Transcript PowerPoint Templates

Delivering the promises
Cunningham Lindsey Canada
Claims Services Ltd.
Defined Contribution Registered Pension Plan
2012 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 Poll
2 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
• Percentage & number of tax filers reporting income from:
OAS (49%)
CPP/QPP (64%)
Other/Private Pensions (50%)
RRSP (6%)
Investment (65%)
Other Income (83%)
Wages, Salaries, Commissions (67%)
Self-Employment (21%)
669,350
1,550,630
2,127,860
2,051,790
2,653,940
1,601,530
2,059,700
198,030
Sources of Income of Senior Couple Families 2009
• Percentage & amount of income received from those sources:
OAS (49%)
CPP/QPP (64%)
Other/Private Pensions (50%)
RRSP (6%)
Investment (65%)
Other Income (83%)
Wages, Salaries, Commissions (67%)
Self-Employment (21%)
$14,732,180
$17,853,740
$21,175,805
$43,701,720
$1,529,645
$147,077,325
$ X 1,000
$24,312,055
$19,375,285
Time & return
• Starting 10 years earlier means Terry will have $54,341 more
than Chris
40
30
$40,000
$30,000
$120,780
$66,439
Assumptions: Contributions made at the beginning of each year, compounded annually, at a 5% rate of return.
Benefits of starting early
• By starting early, you can contribute less to achieve your
retirement goals
If you start in your…
20’s
Income
Percentage of income
you have to save for
retirement:
30’s
Income
6%
40’s
Income
10%
50’s
Income
18%
25%
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)
Withdrawals
No 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 is
Column A
To select a Retirement Date Fund
Column B
To select an Asset Allocation Fund
Column C
Build your own portfolio
with individual funds
Your
symbol is…
Retirement Date Funds
Automatic rebalancing; “Gentle Slope” approach
Asset Allocation Funds
Select the (1) that most closely matches your risk tolerance
‘Build Your Own’ portfolio –
66 Market based funds
7 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 investment
Retirement 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
Investment Basics
www.manulife.ca/investmentbasics
Personal Annual Review
Personal Annual Review
• Review the details of your plan

Do you contribute the maximum amount?
 Review plan information
 Contact your plan administrator to:
 Increase

contribution amounts
Voluntary $$
Personal Annual Review
• Are there changes to be made?

Name change

Address change

Beneficiary
• Are you on track towards your retirement goal?
 Provide up-to-date information to Manulife Financial

Do you have one?
 Address can be updated online at www.manulife.ca/GRO
 Savings
gaps?
 For
beneficiary
changes, download a Change Form from
www.manulife.ca/GRO
Have you thought about…?
• Your retirement budget

Expenses / Income

“70%” rule of thumb


Working vs. retirement lifestyle

Recreational expenses
may increase

Day-to-day expenses
often decrease
Create your retirement income goal
Steps Retirement Program®
• 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?
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 made
2011

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 made
2012

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 made
2012

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 made
2014

“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 made
2012

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 made
2013

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 made
2014

Phased increase in benefit reduction for those who retire early
– Age 60 to < 65
New Proportional
Monthly pension @ 65
Reduced by 30 %
Reduction is:
– Over 3 years
Reduction
– From 0.5 %/month (2014) to 0.6 %/month (2016)
$298
$209
$203
32 %
– Rate will increase proportionally to amount of pension
» Minimum
$596
$417– 0.5%
$395
34 %
» Maximum – 0.6%
$960
$672
$614
36 %
 Will not apply to those born before January 1, 1954
Services and support
Services and support
• 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
Web site available
24 hours a day,
7 days a week.
• Personal rates of return
• Make changes to your investment mix
• Change your future investment instructions
Services and support
• 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
Interactive Voice Response (IVR) service available 24 hours a day, 7 days a week.
Use your customer number and PIN to gain access.
Gail Vaz-Oxlade

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
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.
[email protected]
1-800-287-7703 or 416-804-0581 (cell)
Questions