University of Saskatchewan

Transcription

1 At a glance: Group Retirement > Prescribed Retirement Income PRIF > Registered Retirement Income RRIF The Group Retirement is a custom product available exclusively to members such as yourself, who participate in a Pension Plan. This document highlights some of the key features that make this an attractive retirement income option for you.

2 The Group Retirement You ve worked hard to save for your future. That s why, when the time comes to convert your retirement savings to retirement income, it s important you understand and feel confident with your investment choice. As a member of a Pension Plan you have the following options 1 : > A Group Retirement (customized PRIF/RRIF) with Sun Life Financial; > A PRIF/RRIF with another financial institution; and/or > An annuity with Sun Life Financial or another insurer. Advantages of participating include competitive management fees and ongoing support from Retirement Consultants 2. Our Retirement Consultants are here to help with any questions you may have leading up to your retirement. Call us for a pre-retirement discussion, any business day from 8 a.m. to 8 p.m. ET. Call (select option 1). Fee advantage As a member of the Group Retirement, you will also benefit from paying lower fees that would generally not be available to you as an individual investor at a mutual fund company or other financial institution. Lower fees are an important benefit of belonging to a group plan, and the result of the collaboration between the and Sun Life Financial is more bargaining power than you probably would have had on your own. Lower fees can have a large impact on the costs you incur in your retirement income plan, and you keep more money where it belongs in your account. Inside you will find This brochure provides a brief overview of the plan, including: A description of income options; Prescribed Retirement Income (PRIF) and Registered Retirement Income (RRIF); An overview of the investment options available and current fees; Information on the two distinct investment approaches; Additional plan details; Frequently asked questions about Prescribed Retirement Income s; Access and contact information for a licensed Retirement Consultant at Sun Life Financial to answer your questions about the Group Retirement. 1 You also have the option to cash out any non-locked-in assets. This may trigger tax implications. 2 Registered as Financial Security Advisors in the province of Quebec. 2 AT A GLANCE UNIVERSITY OF SASKATCHEWAN GROUP RETIREMENT FUND

3 Income options The Group Retirement offers two different retirement income plans*, as shown in the chart below: Prescribed Retirement Income (PRIF) Registered Retirement Income (RRIF) What is it? A PRIF for your locked-in pension investments. A RRIF for your non locked-in pension investments and other registered savings. When is it used? Eligibility Minimum withdrawal amount (as set by the federal Income Tax Act) See chart on page 6 Maximum withdrawal amount (as set by the federal Income Tax Act) Spousal consent When you re eligible and ready to convert your registered pension savings into retirement income, but no later than December 31 st of the year you turn 71. June 30 th following age 55, but no later than December 31 st of the year you turn age 71. The Income Tax Act sets a minimum annual amount you must withdraw each year. You can withdraw any amount you wish over this minimum. The maximum amount you can withdraw from a PRIF is limited to the amount of money in your account. Your spouse must sign a waiver form for you to transfer your pension funds to a PRIF. When you are ready to convert your registered savings into retirement income, but no later than December 31 st of the year you turn 71. You are able to enrol into the RRIF any time after you have transferred pension funds into the PRIF, but no later than December 31 st of the year you turn age 71. The Income Tax Act sets a minimum annual amount you must withdraw each year. You can withdraw any amount you wish over this minimum. The maximum amount you can withdraw from a RRIF is limited to the amount of money in your account. Not required. Beneficiary information You must name your spouse as the beneficiary of your PRIF. If you do not have a spouse, you can name a beneficiary of your choice. If you do not designate a beneficiary, your assets will default to your estate. You can name the beneficiary of your choice. If you do not designate a beneficiary, your assets will default to your estate. Tax implications PRIF withdrawals are considered part of your annual income. In addition, withholding tax will apply to any withdrawals over the minimum. However, assets remaining in the PRIF and their investment growth are tax-sheltered until withdrawn. RRIF withdrawals are considered part of your annual income. In addition, withholding tax will apply to any withdrawals over the minimum. However, assets remaining in the RRIF and their investment growth are tax-sheltered until withdrawn. * The Group Retirement not only includes PRIF and RRIF options available under pension legislation, but also includes LIF and LRIF options offered in other pension jurisdictions. This availability will allow for investments in your pension plan that originated from plans in other pension jurisdictions to comply with regulations in those pension jurisdictions. AT A GLANCE UNIVERSITY OF SASKATCHEWAN GROUP RETIREMENT FUND 3

