Delivering the promises. Cunningham Lindsey Canada Claims Services Ltd. Defined Contribution Registered Pension Plan 2012 Review

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 $$



• 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


• 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 %



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 %



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



“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



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 %



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 %



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


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


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.

[email protected]

1-800-287-7703 or 416-804-0581 (cell)

mailto:[email protected]

Questions

Documents

Delivering the promises. Cunningham Lindsey Canada Claims Services Ltd. Defined Contribution Registered Pension Plan 2012 Review