my money for life TM REMOVE THE RISK FROM YOUR RETIREMENT INVESTMENTS WITH A LIFETIME ANNUAL INCOME GUARANTEE

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1 my money for life TM REMOVE THE RISK FROM YOUR RETIREMENT INVESTMENTS WITH A LIFETIME ANNUAL INCOME GUARANTEE

2 WHAT IS my money for life? HELPING YOU MANAGE YOUR RETIREMENT INCOME RISKS WITHDRAWING MONEY FROM my money for life page 2 page 4 page 8 my money for life IN ACTION MEMBER STORIES ANSWERS TO YOUR TOP 10 QUESTIONS page 9 page 13

3 my money for life? Insure your retirement income for life It s no surprise that when the markets fluctuate, you may feel uncertain about several aspects of your retirement: Will I outlive my savings? Will market downturns affect my retirement lifestyle and level of retirement income? How will inflation affect my retirement lifestyle? Some things in life are worth being sure about. Now you can achieve certainty when it comes to your retirement income, with an innovative guaranteed income solution designed to address your retirement concerns my money for life. SUN LIFE FINANCIAL my money for life 1

4 what is my money for life? Certainty and security and the potential for more my money for life is a great way to ensure a guaranteed income stream for life while still maintaining the potential to capture increases in the market value of your investments. It s a revolutionary concept that works like insurance coverage. It s protection for your group plan investments, giving you an annual income guarantee in retirement that will never decline because of market fluctuations and you ll continue to benefit from investment returns that grow your assets. my money for life works seamlessly with the group plan investments that you hold in a Registered Retirement Savings Plan (RRSP), Defined Contribution Pension Plan (DCPP) or Deferred Profit Sharing Plan (DPSP), and Registered Income Plans. You can apply the guarantee to all of your savings, or just some. The choice is yours! A SIMPLE GUARANTEE THAT S EASY TO ADD TO YOUR GROUP PLAN INVESTMENTS It s easy to add my money for life to some or all of your group plan savings. Just identify the registered savings you d like to have guaranteed, then add my money for life. This initial contribution plus any subsequent contributions you make to my money for life makes up what s known as your Benefit Base. Your annual income guarantee is equal to up to 5% of your Benefit Base. So if your Benefit Base is $100,000, you re entitled to an annual income guarantee of $5,000 each year, for your life, starting at age 65. Early retirement and spousal income options are available, with a reduced annual income guarantee. 2 SUN LIFE FINANCIAL my money for life

5 ONE WEB VISIT OR PHONE CALL IS ALL IT TAKES Adding my money for life to your group plan savings is simple just visit Sun Life Financial s Plan Member Services website at or call Sun Life Financial s Customer Care Centre at , any business day from 8 A.M. to 8 P.M. ET. MANY OTHER GREAT FEATURES Take a look at the other my money for life features that can provide the peace of mind you re looking for when it comes to your retirement. You can add my money for life at any time between ages 45 and 75. MORE FLEXIBILITY Early retirement option You can start receiving annual income guarantee payments as early as age 60. Spousal income option The spousal income option ensures that, on your death, your annual income guarantee payments continue to your surviving spouse for your spouse s lifetime. Feature sheets and the Up Close: my money for life document contain full details about these options. TAKE NOTE: SEE EXAMPLES OF my money for life IN ACTION The member stories that start on page 9 provide you with detailed examples of how my money for life works in different situations. TAKE NOTE: BENEFIT FROM LOWER FEES In a group plan, you can benefit from an income guarantee with lower fees, as compared to similar products available to you as an individual investor. CAPTURE MARKET GAINS WITH RESETS Your Benefit Base will be reset automatically every three years on your birthday to capture any increase in market value. If your market value is less than your Benefit Base, no adjustment will be made. If the market value is higher, your Benefit Base will increase automatically to this amount. A higher Benefit Base means a higher annual income guarantee. KEEP THE SAME INVESTMENTS When you insure your assets with my money for life, you ll be able to keep most, if not all, of your existing group plan investment options. The only asset mix requirement is that the investment instructions you provide must invest at least 40% in fixed income investments. We ll automatically rebalance your account each month to maintain your investment instructions. LEAVE A LEGACY Any remaining market value of the assets covered by my money for life at the time of your death or your spouse s death if you elected the spousal income option and your spouse survives you will be paid to your or your spouse s named beneficiary, or estate at that time, subject to any requirements under applicable legislation. KEEP YOUR GUARANTEE EVEN IF YOU LEAVE To maintain the my money for life guarantee when you transfer your assets out of your current group plan, you must transfer your my money for life assets to a Sun Life Financial arrangement for former group plan members: the Group Choices Plan, if you are in the savings phase, or the Sun Life Financial Group Retirement Income Plan, if you are eligible to start receiving your annual income guarantee payments. Fund management fees and fund options in these arrangements may vary from those in your current group plan. TOP UP TO REGISTERED RETIREMENT INCOME MINIMUM Once retired, if you hold your my money for life assets in a Registered Retirement Income Fund (RRIF), Life Income Fund (LIF), Locked-in Retirement Income Fund (LRIF), Prescribed Retirement Income Fund (PRIF), or Restricted Life Income Fund (RLIF), and the minimum amount you re required to withdraw is greater than the annual income guarantee amount under my money for life, you ll be able to withdraw this higher amount without any decrease to your Benefit Base. PAY FOR THE AMOUNT THAT S GUARANTEED The monthly insurance fee for my money for life is transparent and is charged separately from fund management fees. The insurance fee varies by asset class and is based on your Benefit Base, not the market value of your investments. SUN LIFE FINANCIAL my money for life 3

