gif select incomeplus like your own personal pension plan stéphane r. dieujuste, cim district vice...
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GIF Select IncomePlusLike your own personal pension plan
Stéphane R. Dieujuste, CIM
District Vice President, Manulife Investments
GIF Select IncomePlus
Defined ContributionPension Plan
Defined BenefitPension Plan
Pre-defined contributions throughout working years
Pre-defined benefitin retirement
Typically, investor hasfund choice
No fund choice allowedby investors
Not inflation protected Often provides inflation protection
Investor is responsible for turning savings into income
The plan generates income in retirement
Income for as long as thesavings last Income for life
The right fit for your portfolio
Guaranteed Lifetime Income Sources
Non-Guaranteed Income Sources
Product Categories
QPP & OAS Defined Benefit (DB) Pensions
Annuities
GMWB – Guaranteed Minimum Withdrawal Benefit
SWP Defined Contribution
Pensions Mutual Funds Segregated Fund Contracts Stocks Bonds Bank or insurance GICs*
Income Protection
Protected Protected & Variable
Variable
Participation in Markets
Non-Participating
Participating Participating
Retirement risks and challenges
INFLATION
Decrease buying power of savings
LONGEVITY
Outlive life savings
VOLATILITY
Poor market returns
HEALTH CONCERNS
Can you afford to become ill?
The Retirement Risk Zone –5 to 10 years before and after retirement
ACCUMULATION(SAVINGS)
RETIREMENTDATE
RETIREMENT(PAYOUT)
RETIREMENTRISK ZONE
The period of time where you are most vulnerable to market downturns
Affects how much you retire with and how long it will last
Create your own sustainable retirement income
GIF Select IncomePlus
IncomePlus Provides predictable, sustainable income that will last for life
(5%) or the lives of two spouses (4.5%) Allows access to the market value of the investments in the
case of an emergency
ALSO Any residual benefit can be passed to beneficiaries Income not reduced on death of first spouse (for the Joint
Life payout option) Potential resets on every 3 year anniversary date
The Joint Life must be the spouse (as defined by the Income Tax Act (Canada) ) of the annuitant. Exceeding the withdrawal thresholds may have a negative impact on future income payments. Maturity and Death Benefit Guarantees reduced proportionally for withdrawals. Maturity Guarantee available on December 31st of the annuitant’s 100th year or earlier where required by legislation. Withdrawals may be subject to fees.
GuaranteedWithdrawal
Benefit (GWB) Benefit Base
LifetimeWithdrawal
Amount(LWA)
Terms to know
IncomeBonus
Lifetime Withdrawal Amount –Payout Percentages
Annuitant Age(on Dec 31st)
Single Life LWA
Joint LifeLWA*
55 - 64 4% 3.5%
65 - 74 5% 4.5%
75 + 6% 5.5%
*Based on the age of annuitant, or younger of annuitant and Joint Life (if applicable)
Available on January 1st of the year you turn age 55
An amount based on the GWB Benefit Base annually and the elected payout percentage
not eligible to continue after your death
Exceeding the withdrawal thresholds and/or withdrawals taken prior to the Election of LWA (Lifetime Withdrawal Amount) may have a negative impact on future income payments. The LWA becomes available for election on January 1st of the year the annuitant or the younger of the annuitant and the Joint Life (if applicable) turns age 55. Other conditions may apply.
Lifetime Withdrawal Amount – Single Life Payout Option
Available on January 1st of the year the younger of you or your spouse turns age 55
An amount based on the GWB Benefit Base annually and the elected payout percentage
Exceeding the withdrawal thresholds and/or withdrawals taken prior to the Election of LWA (Lifetime Withdrawal Amount) may have a negative impact on future income payments.The Lifetime Withdrawal Amount becomes available January 1st of the year the annuitant or the younger of the annuitant and the Joint Life (if applicable) turns age 55. The Joint Life must be the spouse [as defined by the Income Tax Act (Canada)] of the annuitant at the time of election of the Joint Life Payout option. Only one person can be named as the Joint Life and may not be changed. Other conditions may apply.
Lifetime Withdrawal Amount – Joint Life Payout Option
Lifetime Withdrawal Amount (LWA)
Single Life(5%)
Joint Life *(4.5%)
Lifetime Withdrawal Amount $10,000 $9,000
Income Eligibility Age
Annuitant must be 55 to begin LWA
Both spouses must be 55 to begin LWA
Latest Age to Deposit
Deposits to age 80 of the annuitant
Deposits to age 80 of the oldest spouse
Income Continuation
Upon death – death benefit proceeds to
beneficiary
Upon 1st death - $9,000 LWA continues to
surviving spouse*The Joint Life must be the spouse or common-law partner (as defined by the Income Tax Act (Canada)) of the annuitant at the time of election of the Joint Life Payout Option. Only one person can be named as the Joint Life and may not be changed
Example: $200,000 deposit at age 65, a 5% Single Life Payout option and a 4.5% Joint Life payout option
5% Income bonus added to your guaranteed income, for ANY year income is not taken
Bonuses are not cash deposits, they increase the amount that is basis for calculating the guaranteed income amounts.
Income bonus
Retirement Age / Payout Rate
Income Bonuses
GWB Benefit Base
Annual Lifetime
Withdrawal Amount
Percentage of Initial
Investment
55 years old / 4% payout rate $0 $200,000 $8,000 4%
65 years old /5% payout rate $100,000 $300,000 $15,000 7.5%
75 years old /6% payout rate $200,000 $400,000 $24,000 12%
Power of Income Bonuses and deferring Income Example: $200,000 initial investment
Assumes a down or flat market and no withdrawals have been taken. Assumes that Single life payout option and initial investment at age 55
Guarantees named beneficiaries 100% of deposit value
Reduced proportionally by withdrawals
Can potentially be increased
Resets to GWB and Death Benefit guarantee only occur when market value is higher than the existing guarantee. Resets to the death benefit guarantee end at age 80.
