my money* * and how to make it grow

Preparing for Retirement

University of Northern British Columbia

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Things to consider…

Social lifeSocial life Activities as a coupleActivities as a couple

ResidenceResidence

Psychological aspectPsychological aspect

Individual activitiesIndividual activities

HobbiesHobbiesHealthHealth

Financial AspectFinancial Aspect

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Agenda

Your plan Savings Phase Retirement Income Phase

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Preparing for Retirement

Your Plan

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Your Plan at a glance

Employee contributions

Defined Contribution Pension Plan (DCPP)

Eligibility: Immediate for regular employees who work more than 18 hours/weekParticipation: CompulsoryVesting and Locking in: 2 years of continuous serviceTransfers: Transfers in from other financial institutions are accepted

Employer contributions

You contribute 3% of monthly earnings up to YMPE and 5% above YMPE (YMPE for 2010 $47,200)Additional voluntary contributions are accepted

UNBC contributes 8% of earnings up to YMPE and 10% over YMPE (up to revenue Canada limits)

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Meet Robert

Retirement Income PhaseSavings Phase

10 years from retirement 14 years of service with UNBC Annual salary $50,000 Contributes required amount to

the DCPP He is a conservative investor He wants to ensure he is saving

enough for retirement Wants to grow his money and

manage risk

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Savings Phase

Preparing for Retirement

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Plan Like Robert

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Robert’s assets

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Robert’s lifestyle in retirement

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Robert’s action plan

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Action Plan

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Action Plan

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Advantages of making additional voluntary contributions (AVCs)

Gross Rate of Return 5.75 %Fund Management Fees: 0.75 %Annual Revenue: $50 000

$561,775

$388,387

15

You contribute 3.11%*

Your employer contributes 8.11%* You contribute 3.11%*You contribute AVC of 5%Your employer contributes 8.11%**based on plan formula and $50,000 income

Effects of contributing to the maximum on your net salary

Annual Salary $50,000

Pay after taxes

Less Taxes

Your contribution

Gross Pay

Cost after tax per day

Tax Savings

Employer contribution

$1,362

( $405)

( $156 )

$1,923

3.11% Employee

5% Employee AVC

8.11% Employer

$7.28

( $54)

$156

$1,424

($409)

( $60 )

$1,923

$2.85

( $20)

3.11% Employee

8.11% Employer

$156

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Your Retirement Financial Challenges

OUTLIVING YOUR SAVINGS

YOUR MONEY LOSING VALUE

THE MARKET ROLLER COASTER

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The market roller coaster

$0

$10,000

$20,000

$30,000

$40,000

$50,000

Jun 95 Jun 96 Jun 97 Jun 98 Jun 99 Jun 00 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10

Consumer Price Index DEX 91-Days T-Bill Index DEX Universe Bond Index

S&P/TSX Composite Index S&P 500 TR (Bank of Canada) CAD

$ 13,291

$ 17,120

$ 19,632

$ 28,893

$ 34,583

Source: Morningstar.ca18

Outliving your savings

9525% chance

one spouse willlive to age 95

9150% chance

one spouse willlive to age 91

Source: Canadian Institute of Actuaries – 1994 Uninsured Pensioner Mortality Table Projected to 2020.

Retirement

65

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Your money losing value

$18,490*$6,715Cost of a car

$303,700**$110,292Cost of a house

$50$21Cost of Groceries+

1980 Today

+ Inflation impact of the cost of groceries is measured by the CPI sub-index for food purchased from stores; inflation impact on the cost of a car and house is based on the aggregate CPI. Data source: Statistics Canada* Canadian MSRP for a 2010 Honda Civic Sedan DX with air conditioning** Average price for a detached bungalow in Canada, as at September 30, 2009

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Meet Robert

10 years from retirement 14 years of services with UNBC Annual salary $50,000 Contributes the required amount

to the DCPP He is a conservative investor He wants to ensure he is saving

enough for retirement Wants to grow his money and

manage risk Adds my money for life coverage

Retirement Income PhaseSavings Phase

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Financial Challenges

The market roller coaster Outliving your savings Your money losing value

RETIREMENT INCOME PHASE

Financial Challenges in the Savings Phase and the Retirement Income Phase

The market roller coaster Outliving your savings Your money losing value

SAVINGS PHASE

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my money for life

my money for life

He gets a stable andpredictable income for life

RETIREMENT INCOME PHASE

Robert’s savings protected from market volatility

SAVINGS PHASE

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RRCD

100 000 $

REER

50 000 $

Insuring Robert’s registered retirement savings

DCPP

$100 000

DCPP without coverage DCPP with my money for life Robert decides to add my

money for life on his entire DCPP balance

DCPP$100,000

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RRCD

100 000 $

REER

50 000 $

Benefit Base

The Benefit Base is the starting point used to calculate Robert’s annual income guarantee

Robert allocates $100,000 of his retirement savings to my money for life He contributes $467 to DCPP per month for a total of $5604 annually At the end of the first year his Benefit Base is $105,604.