4 Investment options There are eight different investment options to choose from, identical to that of the 2000 Academic Money Purchase Pension Plan and the Research Pension Plan. They are set out in the tables below. Risk profile of investment options Aggressive Canadian Equities U.S. Equities International/ Global Equities Balanced RETURN Money Market Sun Life Money Market Bond BlackRock Universe Bond Index Conservative Conservative Life Cycle (80% Bonds 20% Equities) Balanced Life Cycle (40% Bonds 60% Equities) Aggressive Life Cycle (20% Bonds 80% Equities) Canadian Equity BlackRock U.S. Equity Index International Equity low RISK high As a reminder, you can learn more about the investment options offered in the Group Retirement through Morningstar, a leading provider of investment news and analysis. Log in to your account at mysunlife.ca, then under the Accounts drop-down menu, select Investment performance, then select each fund. Low management fees The table below shows the annualized fees as of October 31, 2016: Investment Management Fee Sun Life Administration Fee Total Fees* Money market 0.11% 0.10% 0.21% Bond 0.10% 0.10% 0.20% Conservative Life cycle 0.12% 0.10% 0.22% Balanced Life cycle 0.23% 0.10% 0.33% Aggressive Life cycle 0.28% 0.10% 0.38% Canadian Equity 0.37% 0.10% 0.47% U.S. Equity 0.10% 0.10% 0.20% International Equity 0.58% 0.10% 0.68% * Does not include $50 annual administrative fee. You can find up-to-date information on the fees you pay online. Simply sign in to mysunlife.ca using your access ID and password, and select my financial centre > Accounts > Account fees. 4 AT A GLANCE UNIVERSITY OF SASKATCHEWAN GROUP RETIREMENT FUND

5 Two distinct investment approaches The Group Retirement offers you two approaches to invest and save built FOR me (Life cycle funds/target risk funds) and built BY me (fund lineup from which you can build your own portfolio). Built FOR me Life cycle funds (sometimes called target risk or asset allocation funds) are designed to match your comfort level with investment risk. Each target risk fund is designed to match a particular level of investor risk tolerance, and is re balanced regularly to ensure that its target asset mix is maintained on an ongoing basis. category Life cycle investment options Conservative Life Cycle (80% bonds, 20% equities) Balanced Life Cycle (40% bonds, 60% equities) Aggressive Life Cycle (20% bonds, 80% equities) You should consider a life cycle fund if you: Have little or no interest in actively rebalancing your account. You should, however, review and revisit your asset allocation selection on a periodic basis. Built BY me The Group Retirement lets you build your own portfolio with funds from a variety of investment fund asset categories. category Money market Bonds Canadian Equities U.S. Equities International Equities lineup Sun Life Financial Money Market BlackRock Universe Bond Index Canadian Equity (Triasima and BlackRock) BlackRock U.S. Equity Index (Registered assets only) International Equity (Mawer International Equity) You should consider building your own portfolio if you: Are comfortable choosing your own investment funds; Are comfortable actively managing your portfolio; and Will monitor and make any changes needed to your portfolio to ensure it continues to reflect your investment goals. Additional plan details Members have many options for withdrawal schedules (annual, semi-annual, quarterly, or monthly) or lump sum withdrawals. Retirees are charged an annual Sun Life Financial administrative fee of 1/10 of one percent (0.10%) of balances; and an administrative fee of $50 per year is charged by the University. Members have access to the Sun Life Financial system including the Customer Care Centre, Member Website, Client Solutions Centre. Members may exit the Group Retirement with the payment of a minimal fee, presently set at $100. The Academic Money Purchase Pension Committee (AMPPC) provides the oversight duties for the Group Retirement. Retirees contribute to the expenses associated with the oversight duties via a portion of the annual administrative fee. Sun Life Financial is able to make an Electronic s Transfer (EFT) directly into your Canadian bank account. AT A GLANCE UNIVERSITY OF SASKATCHEWAN GROUP RETIREMENT FUND 5

