delivering the promises. cunningham lindsey canada claims services ltd. defined contribution...
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Delivering the promises
Cunningham Lindsey Canada Claims Services Ltd.
Defined Contribution Registered Pension Plan2012 Review
Agenda
• Why plan for retirement? Sources of retirement income Time & return Benefits of starting early
• Your plan
• Investments How do you chose? Making changes Investment Basics website
Agenda
• Personal Annual Review Retirement budget
• Steps Retirement Program
• CPP changes
• Service and support available
Why plan for retirement?
• Do you want to maintain your lifestyle? Food, clothing shelter & transportation
No “free lunch”
One third of Canadians age 60 or older are worried they’ll outlive their retirement savings1
Two thirds of Canadian households expecting to retire in 2030 are not saving enough to meet necessary living expenses2
1 2007 Decima Research Poll2 2007 Study by University of Waterloo and Canadian Institute of Actuaries
Sources of retirement income
• Canadians generally rely on three distinct sources of income: Government Pensions
CPP: $987/month OAS: $540/month
Personal Savings RRSPs, TFSAs, GICs, Mutual Funds Home equity, line of credit, reverse mortgage Other investments
Company Retirement Plan CLC Registered Pension Plan
Sources of Income of Senior Couple Families - 2009
1,550,630
2,051,790
1,601,530
198,0302,059,700
2,653,940
2,127,860
669,350
OAS (49%) CPP/QPP (64%)
Other/Private Pensions (50%) RRSP (6%)
Investment (65%) Other Income (83%)
Wages, Salaries, Commissions (67%) Self- Employment (21%)
• Percentage & number of tax filers reporting income from:
$17,853,740
$43,701,720
$24,312,055
$19,375,285
$1,529,645
$21,175,805
$147,077,325
$14,732,180
OAS (49%) CPP/QPP (64%)
Other/Private Pensions (50%) RRSP (6%)
Investment (65%) Other Income (83%)
Wages, Salaries, Commissions (67%) Self- Employment (21%)
$ X 1,000
• Percentage & amount of income received from those sources:
Sources of Income of Senior Couple Families - 2009
Time & return
$120,780 $66,439
• Starting 10 years earlier means Terry will have $54,341 more than Chris
Assumptions: Contributions made at the beginning of each year, compounded annually, at a 5% rate of return.
40
$40,000
30
$30,000
• By starting early, you can contribute less to achieve your retirement goals
6%
30’s 40’s 50’s
18%10% 25%
If you start in your…
Percentage of income you have to save for retirement:
20’s
Income Income Income Income
Benefits of starting early
Benefits of a group pension plan
• A convenient way to save (payroll deduction)– Immediate tax benefits
• CLC contributions add to your savings
• Tax-deferred growth
• Lower investment management fees
• Leading fund managers
• A way to consolidate your savings
Your plan - key highlights
Contribution Category
Employee Required Contributions
Employer Required Contributions
Employee Voluntary Contributions
Contributions 5% of your earnings, maximum $7,500
5% of your earnings, maximum $7,500
To CRA maximum (2012: 18% of your earnings, maximum $23,820)
WithdrawalsNo withdrawals while actively employed with CLC
No withdrawals while actively employed with CLC
Withdrawals allowed at any time
Please note:
Vesting of Employer Required Contributions will be changing to “immediately” in the future in Ontario
Vesting of Employer Required Contributions is immediate in Quebec
Investments – How do you choose?
If you chose two or more from The best investment
for you isYour
symbol is…
Column A To select a Retirement Date Fund
Column B To select an Asset Allocation Fund
Column CBuild your own portfolio
with individual funds
Automatic rebalancing; “Gentle Slope” approach
Retirement Date Funds
Asset Allocation Funds
Select the (1) that most closely matches your risk tolerance
‘Build Your Own’ portfolio – 66 Market based funds7 Guaranteed accounts
Default fund
If you have not chosen fund(s) for contributions to your plan, they will be invested in the ‘plan default’ investment until you provide instructions.
Plan default investmentRetirement Date Fund selected according to your date of birth and an
estimated year of retirement at age 65.
If your date of birth is not on file, contributions will be invested in the Manulife McLean Budden Balanced Growth Fund (code 5161).
Important: This fund may not be the most appropriate investment for you. Please review the materials, obtain assistance when necessary and provide your investment selection to Manulife
www.manulife.ca/investmentbasics
Investment Basics
Personal Annual Review
• Review the details of your planDo you contribute the maximum amount?
Review plan information
Contact your plan administrator to: Increase contribution amounts
Voluntary $$
Personal Annual Review
Personal Annual Review
• Are there changes to be made? Name change Address change Beneficiary
• Are you on track towards your retirement goal? Do you have one? Savings gaps?
Provide up-to-date information to Manulife Financial Address can be updated online at www.manulife.ca/GRO For beneficiary changes, download a Change Form from
www.manulife.ca/GRO
• Your retirement budgetExpenses / Income“70%” rule of thumb
Working vs. retirement lifestyle Recreational expenses
may increase Day-to-day expenses
often decrease
Create your retirement income goal
Have you thought about…?
• Set a retirement goal Lifestyle or income
• Create a path to get to goal Select investments
• Track your progress Are you on course towards your
goal?
