Your Retirement Pension Plan This booklet describes the highlights of the Simplified Money Purchase Pension Plan provided by CUMIS for MANITOBA CHILD CARE ORGANIZATIONS CUMIS Life Insurance Company July 2016
TABLE OF CONTENTS JOINING THE PLAN Full-Time Employees 3 Part-Time Employees 3 CONTRIBUTIONS TO THE PLAN Required Employee Contributions 3 Required Employer Contributions 3 Voluntary Contributions 3 Maximum Contribution 3 Member's Account 4 Salary 4 INVESTMENT OF CONTRIBUTIONS Investment Options 4 Interfund Transfer 5 Investment Costs 5 WHEN YOU MAY RETIRE Normal Retirement 5 Early Retirement 5 Late Retirement 5 RETIREMENT BENEFITS Amount of Benefits 6 Normal Form of Annuity 6 Optional Forms 6 Life Income Fund 7 TERMINATION BENEFITS 7 DEATH BENEFITS Before Retirement 7 After Retirement 8 Beneficiary 8 DEFINITION OF SPOUSE 8 GOVERNMENT BENEFITS Canada Pension Plan (CPP) 8 Old Age Security (OAS) 8 GENERAL PROVISIONS 9 M:/SMPPP 2
JOINING THE PLAN Full-time Employees A full-time employee hired prior to the establishment of the child care centre s pension play may become a member of the plan immediately or at a later date. A full-time employee hired on or after the establishment of the child care centre s pension plan may become a member of the plan immediately. If you don t join the plan immediately you must join the plan after two years of continuous service, Your employer may, however, require that full-time employees join the plan immediately, or following an eligibility period. Please check with your employer regarding the specific rules for your plan. Part-time Employees A part-time employee hired prior to the establishment of the child care centre s pension plan may become a member of the plan immediately or at a later date. A part-time employee hired on or after the establishment of the child care centre s pensionplan may become a member of the plan immediately. If you don t join the plan immediately you must join the plan after two years of part-time continuous service, provided that in each of the two calendar years immediately prior to joining, earnings are not less than 35% of the year's maximum pensionable earnings (YMPE) or total hours of paid employment are not less than 700 hours. Your employer may, however, require that part-time employees join the plan immediately, or following an eligibility period. Please check with your employer regarding the specific rules for your plan. CONTRIBUTIONS TO THE PLAN Required Employee Contributions You are required to contribute 4% of salary to the plan. Required Employer Contributions Your Employer is required to contribute 4% of salary to the plan. Voluntary Contributions Voluntary Contributions are contributions you request to be deducted from your pay. You may choose to make voluntary contributions to your pension plan up to the maximum limit allowed under the Income Tax Act. They cannot be withdrawn until you terminate employment, die or retire, but can be taken in cash at that time. Maximum Contribution Canada Revenue Agency (CRA) limits the total annual contribution to Registered Pension Plans to 18% of income to a dollar maximum of: Year Registered Pension Plan 2016 $26,010 2017 2016 Maximum Indexed Contributions to your Pension Plan reduce your RRSP room by the Pension Adjustment noted in Box 52 of your T4 Supplementary Slip issued annually by your Employer. Your RRSP room is recorded by CRA and reported each year on your Notice of Assessment. M:/SMPPP 3
Member's Account You will receive a personal statement annually, showing the balance in your account, along with the transactions and interest earnings that have taken place since the last statement. The statement will also show the amount of any voluntary contributions. The rate of return reported on your member statement is calculated using the Newton-Raphson method which provides a dollar and time-weighted return for the specified period. Salary For the purpose of calculating contributions, "salary" means gross salary or wages, excluding overtime, bonuses, or special payments but including vacation pay and sick leave pay. INVESTMENT OF CONTRIBUTIONS Investment Options Your contributions and those made by the employer on your behalf may be invested in one or more of the following investment options. The minimum deposit to any fund is 5% of each contribution. Fixed Income Yield Based Funds Retirement Security Fund (CUMIS) which seeks to maximize return given a conservative risk exposure by investing primarily in high quality bonds, augmented with federally insured commercial mortgages, residential mortgages, term deposits and money market instruments. The RSF is an income flow-through fund rather than a market value fund, thereby removing much of the volatility normally associated with market value funds. Target Date Funds The MFS LifePlan Retirement Funds are a series of funds that greatly simplify the fund selection process. These funds are designed to change automatically with the changing needs of the investor. Quite simply, these funds progressively focus on preserving capital as the investor approaches retirement. Each investor determines the year at which they are most likely to be retiring and invests in the fund that most closely reflects his/her expected retirement date. The modules are described below. LifePlan Retiree Fund (MFS) LifePlan Retirement 2020 (MFS) LifePlan Retirement 2025 (MFS) LifePlan Retirement 2030 (MFS) LifePlan Retirement 2035 (MFS) LifePlan Retirement 2040 (MFS) LifePlan Retirement 2045 (MFS) LifePlan Retirement 2050 (MFS) LifePlan Retirement 2055 (MFS) CONTRIBUTIONS INVESTED IN THE ABOVE FUNDS PURCHASE UNITS OF THOSE FUNDS. THE VALUE OF THE UNITS IN THESE FUNDS IS NOT GUARANTEED AND WILL FLUCTUATE WITH THE MARKET VALUE OF THE ASSETS HELD BY THOSE FUNDS. If you want to have some or all of your contributions allocated to one or more of the investment options, you must indicate this on the Group Pension Enrolment Form included in your enrolment kit, or complete the Investment Change Form that is available from CUMIS. If you do not provide an investment choice to CUMIS on the enrolment form or investment change form, the default investment fund is the Retirement Security Fund (CUMIS). M:/SMPPP 4
