive pricing 3

4 Who we are ia Financial Group is one of the biggest and most reputed insurance and financial services provider in Canada Over 5,700 employees Strong presence coast to coast 125 years in business 4

5 Details of your plan

6 Summary of your Plan Details CRITERIA Participation Eligibility Employee regular contributions Employer contributions SPP Voluntary Starting on January 1st of the year following the one in which you attained one of the following criteria: Earned income of 35 % of the YMPE (2017: $19,355), or worked at least 700 hours in 2017 for 2018 You remain eligible as long as the waiting time between your various employment periods does not go beyond 160 days Based on employee s annual salary and current YMPE level Additional voluntary contributions are allowed See table on the next slide Based on age brackets: See table on the next slide 6

7 Summary of your Plan Details CRITERIA Vesting SPP Immediate Locking-in Yes, for basic employee contributions and employer contributions No, for employee additional voluntary contributions Contribution Limit 18 % of year s pensionable earnings, max $26,500 for 2018 Withdrawal policy Allowed, for non-locked-in additional voluntary contributions only Transactional fee of $50 per withdrawal, and a minimum tax withholding as determined by the CRA 7 Please refer to your plan summary document for a complete overview of your plan rules.

8 Immediate Tax Savings through Payroll Deductions No contribution Contribution Gross pay $1,000 $1,000 Contribution ($0) ($100) Less tax (30%) ($300) ($270) + $30 After tax pay $700 $630 -$70 8 $100 contribution only costs you $70

9 Contribution formula Employee s contribution Age Income below $55,900 Income above $55, or less 3.2% 5.0% 40 to % 7.0% 50 to % 8.0% McGill s contribution Age Income below $55,900 Income above $55, or less 3.2% 5.0% 40 to % 7.5% 50 to % 10.0% 9

10 Participating in the plan: the right choice! Example of Paula, 45, income of $60, Employee s contribution Income below $55, % of $55,900 $2, Employer s contribution 5.7% of $55,900 $3, Total annual savings Assumptions: tax rate according to salary. + $3, (employee) ($2, net) + $3, (employer) $6, Income above $55, % of $4,100 $ % of $4,100 $307.50

11 Take advantage! How your savings could grow over time: Paula s savings over time Savings after 1 year $3, (employee) + $3, (employer) $6, Savings after 5 years $36, Savings after 10 years $81, Savings after 20 years $202, This example is based on a net rate of return of 4%. This illustration provides an estimate using the assumptions noted above and does not constitute a guarantee

12 What if I leave before retirement age? Keep your assets with ia Financial Group Tax-Free Transfer to personal plan Columbia College RRSP Tax-Free Transfer to plan of new employer (if allowed) Cash Settlement if applicable (withholding tax, added to income) 12

13 Let s talk about retirement!

14 Retirement savings: Does it matter to me? Possible reasons to have a limited interest in this subject: 1. It is not my top priority (family, job, etc.) 2. Takes away money nowfor something that seems so far away 3. Limited knowledge on the subject 4. Other reason? 14 However, retirement savings is an unavoidable subject, no matterourageor respective interests!

15 Why we should save for retirement? 1. $$ from public plans will NOT be enough QPP $1,134 per month OAS $586 per month $20,640 per year Maximum benefits payable at 65, in To save taxes now and pay potentially less taxes at retirement Registered retirement contributions = income tax reduction 3. To benefit from your employer contributions You contribute + your employer contributes 15

16 How much retirement income will be enough? Industry Rule of Thumb 70% of your income before retiring For example: Before retiring: $50,000 70% of $50,000 = $35,000 Remember: Less expenses at retirement Income from government plans Does this amount make sense to you? 16

17 Is this a realistic goal for you? Try the Retirement Simulator (accessible on My Client Space) to: Find out if you are saving enough Set a goal for retirement (age and replacement ratio) Consider suggestions to your savings pattern (if you re not in line with your goal) 17

18 Investment Options

19 Understanding the basics of investments In general, for your retirement savings, there are 4 distinct types of investment categories. LESS risk MORE risk Income Funds Canadian Equity Funds Foreign Equity Funds Alternative/ Specialty Funds Diversifying your investments is important! Have a little bit of everything! 19

20 One destination, two choices of itinerary Simplified mode Advanced mode Choose an Attitude Portfolio and let us manage your investments Make your own selections from a wide range of investment options 20

21 Simplified mode: ATTITUDE portfolios A simplified & diversified investment solution These portfolios are deemed Life Cycle : The level of risk in your investments automatically reduces gradually, as you approach retirement. 21

22 Simplified mode: ATTITUDE portfolios A simplified & diversified investment solution Because we all have different risk tolerance, we have five paths of investment in which you can choose from. Here are two examples: Terry, 23 Paula, 45 22

23 Paula s Portfolio Details Balanced Example: Paula, 45 23

24 24 Advanced Mode: Pick & choose your own funds

25 Long-term impact of Management Fees Management fees The cost to manage your investment can make a difference! Annual contribution Years of contribution Balance after 20 years 1.06% $202, % $173, %* $6, % $6, * Average management fees of Bank This example is based on an annual earning income of $60,000, and gross rate of return of 5% (before fees). It is for illustration purposes only $134,200 Cotisation totale $ Total savings of $28,772

26 Enrol in your Plan

27 Easy online enrolment! ia.ca/enrolnow All-in-one process: 1. Personal information 2. Beneficiary designation 3. Investor profile 4. Investment choice 5. Contribution rate (if applicable) 6. Setup of Client Space Get started at: ia.ca/enrolnow 27

28 28 General information

29 29 Designate a beneficiary

30 30 Complete your investor profile

31 Choose your investments Are you looking for a simple investment solution that will manage your funds for you? YES? All you have to do is select the suggested profile After completing the questionnaire, an investor profile will be suggested to you 31

32 Choose your investments (continued ) Are you looking for a simple investment solution that will manage your funds for you? NO? You can build your own portfolio 32

33 33 Confirm your information

34 My Client Space

35 35 My Client Space ia.ca/myaccount

36 Manage your account Modify your investment instructions Consult the details of your account Designate your beneficiaries 36 Complete your investor profile

37 37 Modify Your Investments

38 38 Beneficiary Designation

39 Program Benefits - Summary Employer contributions Much lower investment fees vs investing individually Convenience of payroll deductions Variety of quality investment options My Client Space web access 24/7 39

40 Need assistance? Contact our ia Client Service Representatives. They will help you get back on track in no time. You can reach them by phone or by (Monday to Friday, 8 AM to 8 PM ET) pension@ia.ca 40

41 Thank you for your time! Any questions?