McGill University Pension PlanRetirement Information Session

The presentation can be accessed online at: http://www.mcgill.ca/hr/pensions/mupp/sessions

MS Teams Etiquette

• All participants have been muted

• Please disable your camera

• During the question period, if you have a question, please

▫ use the “chat” function

• Any questions not answered during the session can be emailed to: pensions.hr@mcgill.ca.

2

This presentation is intended to inform you about the McGill Pension Plan & the importance of integrating pension investment decisions to your financial management.

This is not financial advice & should not be taken as such. It is meant to alert you to the matters to look into.

Your individual needs & circumstances may not be adequately addressed by the info contained in this presentation.

3

Learning Objectives

4

Understand the importance of planning your retirement;

Identify the settlement options available to you & the decisions you need to make;

Understand the need to review your investment strategy; and

Learn which benefits are offered post-retirement and eligibility requirements;

Learn where to get more information.

McGill provides the following post-retirement benefits:

Supplemental Health Plan

Dental Plan

Life Insurance Plan

For more information: http://www.mcgill.ca/hr/benefits/insurance/change-coverage

6

Post-Retirement Benefits

Minimum age 55

Minimum 10 years continuous service

Participated in the benefit plans for a minimum of 10 consecutive years

And: Must be a resident of Canada

Coverage is dependent on eligibility for Medicare (RAMQ)

7

Eligibility Requirements

Cost sharing is: 70% paid by retiree & 30% paid by McGill

Eligible dependents can continue coverage

Spouse can continue coverage upon death of pensioner

8

Supplemental Health Plan

Coverage identical to that of actives (such as hospitalization, physiotherapy etc..)

Exceptions: Prescription drugs and Emergency Travel Assistance

9

Coverage - Supplemental Health Plan

At age 65, Quebec residents will be automatically registered with RAMQ Drug Plan

Dependents under 65 must also be covered by the RAMQ Drug Plan; contact the RAMQ to register dependents

McGill Health Plan may cover drugs not listed on RAMQ formulary

10

Quebec Drug Plan - RAMQ

Out-of-country/province coverage Emergency medical expenses/assistance Coverage includes pre-existing conditions

• Medical condition must be stable 90-days per trip 100% reimbursement of eligible expenses

For more information: http://www.mcgill.ca/hr/benefits/insurance/travel

11

Travel Insurance - Supplemental Health Plan

New employees hired as of January 1, 2010 – not eligible to dental plan at retirement

Cost is paid 100% by retiree

Eligible dependents can continue coverage

Spouse can continue coverage upon death of pensioner

12

Dental Plan

No residency requirements

Plan reimburses expenses based on Quebec Fee Guide for General Practitioners

Same plan for actives and pensioners

13

Dental Plan - continued

Coverage continues at retirement

14

Life Insurance

• Until age 65: 50% of pre-retirement salary to $50,000• 65 +: 50% of pre-retirement salary to $30,000• McGill pays 100%

Basic Coverage

• Can maintain insurance purchased before retirement• Maximum = $100,000• Retiree pays 100%• Rates based on age• Can reduce coverage at any time

Optional Coverage

Why save for retirement?

30 40 50

20 60 70 80 90Career Begins Current AverageAge 23 Retirement Age 61

Current Life Expectancy of a 60-year-old:MALE = age 86.9 increasing to age 94.5FEMALE = age 88.9 increasing to age 95.5

17

35+ working years 25+ years inretirement

Projected Life Expectancy18

Source: CPM2014 Publ Improvement Scale B

86

87

88

89

90

91

92

93

94

95

96

60 65 70 75 80 85 90

Aver

age

Life

Expe

ctan

cy

Male FemaleAge

Maximum Recorded Life Expectancy: 122 years – Jeanne Calment (France)

Aver

age

Life

Exp

ecta

ncy

Canadians need 60% to 70% income replacement in retirement.

Only 50% of Canadian have access to a pension plan.

How much will I need?

Forecast spending needs in retirement

Forecast after-tax income from all sources

Determine the gap between needs & income

Determine additional savings needed by target retirement date

20

Will I have enough in retirement?

21

Building your

Retirement McGill University Savings Program• MUPP (49%)*• GRSP• GTFSA

Government Programs• Quebec Pension Plan (24%)• Old Age Security (12%)

Personal Savings• RRSP• TFSA

* based on a pre-retirement income of $58,700 at age 65, annualized rate of return of 5.5% and interest rate assumption of 5.0% at settlement.

Where your retirement income comes from

Assuming an inflation rate of 2.5%

Income 10 years 15 years 20 years 25 years 30 years

$30,000 $38,403 $43,449 $49,158 $55,618 $62,927

$50,000 $64,004 $72,415 $81,931 $92,697 $104,878

$70,000 $89,606 $101,381 $114,703 $129,776 $146,830

22

Inflation & Purchasing Power

You can view your Statement of Participation on the RetraiteQuebec website: https://www.retraitequebec.gouv.qc.ca/en/services-en-ligne-outils/Pages/seances-information-outils-planification.aspx or you can request one by telephone.