6 Frequently asked questions Prescribed Registered Retirement Income (RRIF) The following information is provided by the Financial and Consumer Affairs Authority, Pensions Division. It is the same product as the PRIF that is part of the Group Retirement. You can find more information on prescribed RRIFs at the following website: When can I start a Prescribed RRIF? You must be eligible to commence your pension in order to be eligible to transfer locked-in pension money to a prescribed RRIF. If you are transferring money directly from a pension plan, the earliest age at which your pension can commence is established by the rules of the plan. You may transfer money from a LIRA at the earlier of age 55 or the early retirement age established by the plan where the money originated. Does my spouse have to sign a consent form for me to transfer to a Prescribed RRIF? Yes, under pension legislation your spouse is entitled to receive a guaranteed pension on your death paying 60% of the pension amount to which you were entitled. A prescribed RRIF cannot provide that guarantee to your spouse. As well, there is nothing preventing you from withdrawing the entire amount from your prescribed RRIF in which case your spouse would not receive any pension on your death. What is the minimum withdrawal required to be made from a Prescribed RRIF? A prescribed RRIF must be registered under the Income Tax Act. One of the most important rules found in the Income Tax Act for a RRIF is that you must be paid an income each year, except for the first year of the contract. The Income Tax Act establishes the minimum annual withdrawal required to be made from a RRIF. You do not have to withdraw money in the calendar year in which the RRIF is established. A RRIF operates on a calendar year basis. The amount of the minimum withdrawal varies each year based on your age at January 1. Can I use my spouse s age in determining the minimum withdrawal? Yes, the Income Tax Act permits you to use your age or the age of your spouse in determining the minimum withdrawal. This is a one-time decision made when the prescribed RRIF is established. Using the age of the younger person will reduce the minimum required withdrawal. To determine the minimum annual payment, multiply the value of your prescribed RRIF as at January 1 by the rate that corresponds to your (or your spouse s) age: Age at January 1 Rate % Minimum withdrawal table for PRIF and RRIF Age at January 1 Rate % Age at January 1 Rate % & beyond AT A GLANCE UNIVERSITY OF SASKATCHEWAN GROUP RETIREMENT FUND