Death Benefit Guarantee
Automatically resets the: Death Benefit Guarantee
GWB Benefit Base and
GWB Bonus Base
to the market value, if higher, every third anniversary
Resets only occur when market value is higher than the existing guarantee. Resets to the Death Benefit Guarantee end at age 80.
IncomePlus Reset
Diversified investment choice
Your IncomePlus statement will show:
how your IncomePlus funds are performing
the guaranteed income available
the description and the values of all your contract guarantees
Easy to understand client statements
IncomePlus in action –Case studies
GIF Select IncomePlus – Income Later
IncomePlus was the first product of its kind in Canada
Features that could benefit pre-retirees: 5% Income bonus
Automatic resets to lock-in market gains every 3 years
100% Death Benefit Guarantee (proportionally reduced by withdrawals)
The bonus is available each year following the initial deposit to the IncomePlus Series, provided no withdrawals are taken. Bonuses are not cash deposits, they increase the basis for calculating the guaranteed income.
GIF Select IncomePlus – Income Later
Income Later – How it worksIncome Later – How it works
Carol, age 45
20 years away from retirement
$200,000 in non-registered assets
Assumes a Single Life Payout Option
Income later
Income later: Up market scenario
For illustration purposes only. Hypothetical portfolio consists of 60% Globe Canadian Equity Peer Index and 40% Globe Canadian Bond Peer Index. Calendar year returns from 1989 to 2008. Returns have been adjusted for an annual IncomePlus Fee of 0.65%. Performance histories are not indicative of future performance. Assumes a Single Life Payout Option.
Portfolio Market Value
GWB Income bonus GWB Benefit Base
IncomePlus Reset
$42,048 minimum guaranteed income
for life5% x
$840,954
20Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 After year
20
$10,000Bonuses
$840,954
$200,000 $231,266
$314,670
$417,917
$498,677
$582,414
$731,265
$11,563Bonuses
$15,733Bonuses
$20,896Bonuses
$24,934Bonuses
$29,121Bonuses
$36,563Bonuses
Income later: Down market scenario
For illustration purposes only. Assumes a Single Life Payout opton Portfolio markets values are hypothetical and not indicative of future performance.
20Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 After year
20
$20,000LWA
Portfolio Market Value$10,000 Income bonus GWB Benefit Base
$400,000
5% Bonuses for 20 years
$200,000
GIF Select IncomePlus – Income now
Income Now – How it works
Income Now – How it works
IncomePlus and RRIFs
RRIF Minimum Schedule 2010
Age General
71** 7.38%
75 7.85%
80 8.75%
85 10.33%
90 13.62%
94 or older 20.00%
Source: Canada Revenue Agency** To calculate minimum annual withdrawals for below age 71, use the formula 1/(90–age).
Example: IncomePlus inside a RRIF
Amount
Deposit $500,000
Income bonus added December 31 $25,000
Lifetime Withdrawal Amount (LWA) $26,250 for life
Client aged 65 decides to invest his RRSP in IncomePlus and convert it to a RRIF in the following year and begin withdrawals
Based on a Single Life Payout Option
IncomePlus: RRIF income for life
For illustration purposes only. In the years where the RRIF minimum remains below the guaranteed income, the LWA continues to be paid at an annual 5% withdrawal rate. Results may vary with market conditions and resets. Exceeding the IncomePlus withdrawal and RRIF minimum thresholds may have a negative impact on future payments. *Used in the calculation to determine RRIF minimum. Assumes a Single Life Payout and assumes the elected LWA payout percentage is 5% Assumes no withdrawal is made in the first year and that a full 5% bonus is applied in the first year.,.
RRIF Minimum
$40,700(MV of $550,00 X 7.4% RRIF
Minimum at 72)
$26,250(5% LWA of
$500,000+ 5% Income Bonus)
Age 72Age 65
Market value*
LWA (5%)Income stream (greater of LWA or RRIF minimum)
Advantage of IncomePlus in a RRIF
Age 80Age 72 Age 80
Why Manulife? Strength & Security
Choosing a financial partner is important Manulife Financial offers:
Financial strength Prudent risk management practices Diverse business platform High quality investment portfolio
Segregated fund industry leader
* Investor Economics Insight, January 2010
Questions?
Important information
Bonuses are not cash deposits; they increase the basis for calculating guaranteed income. The bonus is available each year following the initial deposit to the IncomePlus Series, provided no withdrawals are taken. For all deposits to IncomePlus in the first calendar year, the bonus is pro-rated based on the month of the initial deposit.
Exceeding the withdrawal thresholds may have a negative impact on future income payments. The Lifetime Withdrawal Amount (LWA) becomes available on January 1st of the year the annuitant or the younger of the annuitant and the Joint Life (if applicable) turns age 65. The Joint Life must be the spouse (as defined by the Income Tax Act (Canada)) of the annuitant at the time of election of the Joint Life Payout Option. Only one person can be named as the Joint Life and may not be changed.
Withdrawals proportionally decrease Maturity and Death Benefit Guarantees. Withdrawals in excess of the LWA or prior to the LWA eligibility date will reduce the GWB Benefit Base proportionally. Other conditions may apply.
The Manufacturers Life Insurance Company is the issuer of the Manulife GIF Select insurance contract which offers the IncomePlus, EstatePlus and InvestmentPlus Series and the guarantor of any guarantee provisions therein. InvestmentPlus and EstatePlus are trademarks, GIF Select IncomePlus, Manulife and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation.
Thank you