Steps Retirement Program®
Canada Pension Plan
Changes
Canada Pension Plan - CPP
• You & your company contribute 4.95% of earnings Max: 2012 - $2,307 (each)
• Maximum benefit, $987/month @ 65, based on: 25% of 5 year average YMPE / 12
Average YMPE for 2012 = $47,360
• You can retire Early Late
• Payments are indexed to inflation annually
Canada Pension Plan - CPP
• Changes have been made2011
Gradual increase in benefit enhancement for those who retire late
– + age 65 to 70– Over 3 years– From 0.5%/month (2010) to 0.7%/month (2013)
Year % monthly increase % annual increase Increase if age 70
2011 0.57 6.84 34.2 %
2012 0.64 7.68 38.4 %
2013 0.70 8.40 42.0 %
Canada Pension Plan - CPP
• Changes have been made2012
Gradual increase in benefit reduction for those who retire early
– Age 60 to < 65– Over 5 years– From 0.5%/month (2010/2011) to 0.6%/month (2016)
Year % monthly decrease % annual decrease Decrease if age 60
2012 0.52 6.24 31.2 %
2013 0.54 6.48 32.4 %
2014 0.56 6.72 33.6 %
2015 0.58 6.96 34.8 %
2016 0.60 7.20 36.0 %
Canada Pension Plan - CPP
• Changes have been made2012
Don’t have to stop work to collect– But, you & employer still contribute between ages 60 to 65
» Even if you’ve already started to receive payment– Voluntary participation after 65
» Opt out» No loss of hours or earnings
Creates “Post-Retirement Benefit”– Will be paid even if you are receiving maximum amount– Does not increase amount of other CPP benefits– Not subject to
» Credit split» Pension sharing
“Credit” for years of low or no earnings increased to 16% = 7.5 years
Canada Pension Plan - CPP
• Changes have been made2014
“Credit” for years of low or no earnings increased to 17% = 8.0 years
Quebec Pension Plan
Changes
Quebec Pension Plan - QPP
• You & company currently contribute 5.025% of earnings Max: 2012 - $2,341.65 (each)
• Maximum benefit, $987/month @ 65, based on: 25% of 5 year average AMPE / 12
Average AMPE for 2012 = $47,360
• You can retire Early Late
• Payments are indexed to inflation annually
Quebec Pension Plan - QPP
• Changes have been made2012
Gradual increase contribution amount
– 0.075% each for employee, employer – Total amount – 10.80 % @ 2017– 2018
» Automatic adjustment for future amounts
Year Employee Amount Employer Amount Total
2012 5.025 % 5.025 % 10.05 %
2013 5.100 % 5.100 % 10.20 %
2014 5.175 % 5.175 % 10.35 %
2015 5.250 % 5.250 % 10.50 %
2016 5.325 % 5.325 % 10.65 %
2017 5.400 % 5.400 % 10.80 %
Quebec Pension Plan - QPP
• Changes have been made2013
Increase in benefit enhancement for those who retire late
– + age 65 to 70– From 0.5%/month to 0.7%/month
Year % monthly increase % annual increase Increase if age 70
2013 0.70 8.40 42.0 %
Quebec Pension Plan - QPP
• Changes have been made2014
Phased increase in benefit reduction for those who retire early
– Age 60 to < 65– Over 3 years– From 0.5 %/month (2014) to 0.6 %/month (2016)– Rate will increase proportionally to amount of pension
» Minimum – 0.5%» Maximum – 0.6%
Will not apply to those born before January 1, 1954
Monthly pension @ 65 Reduced by 30 % New Proportional Reduction Reduction is:
$298 $209 $203 32 %
$596 $417 $395 34 %
$960 $672 $614 36 %
Services and support
Services and support
Web site available 24 hours a day, 7 days a week.
• Online at www.manulife.ca/GRO
• Monitor and manage your accounts:
Obtain your account balance (updated daily)
View: •Summary of your contributions
•Current unit values
•Personal rates of return
• Make changes to your investment mix
• Change your future investment instructions
• Call Manulife toll-free at 1-888-727-7766 Financial Education Specialists
Monday to Friday, 9 a.m. to 5 p.m. ET for assistance with investments and retirement planning
Customer Service Representatives Monday to Friday, 8 a.m. to 8 p.m. ET for account inquiries and
administrative assistance
Services and support
Interactive Voice Response (IVR) service available 24 hours a day, 7 days a week.
Use your customer number and PIN to gain access.
As a member of a group plan with Manulife, you can view a series of online presentations hosted by personal finance writer and host of TV’s ‘Til Debt Do Us Part’, Gail Vaz-Oxlade
Gail’s webcasts have addressed the topics of “Debt vs. Savings”, “Finding Money to Save” and“Creating a Financial Plan”
You can watch a recording at:www.manulife.ca/gvo
Gail Vaz-Oxlade
New – Secure website home page
• Second quarter 2012 Personalized
banner Account balance Estimated
retirement income Message centre Learning centre
Personal Consultation
• For personal consultation please contact your consultant:
David Mannila
Corporate Benefit Consultants Ltd.
1-800-287-7703 or 416-804-0581 (cell)
Questions