23

24

Source: Guide to financial planning for retirement 2018-2019 Edition. Available at:http://questionretraite.ca/outils/guide-de-

planification-financiere-de-retraite/

Source: https://www.rrq.gouv.qc.ca/en/retraite/rrq/calcul_rente/Pages/montant_rr.aspx

A financial planner can help you choose the best time to begin receiving your pension, depending on your financial resources and overall needs.

Age of eligibility: age 65

Voluntary deferral of the OAS• available since July 2013• defer OAS pension by up to five years • enhanced monthly benefit of 0.6 percent per

month of deferral

Old Age Security (OAS)

27

*Income above $79,054 (in 2020) subject to clawback = 15% of the excess

Age

55 60 65 71

Earliest company pension may be available

Earliest CPP/QPP is available

Traditional retirement age

Earliest OAS is available

Latest registered savings plans must be converted to retirement income

Personal savingsWork part time

McGill Pension PlanRRSP converted to income

Old Age Security (for life)Canada/Quebec Pension Plan (for life)Reduced CPP/QPP

Sources of retirement income

Types of Pension Plans

• Pension is based on a formula tied to service & salary

Defined Benefit

• Retirement income is based on contributions, the investment return accumulated at retirement as well as market conditions

Defined Contribution

31

McGill University Pension Plan

• Applies to members who became eligible to join on or after January 1, 2009

• Referred to as “Part B” of MUPP

Defined Contribution

Plan

• Applies to members who joined prior to January 1, 2009

• Defined Contribution + Defined Benefit = Hybrid

• Referred to as “Part A” of MUPP

Hybrid Plan

32

Access and Manage your Account

Access your Sun Life account via the link provided on the McGill University Savings Program website: http://www.mcgill.ca/hr/pensions/mupp/mupp-login.

On mysunlife.ca• View Account balances, included defined benefit (Part A) • Personal & fund rates of return• View your Statements• Use the Retirement Planner • Monitor your investments with Morningstar• Transfer in external holdings

33

34

Potential Supplemental Retirement Benefitmysunlife.ca: my financial centre > Accounts > Balances

Supplemental Retirement Benefit Value (SRBV) – DB MinimumApplies to members of Part A (hybrid plan) only

SRBV

Opt

ions

Paid as a Transfer ValueAmount over the Maximum Transfer Limit of Income Tax Act paid in

cash less withholding taxes

Paid as a pension (default)In order to generate annuity quotes – marital declaration is required and

must be dated within 6 months of the request for a quote*

*www.mcgill.ca/hr/forms

mysunlife.ca > my financial centre > resource centre > my money tools37

Retirement planner– available online!38

39

No mandatory retirement age in Quebec

Normal Retirement Date (“NRD”)• Last day of the month in which you reach age 65

Early Retirement Date• You may retire as early as age 55

Delayed Settlement• If you continue to work after NRD, must settle your account no later

than the December 31st of the year in which you reach age 71

40

When can I retire?

Steps to take to retire

Provide notice of retirement in writing:• Admin & Support – advise your immediate supervisor• Academic – refer to Regulations -

https://www.mcgill.ca/secretariat/policies/academic or Academic Personnel Office - https://www.mcgill.ca/apo/academic-personnel-office

Ensure your area processes your retirement in WorkdayAttend the Settlement Options & Decumulation Information Sessions -

http://www.mcgill.ca/hr/pensions/mupp/sessionsOnce Sun Life receives your last contributions, they will issue a settlement

package to you – you can settle or defer settlement

41

Further information – please register for a Settlement Options Information Sessionhttp://www.mcgill.ca/hr/pensions/mupp/sessions

A brief overview of settlement options. For more information, please sign up for a “Settlement Option Information Session”.

You can “retire” from the University without having to settle your MUPP holdings = defer settlement

Ability to settle MUPP holdings:• Earliest of termination, retirement or if you continue to

work, the year in which you turn age 71 or• Latest: December 31st of the year in which you turn 71.

43

Retirement vs. Settlement

Subject to locking-in provisions!

Lump-Sum Cash Payment is available if:

a) Value < 20% of YMPE in year or termination, or

b) If over age 65 and total value in DC, LIF, LIRA < 40% of YMPE, or

c) Non-Resident (Canada) for at least 2 years.

44

Can I cash out my pension plan?

45

MUPP

Purchase an external

annuityCombo –annuity & LIF/LIRA

LIRA or LIFGroup /

Individual

NEW! Variable Benefit

SRBVTransfer value

SRB pension

Defer Settlement (latest age

71)

Settlement Options

LIF = Life Income FundLIRA = Locked In Retirement AccountVB = Variable BenefitSRBV = Supplemental Retirement Benefit ValueSRB = Supplemental Retirement BenefitGroup = McGill University Retirement Income Program