BENEFIT BASE

$100,000CONTRIBUTIONS

$5604+

WITHDRAWALS

$0–

NEW BENEFIT BASE

$105,604=

Assumptions

Does does not reflect market increases 25

Assumes the following annual sequence of returns:Year 1: -15%; Year 2: 6%; Year 3: 8%; Year 4: 9%; Year 5: 11% ….repeat.

Benefit Base Resets

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my money for life is reported separately from your uninsured savings on your statements

Semi-annual statement can be viewed online

Annual statement mailed directly to your home

my statement

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Investment options

You must have 40% of your money invested in Fixed Income Investment.

Asset Category Fund Name

Fixed Income BlackRock Universe Bond Index Fund

PH&N Bond Fund

Money Market SLF Money Market Fund

Balanced Beutel Goodman Balanced Fund

McLean Budden Balanced Growth Fund

McLean Budden Select Balanced Fund

Bonavista Balanced Fund*

Canadian Equity Beutel Goodman Canadian Equity Fund

BlackRock S&P/TSX Composite Index Fund

McLean Budden Canadian Equity Fund

McLean Budden Canadian Equity Growth Fund

U.S. Equity BlackRock US Equity Index Fund

McLean Budden US Equity Fund

CI American Value Fund*

Global Equity McLean Budden Global Equity Fund

Minimum 40%

Up to 60%

28*Not eligible for my money for life

Investment choice and fees

You must have 40% of your money invested in Fixed Income Investment.

Asset Category Fund Name FMFsMMFL coverage fees

Total fees

Fixed Income BlackRock Universe Bond Index Fund

PH&N Bond Fund

0.44%

0.66%

0.65%

0.65%

1.09%

1.31%

Money Market SLF Money Market Fund 0.39% 0.60% 0.99%

Balanced Beutel Goodman Balanced Fund

McLean Budden Balanced Growth Fund

McLean Budden Select Balanced Fund

0.73%

0.64%

0.71%

0.85%

0.85%

0.85%

1.58%

1.49%

1.56%

Canadian Equity Beutel Goodman Canadian Equity Fund

BlackRock S&P/TSX Composite Index Fund

McLean Budden Canadian Equity Fund

McLean Budden Canadian Equity Growth Fund

0.73%

0.45%

0.65%

0.64%

0.95%

0.95%

0.95%

0.95%

1.68%

1.40%

1.60%

1.59%

U.S. Equity BlackRock US Equity Index Fund

McLean Budden US Equity Fund

0.45%

0.71%

0.95%

0.95%

1.40%

1.66%

Global Equity McLean Budden Global Equity Fund 0.67% 0.95% 1.62% 29

Action Plan

Review page 2 and 3 of your annual expense worksheet to help you determine your needs.

Complete the Retirement Planner online or consult a financial advisor

Review periodically your investment strategy

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Retirement Income Phase

Preparing for Retirement

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Government Retirement Programs

Government Programs1. Canada Pension Plan2. Old Age Security3. Guaranteed Income Supplement4. Allowance

For more information CPP/OAS/GIS/Allowance - 800-277-9914 or

www.servicecanada.gc.ca

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Canada Pension Plan (CPP) - Overview

Designed to replace 25% of the earnings on which you contributed over your working life

Retirement pension paid to people who are at least 60 years of age Conditions apply in order to draw an early pension Pension is reduced if taken before age 65 and

increased if taken after age 65

Need to apply (6 months in advance)

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CPP - Eligibility to apply from ages 60 to 64

Stop working Not working by the end of the month before the

pension begins and during the month that it begins

OR

Have low earnings Earn less than the current maximum retirement

pension amount in the month prior to starting to collect and during the month that it begins

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Old Age Security (OAS) - Overview

Payable to anyone who has lived in Canada for a minimum of 10 years between the age of 18 and 65

Maximum pension paid if you lived in Canada for more than 40 years between the age of 18 and 65

Eligible at age 65 (must apply) Clawback provisions exist based on your other

income

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OAS – Clawback income threshold

If your net income is above $66,733 there is an OAS clawback (repayment) to part or all of your OAS payments

Full OAS is eliminated when your net income is $108,090 or above

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How much might I get from the government?