Interfund Transfer You may elect to transfer amounts between investment options, subject to minimum amounts established by CUMIS. There is no charge for the first four (4) transfers between the different investment options in a calendar year. A $25 fee may be charged to you for each additional transfer throughout the remainder of the calendar year. To transfer funds, you must complete the Investment Change Form available from CUMIS. You may also complete this transaction online through your personal member website account. Investment Costs ALLIANCE FUNDS IMF (%) TARGET DATE FUNDS CUMIS LifePlan Retirement 2020 1.70% CUMIS LifePlan Retirement 2025 1.70% CUMIS LifePlan Retirement 2030 1.70% CUMIS LifePlan Retirement 2035 1.70% CUMIS LifePlan Retirement 2040 1.70% CUMIS LifePlan Retirement 2045 1.70% CUMIS LifePlan Retirement 2050 1.70% CUMIS LifePlan Retirement 2055 1.70% CUMIS LifePlan Retiree Fund 1.70% CUMIS GENERAL FUND CUMIS Retirement Security Fund 1.20% Notes: Pooled Funds are not guaranteed, their values change frequently and past performance may not be repeated. Investment Managers charge expenses against the funds and are not included in the above-fees. Minimum purchase of $25.00 per member per MFS fund is applicable. Above-noted pooled fund management fees are subject to Good and Services Tax (GST) Interest rate credited to the Retirement Security Fund is net of fees. WHEN YOU MAY RETIRE Normal Retirement Your NORMAL retirement date is the first day of the month coinciding with or next following your 65th birthday. For example, if you were born on July 19th, your normal retirement date will be August 1. Early Retirement You may elect EARLY RETIREMENT on the first of any month after your 55th birthday. Late Retirement You may postpone your retirement, on the approval of your employer. In no event shall your retirement date be postponed beyond the last day of the year in which you attain age 71. M:/SMPPP 5
RETIREMENT BENEFITS Amount of Benefits Upon retirement, you will receive a life annuity that can be purchased with your account balance (including or excluding your voluntary contributions at your choice). This will provide you with a lifetime monthly pension benefit, the amount of which depends mainly upon: - your age at retirement - your account balance - interest rates at the time of annuity purchase - the form of annuity you choose You may elect to use the published rates of the insurer in force at the time of retirement, or you may elect to transfer the balance in your account to purchase an annuity from another financial institution. Normal Form of Annuity The normal form of pension benefit is payable in equal monthly instalments for as long as you live but guaranteed for 10 years. This form of pension is only payable if you do not have a spouse at your retirement date. If you have a spouse at your retirement date, the normal form of pension benefit will be a pension payable to you for life and upon your death 60% of the amount paid to you will be payable to your spouse for life. To elect an optional form of pension benefit you and your spouse can waive the normal form by signing a Waiver Form as prescribed by the Pension Benefits Act. Optional Forms The following is a brief outline of the annuities available: 1. Life - Ceasing at Death This option provides a slightly higher benefit. Payments of pension cease with the payment immediately preceding your death, regardless of the number of payments you have received. 2. Life - Guaranteed Five (5) Years This option provides a slightly higher payment for your entire lifetime but guarantees that, should you die after your pension has commenced and before you have received sixty (60) monthly payments, the payments will continue to your beneficiary until sixty (60) monthly payments in all have been made. 3. Life - Guaranteed Fifteen (15) Years This option provides a slightly lower payment for your lifetime and guarantees that, should you die after your pension has commenced but before you have received one hundred and eighty (180) monthly payments, the payments will continue to your beneficiary until one hundred and eighty (180) monthly payments in all have been made. 4. Joint Annuitant Pension Under this option you may have your pension continue for the lifetime of a joint annuitant under one of the following formats: (i) after your death, the pension shall continue to the joint annuitant in the same amount as had been received by you prior to the date of your death; or (ii) after your death, either 75%, 60% or 50% of the amount that had been received by you prior to the date of your death shall continue to the joint annuitant. M:/SMPPP 6