7 What is the maximum withdrawal from a Prescribed RRIF? There is no maximum limit on RRIF withdrawals. Will I be taxed on the withdrawals? The withdrawal will be considered part of your income for the year and you will have to pay tax. There is no withholding tax on the minimum withdrawal. Tax is required to be withheld on withdrawals that exceed the minimum. What are the rules for investing my Prescribed RRIF? The investment rules are those placed on a RRIF by the Income Tax Act. No further restrictions apply. You determine how the money in your prescribed RRIF is invested and investment earnings continue to grow on a tax-sheltered basis to the extent they are not withdrawn. What happens when I die? You must name your spouse as beneficiary of the money in your prescribed RRIF. However, your spouse may waive his or her designated beneficiary status by signing a waiver form. Your spouse may revoke the waiver at any time by providing notice to the issuer of the prescribed RRIF. If you have no spouse or if your spouse has signed a waiver, the money will pass to a designated beneficiary or your estate and will be taxed in the year of your death as determined by your executor. The disposition of the money is governed by the Income Tax Act. Where can I find a Prescribed RRIF? A wide variety of financial institutions, such as banks, trust companies, credit unions, insurance companies and brokerage firms, offer the product. Can my Prescribed RRIF be seized by my creditors? No, the money in a prescribed RRIF is exempt from execution, seizure or attachment. Also, you may not assign the money. However, a prescribed RRIF could be subject to a division on spousal relationship breakdown pursuant to The Family Relations Act. As well, the money in a prescribed RRIF could be subject to attachment for purposes of enforcing a maintenance order pursuant to The Enforcement of Maintenance Orders Act. Do I ever have to purchase a life annuity? No, you do not have to purchase a life annuity. Is my Prescribed RRIF guaranteed or protected from loss? Your prescribed RRIF is not insured or guaranteed by the Government of. Your pension income could suffer from poor investment performance. Some of the products in which you are invested might be guaranteed. For example, deposits at banks, trust companies and credit unions are backed by insurance schemes. I m comfortable with my LIRA investments, but want to start a Prescribed RRIF. How can I keep my investments? Subject to the provisions of your prescribed RRIF contract, you may be able to transfer identifiable and transferable securities, either into or out of a prescribed RRIF. This would permit you to continue a particular investment strategy you have adopted in investing your LIRA assets without having to dispose of and repurchase the securities. Can I transfer my money from one Prescribed RRIF to another Prescribed RRIF? Yes, however, before the transfer takes place, the minimum annual withdrawal amount required under the Income Tax Act must be taken. Money that originated from a registered pension plan (locked-in) must be kept separate from ordinary RRIF money that accumulated as a result of personal savings. Can I roll over my annual withdrawal to an RRSP or RRIF? No, the prescribed RRIF has certain characteristics such as protection of spouses that make it different from an ordinary RRSP or RRIF. Do I receive my income monthly or in a lump sum at the start of the year? The frequency of payments is a matter between you and your financial institution. Are Prescribed RRIF payments eligible for the pension tax credit? Payments from a RRIF to a person age 65 and older are eligible for the pension tax credit. However, if you are under age 65, you will not be able to claim your RRIF payments. AT A GLANCE UNIVERSITY OF SASKATCHEWAN GROUP RETIREMENT FUND 7

8 Easy access As a member of the Group Retirement, you enjoy access to a suite of online financial planning tools that can help you build a better future. Make the most of your retirement savings nest egg through Sun Life Financial s plan members services website, mysunlife.ca and my money tools. my money tools allow you to learn more about your group plan s investment options, make changes to your investment selections and access financial planning tools, including: Registered Retirement Income (RRIF) calculator: Find out how much income you can expect from your RRIF. Old Age Security (OAS) clawback calculator: Find out how much you can expect in OAS payments. Pre-retirement Learning Centre: a series of webcasts on a variety of retirement-specific topics, including understanding retirement in Canada, government benefits at retirement, drawing income and health products at retirement. Annuity premium calculator: Estimate the annuity premium to purchase a life annuity from an insurance company and get an idea of how much monthly annuity income you may receive for a lump sum amount. Learn about your investment options through Morningstar : You can learn more about the investment options offered in the Group Retirement through Morningstar, a leading provider of investment news and analysis. Under the Accounts drop-down menu, select Investment performance. Next select: Rates of Return and Unit Values to see the performance of funds available in your plan; or Report to access tools and information about your funds. We re here to help As a member of the Group Retirement, you have access to licensed Retirement Consultants at no cost to you. At your convenience, a Sun Life Retirement Consultant will help you understand your conversion options and other insurance and investment plans that are available to you. They will also provide you with advice and guidance on the investment funds included in your plan; helping you meet your unique retirement goals. Sun Life Financial s Client Solutions Centre has a team of Retirement Consultants available at (select option 1), any business day from 8 a.m. to 8 p.m. ET. For additional information, please contact the Pensions and Treasury office at or pensions.inquiries@usask.ca. Life s brighter under the sun Group Retirement Services are provided by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. Sun Life Assurance Company of Canada, TR E-USK-0117