$518.51/mth($6,222/yr)

$505.11/mth($6,061/yr)

$489.12/mth($5,869/yr)

2010 CPP OAS

Maximum Monthly

Survivor Benefit

Average

$934.17/mth($11,210/yr) $518.51/mth

($6,222/yr)

$560.50/mth($6,726/yr)

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Retirement Income options

Preparing for Retirement

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Retirement income options for DC pension plans

AnnuityLife Income Fund (LIF)

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Annuities - Overview

Series of future payments in exchange for a lump sum today

Irrevocable once purchased Sensitive to interest rates at time of purchase Once your beneficiary passes on, payments

will cease under most circumstances Does not require active management Is not affected by financial markets

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What’s $100K worth?

These rates are shown for illustration purposes. They are subject to change without notice and current as of the time of writing.

None 5 years 10 years 15 years

$536 $535 $530 $522

$512 $512 $511 $508

Joint life annuity – Male aged 65 with Female spouse aged 65Guaranteed

Joint life annuity – Female aged 65 with Male spouse aged 65Guaranteed

60%

60%

100%

100%

None 5 years 10 years 15 years

$553 $551 $545 $534

$512 $512 $511 $508

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What’s $100K worth?

These rates are shown for illustration purposes. They are subject to change without notice and current as of the time of writing.

Payments are coded in gross dollars. taxes still apply. Annuity calculations are proprietary and this Information will not be divulged

None 5 years 10 years 15 years

$628 $622 $605 $578

$576 $572 $562 $546

Guaranteed

Male, aged 65

Female, aged 65

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Retirement income options for DC pension plans

AnnuityLife Income Fund (LIF)

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Life Income Fund (LIF) - Overview

Money in a LIF continues to grow tax deferred as long as there is money in the plan

Money can be invested in various options (e.g. mutual funds, stocks, bonds, GICs)

Begin to draw a retirement income from the account (page 4) Annual minimum amount applies (from Income Tax Act) Annual maximum amount applies (from Pension Acts)

Minimum withdrawal required – at age 65 it is 4% of the market value on January 1st

Maximum withdrawal restriction is the greater of:

÷ The previous year’s investment earnings; or

÷ The maximum established by a government formula – at age 65 – 7.20%

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Life Income Fund (LIF) - Features

A beneficiary can be designated Upon death, the balance of your account

is transferred to your beneficiary on a locked in basis

An annuity can be purchased at any time

Call the Customer Solutions Centre at 1- 866-224-3906 to understand your options

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Retirement income options for RRSPs

Annuity

Registered Retirement Income Fund (RRIF)

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Registered Retirement Income Fund (RRIF)- Overview

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Money in a RRIF continues to grow tax deferred as long as there is money in the plan

Money can be invested in various options (eg. mutual funds, stocks, bonds, GICs)

Begin to draw a retirement income from the account Annual minimum amount applies (from Income Tax

Act) Annual maximum does not apply!

Registered Retirement Income Fund (RRIF)- Features

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Can close anytime and take cash (less tax)

A beneficiary can be designated An annuity can be purchased at any time

Call the Customer Solutions Centre at 866-224-3906 to understand your options

MARKET AND INFLATION RISK None

RETIREMENT INCOME

ANNUITY

Guaranteed for life

INVESTMENT CHOICE None

DEATH BENEFIT Varies

LIF/RRIF

Not guaranteed for life

Yes

Yes

Market Value

None

Guaranteed for life

Yes

Market value

Comparing retirement income products

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my money for life

my money for life

He gets a stable andpredictable income for life

RETIREMENT INCOME PHASE

Robert’s savings protected from market volatility

SAVINGS PHASE

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my money for life

LIF, RRIFDCPP, RRSP

my money for life

Retirement income phase

Convert your savings to retirement income through Sun Life Financial’s group retirement income products at age 65 and maintain

your my money for life.

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BENEFIT BASE

$105,604 5%x

ROBERT’S ANNUAL INCOME GUARANTEE

$5,280.20=

Annual income guarantee

Annual income guarantee is equal to 5% of your Benefit Base, starting at age 65.

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Assumes the following annual sequence of returns:Year 1: -15%; Year 2: 6%; Year 3: 8%; Year 4: 9%; Year 5: 11% ….repeat.

$0

$25,000

$50,000

$75,000

$100,000

$125,000

$150,000

$175,000

$200,000

55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95

Robert's Age

Ac

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un

t V

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e/B

en

efi

t B

as

e

Retirement

Resets every three years if current market value is higher

SAVINGS PHASE RETIREMENT INCOME PHASE

Income Phase

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More information

I can help you enrol in my money for life today or you can book a one on one session with me tomorrow to discuss your options further.

For more information on my money for life go to www.mysunlife.ca/mymoneyforlife

For more information on other retirement products got to www.mysunlife.ca, access your account and select retiring soon

For questions regarding retirement options including LIFs, annuities and my money for life, call a Financial Services Consultant at 1-877-808-9303

Call 1-877-805-9303

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Thank you

Questions?

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