6 retirement income risks Helping you manage your retirement income risks In mid- to late-career years, there are three significant risks that could impact your retirement income and retirement lifestyle. my money for life can help you manage all three of these risks. RISK 1 LONGEVITY RISK RISK 2 MARKET RISK RISK 3 INFLATION RISK With longer life expectancies, you run the risk of outliving your savings. Market declines just before or after retirement can significantly reduce the money available to you in retirement. Over time, inflation will reduce the buying power of your retirement income dollars. 4 SUN LIFE FINANCIAL my money for life

7 RISK 1 LONGEVITY RISK The longer you live, the greater your chances of outliving your money. And life expectancy has never been higher. How high? Here s a question for you. Let s say a husband and wife, both age 65, are in good health. What are the chances that at least one of them will live into their 90s? It s higher than you may think. There s a 50% chance that one of them will live to age 92, and there s a 25% chance one of them will live to age 97. Even for individual Canadians who are age 65, the average life expectancy is age 84 [Stats Canada, The Daily, Sept. 27, 2004]. And that s just the average! Despite the strong possibility of living into your 80s or 90s, many people underestimate their lifespan and risk outliving their assets. With your health and comfort at stake, it s not a risk worth taking especially as medical advances continue to extend life expectancies even further. my money for life provides a lifetime annual income guarantee no matter how markets perform or how long you live. With my money for life, you never have to worry about outliving your money. RISK 2 MARKET RISK When you are nearing retirement, market volatility can pose a significant threat to your retirement savings, since you don t have many years to recoup any losses that may occur. A sizeable market downturn as you get closer to retirement can impact your portfolio and your potential retirement income. With the immediate need for income withdrawals, there s no time for your investments to recover. In the crucial years leading up to, and just after, retirement, the interaction between your rate of withdrawal and the sequence of returns can have a dramatic impact on how long you ll be able to draw income from your portfolio. Unfortunately, you can t predict how the markets will perform. Here s an example. Let s say four people each have a $100,000 portfolio at age 65 and they each withdraw $750 per month. They all invest their portfolio differently: PERSON A earns 7% in each of the first three years. PERSON B has returns of 7%, -13% and 27% in the first three years. PERSON C has returns of -13%, 7% and 27% in the first three years. PERSON D has returns of 27%, 7% and -13% in the first three years. Each person averages a 7% return over three years, but the sequence of returns is quite different. SUN LIFE FINANCIAL my money for life 5

