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Plan for life Create a presentation 1 To create your presentation, please select the plan type, whether or not TFSA is included, the enrolment type, and the investment solution: Slide 2 Enrolling in your group program Plan for life Slide 3 Company name Broker/Advisor and Logo Date Slide 4 Plan for life Broker/advisor name xxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxx 4 Slide 5 Plan for life Key topics Enrolling today Contributions Investments Guidance Questions and answers 5 Slide 6 Plan for life How do you feel about your retirement? 6 Slide 7 Plan for life Did you know? 7 70% of employees approaching retirement are concerned with having enough income to cover essential expenses (home, food and other basic needs) throughout their retirement Source: Crunch Research Insights & Advice conducted for The Standard Life Assurance Company of Canada, Retirement transition needs, August 2012 Slide 8 Plan for life A dollar a day 8 $3,351 $8,810 $17,701 *The calculations are based on 5% rate. $20,000 $15,000 $10,000 $5,000 $0 Slide 9 Plan for life How much do I need? 9 Experts suggest you will need to replace 70% of your salary. Keep in mind, your income will come from three sources: Government programs (Old Age Security, Canada or Quebec pension Plan) Your group savings and retirement program Your personal savings (real estate, other savings plans or income) Slide 10 Plan for life Advantages of payroll deductions In the example below, saving $50 really only costs you $30 on your take home pay. And you pay less in tax. 10 5% = $50 Slide 11 Plan for life How much am I allowed to contribute? 11 Limit set by Canada Revenue Agency (CRA) 18% of your current years earned income* or the dollar maximum stipulated for the current year** - Your Pension Adjustment (PA) + Unused contribution room Note: It is your responsibility to monitor your limits Check your Notice of Assessment * For RRSP, its the previous years earned income ** The yearly limit can be found via the following website: www.cra-arc.gc.cawww.cra-arc.gc.ca Slide 12 Plan for life Start now, save more. Regular contributions. 12 Same amount of money ($48,000), same investment return (5%), longer period of time the savings almost double! You simply earn more by putting aside smaller amounts of money over a longer period of time. $100/month over 40 years $200/month over 20 years $148,856 $81,492 Slide 13 Plan for life Pay yourself first. 13 $600 $400 $510 $340 $150 Slide 14 Plan for life Your group program 14 Group retirement plan Registered Retirement Savings plan (RRSP) Employee contributions Employer contributions Review the document in your enrolment kit that states the main provisions of your program for more plan details and other important information.. Slide 15 Plan for life Your retirement program 15 Group retirement plan Registered Retirement Savings plan (RRSP) Employee voluntary contributions Review the document in your enrolment kit that states the main provisions of your program for more plan details and other important information. Slide 16 Plan for life Your retirement program 16 Group retirement plan Deferred Profit Sharing Plan (DPSP) Employer Contributions No employee Contributions allowed Review the document in your enrolment kit that states the main provisions of your program for more plan details and other important information. Slide 17 Plan for life Your retirement program 17 Group retirement plan Defined contributions registered pension plan (DC RPP) Employer contributions Review the document in your enrolment kit that states the main provisions of your program for more plan details and other important information. Employee Contributions (if applicable) Slide 18 Plan for life Your retirement program 18 Group retirement plan Simplified Pension Plan (SPP) Employer contributions Review the document in your enrolment kit that states the main provisions of your program for more plan details and other important information. Employee Contributions (if applicable) Slide 19 Plan for life Your retirement program 19 Group retirement plan Deferred Profit Sharing Plan (DPSP) Registered Retirement Savings Plan (RRSP) Employer contributions Employee contributions Review the document in your enrolment kit that states the main provisions of your program for more plan details and other important information. Slide 20 Plan for life Your retirement program 20 Group retirement plan Defined contributions registered pension plan (DC RPP) Registered Retirement Savings Plan (RRSP) Employer Contributions Employee Contributions (if applicable) Employee Contributions Review the document in your enrolment kit that states the main provisions of your program for more plan details and other important information. Slide 21 Plan for life Your retirement program 21 Group retirement plan Simplified Pension Plan (SPP) Registered Retirement Savings Plan (RRSP) Employer Contributions Employee Contributions (if applicable) Employee Contributions Review the document in your enrolment kit that states the main provisions of your program for more plan details and other important information. Slide 22 Plan for life A simple, flexible arrangement whereby your employer pays contributions, which amounts are based on the companys profits. You are not allowed to contribute to the plan. Group buying power favourable interest rates and lower investment management fees. Tax deferred compensation. Flexibility at termination and retirement vesting to occur no later than 24 months after participation began. No locking-in rules. What is a DPSP? Slide 23 Plan for life Termination or retirement (DPSP) At termination or retirement assets can be: transferred to a RRSP cashed out (minus the applicable