Note: If this option is selected, the date of birth of the joint annuitant must be given and confirmed with a copy of the Birth Certificate. LIFE INCOME FUND Rather than purchase a life annuity at retirement, you may elect to transfer your account balance (excluding voluntary contributions) to a Life Income Fund (LIF). Each year you may withdraw an amount from the LIF subject to a prescribed minimum and maximum amount. The funds remaining each year continue to grow on a tax deferred basis. If you are at least age 55 you may apply to make a one-time prescribed transfer of an amount up to 50% of the balance in one or more of your LIFs to a registered retirement income fund (RRIF). Consent of your spouse or common-law partner is required to make the prescribed transfer. TERMINATION BENEFITS If you terminate your employment for reasons other than retirement or death, you are entitled to a vested, locked-in annuity deferred to your normal retirement date purchased by all required contributions plus credited interest made by you and the Employer on your behalf. In lieu of purchasing the deferred life annuity, you may elect to transfer the contributions to another pension plan in which you are a member providing the terms of the other plan permit such a transfer or, to a registered retirement savings plan. Such transfer must be made in accordance with the Pension Benefits Act, regarding "locked-in" amounts. In addition to the above entitlement if you have made additional voluntary contributions you may elect to have the total of your additional voluntary contributions either: (1) used to purchase an immediate or deferred life annuity prior to your 71st birthday; (2) refunded in a lump sum; (3) transferred to any other tax-exempt trust or plan provided such transfer is permitted under the Income Tax Act, Canada; or (4) transferred to a registered retirement savings plan. DEATH BENEFITS Before Retirement If you should die prior to your retirement your Spouse (or beneficiary if you do not have a Spouse) will be entitled to a lump sum payment equal to the accumulated value in your account of all contributions made on your behalf. If the contributions made on your behalf are locked in, under the Pension Benefits Act, they must be used to purchase for your Spouse either a deferred or immediate life annuity. In lieu of this annuity, your spouse may elect to transfer the accumulated value in your account of all contributions made on your behalf to a locked-in retirement account. In addition to the above entitlement, your surviving spouse, or where there is no spouse, your designated beneficiary will receive a lump sum refund of your additional voluntary contributions, if any, with credited interest to the date of death. Should the member not have a surviving spouse or a designated beneficiary, the death benefit will be made in the form of a lump sum payment to the deceased's estate. M:/SMPPP 7
After Retirement Should you die after you retire, your beneficiary shall receive the benefits according to the terms of the annuity contract you purchased. Beneficiary If you have a Spouse, your Spouse shall be deemed the beneficiary of all pre-retirement death benefits, unless you and your Spouse are living separate and apart at the date of your death. If you do not have an eligible Spouse, you may designate a beneficiary. If you do not designate a beneficiary and you do not have an eligible Spouse at your date of death, then all pre-retirement death benefits shall be paid to your estate. DEFINITION OF A SPOUSE For the purpose of this plan, spouse is defined as a person who is married to the member. Common law partner is defined as the person who: 1. with the member, registered a common-law relationship under The Vital Statistics Act, or 2. not being married to the member, cohabited with him or her in a conjugal relationship for a period of (i) at least three years if either of them is married, or (ii) at least one year if neither of them is married. GOVERNMENT BENEFITS Canada Pension Plan (CPP) At age 65, you will be eligible to start receiving a pension from the CPP. The annual pension you will receive will be equal to 25% of the average of that portion of your salary during the last five years of employment that is below the Year's Maximum Pensionable Earnings. This pension is adjusted each year in line with changes in the cost of living. You may choose to commence your CPP benefits prior to age 65, but after age 60, subject to the early reduction for each month the commencement date is prior to age 65. You may also choose to delay your CPP benefits for up to 5 years beyond age 65. Your pension amount is increased by a set percentage for each month that you delay receiving CPP. For more information on the CPP visit http://www.hrsdc.gc.ca/eng/retirement/cpp/index.shtml Old Age Security (OAS) At age 65, you will be eligible to receive a pension from OAS if you meet the residency requirements. Effective July 1, 2013 you may delay your OAS payments for up to 5 years beyond your eligibility age. Your OAS benefit is increased by a set percentage for each month that you delay receiving OAS. This benefit is adjusted quarterly, based on changes in the cost of living. For more information on the OAS visit http://www.hrsdc.gc.ca/eng/retirement/oas/index.shtml You should apply for both the CPP and OAS benefits at least three months before you wish to commence your benefit. M:/SMPPP 8
GENERAL PROVISIONS Your pension benefits will be taxable when you retire. Since no tax was paid on the money before it was paid into the plan, you must report all pension payments as income when they are received. In effect, the tax is simply deferred until you actually receive the money. In all probability, you will be in a lower tax bracket after your retirement begins so the rate of tax you pay will be lower. You may not borrow against or in any way assign benefits payable under your pension plan. Your employer is responsible for carrying out the provisions of the plan - collecting and forwarding all contributions - determining whether or not you qualify for participation - and arranging for benefits to be paid. Employment or income earned while retired will not affect your benefits from this plan in any way. Proof of age (of yourself and your spouse or a designated beneficiary) or any other necessary information will be required by the Employer before any annuities are purchased. If you have any questions concerning this Pension Plan that are not completely answered in this booklet, your employer will be happy to discuss them with you. If a conflict arises between the wording of this booklet and that of the Plan text, the wording in the Plan text will prevail. M:/SMPPP 9