8 RISK 2 MARKET RISK continued Here s the question. If this sequence of three-year returns repeats indefinitely, which person runs out of money first? PERSON A (+7, +7, +7) PERSON B (+7, -13, +27) PERSON C (-13, +7, +27) PERSON D (+27, +7, -13) Each person averages a 7% return every three years. The correct answer is Person C. For Person A, the assets will be depleted by age 87; for Person B, the assets will be depleted by age 83; for Person C, the assets will be depleted by age 81; and for Person D, the assets will be depleted by age 95. That means Person C will run out of money a full 14 years before Person D. AGE ASSETS DEPLETED PERSON A AGE 87 PERSON B AGE 83 PERSON C AGE 81 PERSON D AGE 95 As you can see, despite the fact that the three-year average return is 7% for each sequence, the order of returns has a dramatic effect on how quickly retirement assets are depleted. my money for life eliminates the risk associated with poor early returns, while maintaining the potential benefit associated with strong early gains. The Benefit Base used to calculate your annual income guarantee is truly guaranteed it will never decline because of poor market performance. 6 SUN LIFE FINANCIAL my money for life

9 RISK 3 INFLATION RISK Inflation rates are currently low at about 2%, but even these low rates can have a devastating effect on retirement assets. At 2% inflation, the purchasing power of a dollar is reduced by more than 30% after 20 years. At 4% inflation (which is the average inflation rate over the past 50 years) a plan member s buying power is reduced by almost 55% after 20 years. With so many Canadians living 20 to 30 years or more in retirement, inflation will have a dramatic impact on their spending power during this time period. WHAT $1 WILL BUY IN 20 YEARS 1% inflation $0.82 2% inflation $0.67 4% inflation $0.45 my money for life can provide you with protection against inflation through its reset feature. Every three years, if the market value of your my money for life assets is higher than your Benefit Base, your Benefit Base will be reset to capture this higher market value, automatically increasing your annual income guarantee. These resets can occur even in retirement, so your annual income guarantee has the potential to increase as markets rise. SUN LIFE FINANCIAL my money for life 7

10 withdrawing money Withdrawing money from my money for life TAKE NOTE: A SPOUSAL WAIVER MAY BE REQUIRED To maintain my money for life coverage, you may need to submit a spousal waiver when you transfer my money for life assets to the Sun Life Financial Group Retirement Income Plan. TAKE NOTE: THERE IS AN EXCESS WITHDRAWAL RULE An excess withdrawal can impact your Benefit Base, annual income guarantee, and your ability to make lump-sum contributions for six months following the withdrawal. Read more about the excess withdrawal rule in Up Close: my money for life before considering making an excess withdrawal. TAKE NOTE: THE CURRENT YEAR S ALLOWABLE INCOME This refers to the annual income amount (in dollars) that you may take each year without any impact to your Benefit Base. Additional information on the current year s allowable income is available in Up Close: my money for life. You are eligible to receive income payments of up to 5% of your Benefit Base anytime after you reach age 60. Your annual income guarantee will depend on when you begin income payments and whether you choose the spousal income option. You can decide to take income payments that are less than or higher than your current year s allowable income, depending on your needs, but keep in mind that taking a higher income payment will reduce your Benefit Base, and is considered an excess withdrawal. In order to start receiving your annual income guarantee payments, you must transfer your my money for life assets to a Registered Retirement Income Fund (RRIF), Life Income Fund (LIF), Locked-in Retirement Income Fund (LRIF), Prescribed Retirement Income Fund (PRIF), or Restricted Life Income Fund (RLIF) all insured with my money for life under the Sun Life Financial Group Retirement Income Plan. This group plan for retiring plan members provides access to most of the same investments and online services that you have access to through your current group plan. Fund management fees and fund options may vary from those in your current group plan. If your annual income guarantee falls below the minimum withdrawal amount required by law, or is above the maximum amount permitted by law, then your annual income guarantee will be adjusted as follows: RRIF, LIF, LRIF, PRIF or RLIF minimum. If your annual income guarantee is less than the amount you re required by law to withdraw from your RRIF, LIF, LRIF, PRIF or RLIF in a given year, we will increase your current year s allowable income to this minimum amount. This additional amount is not considered an excess withdrawal and your Benefit Base will not decrease. LIF maximum. If you have transferred your assets to a LIF upon retirement and your annual income guarantee is greater than the maximum payment amount allowed by law you will receive the LIF maximum and the difference will remain within my money for life, where it may still be eligible to benefit from market gains. 8 SUN LIFE FINANCIAL my money for life