taxes) transferred to another DPSP or a Pension Plan (if permitted) converted into an annuity, or a RRIF Slide 24 Plan for life What is a DC-RPP? Contributions made by the employer, and in certain cases, the employee as well You are responsible for making the investment decisions within the plan Account value used to provide retirement income Amount of income you can expect is directly related to the amount of assets in your account at the time of retirement. Slide 25 Plan for life What is a DC-RPP? Contributions made in accordance to a pre-defined formula specified in the plan rules Employee contributions are deducted from pay before income tax Employer contributions dont constitute a taxable benefit for you until benefit payment Employer and employee contributions are generally locked-in, meaning that the assets can only be used to provided for a retirement income. Under certain conditions, the assets can be non locked-in. Vesting rules may apply 25 Slide 26 Plan for life Termination or retirement (DC-RPP) No withdrawals allowed during employment. At termination or retirement, vested contributions can be: transferred to another Pension Plan (if that plan permits) for locked-in assets: - transferred to a locked-in RRSP or LIRA - used to generate a retirement income through a LIF* for non locked-in assets: - transferred to a RRSP - cashed out (minus applicable taxes) - used to generate a retirement income through a RRIF converted into an annuity 26 *or other similar prescribed plans Slide 27 Plan for life What is a SPP? Participation is voluntary or compulsory, as per plan rules Contributions made by the employer, and in certain cases, the employee as well Contributions made in accordance with a pre-defined formula specified in the plan rules Employee contributions are deducted from pay before income tax Employer contributions dont constitute a taxable benefit for you until benefit payment Employer contributions are locked-in In Manitoba, employee contributions are locked-in. In Quebec, they are generally not locked-in unless specified in the plan rules. Immediate vesting 27 Slide 28 Plan for life Termination or retirement (SPP) At termination or retirement assets can be: transferred to another Pension Plan (if that plan permits) for locked-in assets: - transferred to LIRA - used to generate a retirement income through a LIF* for non locked-in assets: - transferred to a RRSP - cashed out (minus applicable taxes) - used to generate a retirement income through a RRIF converted into an annuity 28 * or other similar prescribed plans Slide 29 Plan for life What is a Group RRSP? The advantages of a Group RRSP: A convenient, disciplined savings program through payroll deduction Immediate tax reductions Dollar cost averaging reduces investment risk Group buying power favorable interest rates and lower investment management fees Income-splitting opportunities* 29 *If spousal account available under your program Slide 30 Plan for life Termination or retirement (Group RRSP) At termination or retirement assets can be: transferred to another RRSP cashed out (minus the applicable taxes) converted into an annuity, or a RRIF 30 Slide 31 Plan for life Your contributions Your tax deduction Account in your name Your contributions Your tax deduction Account in spouses name Employee account Spousal RRSP account Spousal account Group RRSP Slide 32 Plan for life Comparison of splitting retirement income RRSPIncomeTaxes paid*Money kept Spouse #1$50,000$15,073$34,927 Spouse #2000 Income splitting Spouse #1$25,000$5,096$19,904 Spouse #2$25,000$5,096$19,904 Total$50,000$10,192$39,808 Spousal RRSP account * We assume that the hypothetical tax rates are 30.146% and 20.384%. Slide 33 Plan for life Your group program - savings 33 Group savings plan Tax-Free Savings Account (TFSA) Employee voluntary contributions Review the document in your enrolment kit that states the main provisions of your program for more plan details and other important information. Slide 34 What is a TFSA? Capital gains and other investment income earned will not be taxed even when withdrawn! Started January 1, 2009 with a contribution limit of $5,000 per year, indexed to inflation and rounded to the nearest $500 on a yearly basis TFSA withdrawals do not affect your eligibility and/or calculations for federal income- tested benefits and credits Carry forward unused contribution room for an indefinite period Choose from a variety of investment options much like those in your group retirement program TFSA assets can be transferred to a spouse upon death Effective savings vehicle for both short term and long term goals Slide 35 Plan for life Investments Market-related funds Investments are not guaranteed Invest in a variety of securities Fixed Income Funds Balanced Funds Equity Funds Compound Interest Accumulator (CIA) Daily Interest Account (DIA) Guaranteed funds Little or no risk Lower rate of return over the long-term 35 Slide 36 Plan for life Fixed Income Funds -Invest in interest generating investments -Treasury bills, bonds, mortgages Equity Funds -Invest in equity or shares of corporations -Canadian equity, American, International Balanced Funds -Invest in a mixture of stocks and bonds -Portfolio changes as market conditions change Investments 36 Slide 37 Plan for life Your investor profile 37 Slide 38 Plan for life 38 Avenue Portfolios Investor profile Investment period Conservative >25 years Conservative 20 - 25 years Conservative 15 - 20 years Conservative 10 15 years Conservative 5 10 years Moderate >25 years Moderate 20 - 25 years Moderate 15 - 20 years Moderate 10 - 15 years Moderate 5 - 10 years Aggressive >25 years Aggressive 20 - 25 years Aggressive 15 - 20 years Aggressive 10 - 15 years Aggressive 5 - 10 years Moderate