11 member stories my money for life in action member stories Whether you are planning for retirement, or already retired, my money for life ensures that your minimum lifetime annual income is guaranteed and protected. Read on to discover how Robert, Christine and Martin have secured their retirement thanks to my money for life. ROBERT PRE-RETIREMENT CHRISTINE IN RETIREMENT MARTIN IN RETIREMENT How his income guarantee is protected against market volatility. She was concerned about running out of money. How his annual income guarantee is topped up to the RRIF minimum. SUN LIFE FINANCIAL my money for life 9

12 ROBERT PRE-RETIREMENT Robert, age 50, has always been a conservative investor, with little appetite for investment risk. Now that he s starting to plan for retirement, he s seeking ways to protect his savings from market volatility in the critical years leading up to retirement. With retirement at least 15 years away, and with no plans to use his savings until then, Robert wants to take advantage of the opportunity to grow his money, while still managing risk. Robert added my money for life to his RRSP, worth $150,000, providing him with an initial annual income guarantee of $7,500 if he starts receiving annual income guarantee payments at age 65 (5% of $150,000). Robert continues to make contributions each one immediately increasing his Benefit Base dollar-for-dollar. By the time he turns 65, Robert s Benefit Base will have grown to $265,000. Assuming he doesn t make any withdrawals from my money for life, his annual income guarantee will be $13,250, even if markets have declined significantly over the 15 years since he added my money for life. 10 SUN LIFE FINANCIAL my money for life

13 CHRISTINE IN RETIREMENT At 65, Christine is ready to retire. She has been saving through her company-sponsored RRSP for many years, and has accumulated savings of $200,000. Having worked in the medical field her entire career, she s aware of the advances in medical technologies and treatments that can increase life expectancy. A key concern for her is outliving her savings, and with recent market volatility, she s also looking for guarantees that her retirement income will be stable and predictable. At retirement, she chose to keep her RRSP assets with Sun Life Financial and then learned about the my money for life feature. To start drawing income, she converted her RRSP to a RRIF and added my money for life. With a Benefit Base of $200,000, Christine is guaranteed to receive an annual income of $10,000 for life (5% of the Benefit Base). If her investments perform well, her annual income guarantee may increase through resets every three years, which capture market gains. Even if the markets decline sharply during her retirement, when her market value drops to zero after 16 years, she has the comfort of knowing she is guaranteed to receive $10,000 a year for life. SUN LIFE FINANCIAL my money for life 11

14 MARTIN IN RETIREMENT At 71, Martin is enjoying his retirement. Martin and his wife, Natalie, spend a lot of time with their children and grandchildren, and he s been thinking about the legacy he ll leave behind. Martin has explored traditional annuities, and found them to be quite limiting in terms of estate planning options. Martin has a RRIF with Sun Life Financial worth $150,000, and decides to add my money for life. Under my money for life, his annual income guarantee is $7,500 (5% of $150,000). In years when the RRIF minimum income is greater than the 5% annual income guarantee, Martin will receive the RRIF minimum amount without any impact to his Benefit Base and the excess withdrawal rule will not apply. In years when the RRIF minimum income drops below the annual income guarantee, he can still receive up to 5% of his Benefit Base without affecting his annual income guarantee. With the spousal income option, annual income guarantee payments will continue to Natalie until her death. This option must be chosen before annual income guarantee payments begin, and a reduced annual income guarantee will apply. Assuming Martin still has a market value remaining at the time of his death, this amount will be payable to his beneficiary, his wife Natalie. 12 SUN LIFE FINANCIAL my money for life

15 top 10 questions answered 1. IS my money for life RIGHT FOR ME? my money for life is suitable for you if you feel vulnerable to the effects of market declines, if you are security-conscious and within 20 years of retirement, or if you are currently receiving or about to start receiving retirement income. 2. HOW OLD DO I HAVE TO BE TO ADD my money for life? You can add my money for life at any time between ages 45 and IS THERE A MINIMUM AMOUNT NEEDED TO ADD my money for life? No. 4. IS THERE A FEE FOR my money for life? There is a monthly insurance fee for my money for life, which is shown and charged separately from fund management fees. The fee varies by asset class and is based on your Benefit Base, not the market value of your portfolio. This ensures that you pay only for the benefit you are receiving (the annual income guarantee) and don t pay a higher fee for market growth unless you also benefit from the market growth due to a reset of your Benefit Base in the future. The fee does not reduce your Benefit Base or your annual income guarantee. 5. WHAT IS MY ANNUAL INCOME GUARANTEE? The annual income guarantee is 3.5% to 5% of the Benefit Base, depending on when you retire, and whether you choose the spousal income option. 6. WHAT IS THE BENEFIT BASE? The Benefit Base is equal to the value of your initial contribution plus any subsequent contributions you make, less any excess withdrawals. The Benefit Base is a notional value used solely to determine the amount of your annual income guarantee. Your Benefit Base increases immediately with every dollar of contribution you make, and can also increase based on market value resets that occur every three years on your birthday. 7. HOW DOES THE MARKET VALUE RESET WORK? The market value reset occurs on your birthday following the third anniversary of the date my money for life was added to your assets. For example, if you had a July 1st birthday, and you added my money for life to your assets on February 1, 2011, the 3rd anniversary would be February 1, 2014, and the first reset would occur on July 1, 2014 and every three years afterwards. On the reset date (on your birthday every third year), we compare the market value of your portfolio with your Benefit Base. If the market value is higher, we increase your Benefit Base to equal the market value. Your Benefit Base is then locked-in at this higher amount. No reset will occur if the market value on the reset date is lower than your Benefit Base. Your annual income guarantee is increased when a reset occurs, since the guarantee is calculated on the higher Benefit Base. 8. CAN I KEEP MY EXISTING INVESTMENTS? You will be able to keep most, if not all, of your existing group plan investment options. The only requirement is that your portfolio has a fixed-income exposure of at least 40%. For my money for life, all balanced funds and target date funds are assumed to have a 40% fixed income component. We ll rebalance your account automatically each month to maintain your investment instructions. 9. WHEN CAN I START RECEIVING MY GUARANTEED INCOME? You are eligible to receive income payments as early as age 60 and no later than the legislated age without reducing your Benefit Base. If you elect the spousal income option, both you and your spouse must be at least 60 years of age, before income payments can begin. Please keep in mind that taking an income payment amount higher than the annual income guarantee will reduce your Benefit Base. This is considered an excess withdrawal. An excess withdrawal can impact your Benefit Base, annual income guarantee, and your ability to make lump-sum contributions for six months following the withdrawal. Read more about the excess withdrawal rule in Up Close: my money for life before considering making an excess withdrawal. 10. WHAT HAPPENS TO MY GUARANTEE IF I LEAVE MY EMPLOYER? If your plan permits, you may be able to maintain the my money for life guarantee by keeping your assets in your current group plan, up to allowable age limits. To maintain the my money for life guarantee when you transfer your assets out of your current group plan, you must transfer your my money for life assets to a Sun Life Financial arrangement for former group plan members: the Group Choices Plan, if you are in the savings phase, or the Sun Life Financial Group Retirement Income Plan, if you are eligible to start receiving your annual income guarantee payments. Fund management fees and fund options in these arrangements may vary from those in your current group plan. To maintain my money for life coverage, you may need to submit a spousal waiver when you transfer my money for life assets to the Sun Life Financial Group Retirement Income Plan. SUN LIFE FINANCIAL my money for life 13

16 my money for life Group Retirement Services are provided by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. To learn more about how my money for life can benefit you, please call Sun Life Financial s Customer Care Centre at , any business day from 8 A.M. to 8 P.M. ET. GRP 1676-E mjv-je ORP