GUIDELINE NO.X DEFINED CONTRIBUTION PENSION PLANS GUIDELINE

Transcription

1 GUIDELINE NO.X DEFINED CONTRIBUTION PENSION PLANS GUIDELINE JULY 13, 2012

2 Table of Contents PURPOSE... 3 EXISTING CAPSA GUIDANCE RELATED TO DC PENSION PLANS... 3 APPLICATION OF THE DC PENSION PLANS GUIDELINE... 4 KEY PLAYERS IN DC PENSION PLANS... 5 RESPONSIBILITIES RELATED TO DC PENSION PLANS RESPONSIBILITIES OF THE PLAN ADMINISTRATOR RESPONSIBILITIES OF THE EMPLOYER RESPONSIBILITIES OF THE PLAN SPONSOR RESPONSIBILITIES OF THE MEMBERS RESPONSIBILITIES OF THIRD-PARTY SERVICE PROVIDER RESPONSIBILITIES OF THE FUND HOLDER... 7 INFORMATION FOR MEMBERS DURING ACCUMULATION PHASE INFORMATION REGARDING INVESTMENT CHOICES INFORMATION REGARDING CONTRIBUTIONS INFORMATION AND TOOLS REGARDING PROJECTED ACCOUNT BALANCE AT RETIREMENT... 8 INFORMATION FOR MEMBERS WHO ARE APPROACHING THE PAYOUT PHASE INFORMATION REGARDING RETIREMENT PRODUCTS Locked-in Retirement Accounts (LIRA)/ Locked-in Registered Retirement Savings Plans (Locked-in RRSP) Locked-In Retirement Income Funds (LRIF) Life Income Fund (LIF)/ Restricted LIF (RLIF) Prescribed Registered Retirement Income Funds (prrif) Variable Benefits Life Annuity Contract INFORMATION FOR MEMBERS DURING PAYOUT PHASE INFORMATION FOR MEMBERS DURING PAYOUT PHASE ADVERSE AMENDMENTS FOR DC PENSION PLANS ADVERSE AMENDMENTS FOR DC PENSION PLANS DISCLOSURE OF ADVERSE AMENDMENTS FOR DC PENSION PLANS APPENDIX A APPENDIX B Page 2 of 15

3 PURPOSE CAPSA has previously released guidelines and documents which contain guidance related to defined contribution (DC) pension plans. These guidelines are outlined below. The Defined Contribution Pension Plans Guideline is intended to supplement the existing CAPSA guidelines related to DC pension plans by: Outlining and clarifying the rights and responsibilities of plan administrators, employers, plan sponsors, members, service providers and fund holders with respect to DC pension plans. Providing DC pension plan administrators with guidance regarding tools and information to provide to members who are in receipt of a pension from a DC pension plan or when they are choosing amongst retirement options. Clarifying what constitutes an adverse amendment for DC pension plans or plans with a DC provision. EXISTING CAPSA GUIDANCE RELATED TO DC PENSION PLANS CAPSA Guideline No. 3 - Guidelines for Capital Accumulation Plans In May 2004, the Joint Forum of Financial Market Regulators released the Guidelines for Capital Accumulation Plans (CAP Guidelines). CAPSA adopted the guidelines as CAPSA Guideline No. 3: Guidelines for Capital Accumulations Plans. The CAP Guidelines are applicable to DC components of registered pension plans where members are permitted to make investment decisions among two or more options. While the CAP Guidelines are voluntary in nature, it is the expectation of CAPSA that registered pension plans that have CAP components operate in accordance with the CAP Guidelines. A Capital Accumulation Plan is defined in the CAP Guidelines as a tax assisted investment or savings plan that permits the members of the CAP to make investment decisions among two or more investment options offered within the plan established by an employer, trade union, association or any combination of these entities for the benefit of its employees or members Examples of a CAP may include a defined contribution registered pension plan; a group registered retirement savings plan or registered education savings plan; and a deferred profit sharing plan. The CAP Guidelines provide guidance on: Setting Up a CAP o Investment Options o Maintenance of Records Investment Information and Decision- Making Tools for CAP Members o Investment Information o Investment Decision-Making Tools o Investment Advice Introducing the Capital Accumulation Plan to CAP Members o Investment Options o Transfer Options o Description of Fees, Expenses and Penalties Ongoing Communication to Members o Member Statements o Access to Information o Performance Reports for Investment Funds Maintaining a CAP o Reviewing Service Providers o Reviewing Service Providers who Provide Investment Advice o Reviewing Investment Options o Reviewing Maintenance of Records o Reviewing Decision-Making Tools Terminating a CAP or terminating a CAP member s participation in a CAP CAPSA Guideline No. 4 - Pension Plan Governance Guidelines and Self-Assessment Questionnaire Page 3 of 15

4 In October 2004, CAPSA released its CAPSA Guideline No. 4: Pension Plan Governance Guidelines and Self-Assessment Questionnaire. The purpose of the guidelines and self-assessment questionnaire is to assist plan administrators in fulfilling their governance responsibilities by achieving and maintaining good governance practices. CAPSA subsequently released a Frequently Asked Questions (FAQ) companion document in June The purpose of the FAQ is to provide plan administrators with general guidance, additional clarification and examples related to the guideline and self-assessment questionnaire. The FAQ outlines the participants in the governance process and their roles and responsibilities. The FAQ also outlines controls to address the risk that members expectations of what a DC pension plan will deliver may not reflect the plan provisions. These controls include: Frequent, clear, effective information and tools to assist members in understanding the plan and what to expect from it. Guidelines for responding to member inquiries. Regular review of communication materials and necessary action. Ongoing member feedback and necessary action. CAPSA Guideline No. 5 - Guideline on Fund Holder Arrangements On March 1, 2011, CAPSA released CAPSA Guideline No. 5: Guideline on Fund Holder Arrangements. This guideline arose from the need to clarify the nature of fund holder arrangements and the related responsibilities. The guideline focuses on fund holder arrangements by: Expanding on CAPSA Guideline No. 4 by highlighting the governance principles related to fund holder arrangements. Identifying the permitted types of fund holder arrangements. Discussing the respective roles and responsibilities of key players. Providing stakeholders with information on what the regulator looks for when examining fund holder arrangements. The guideline addresses the responsibilities of the fund holder and multiple fund holders in relation to DC pension plans. CAPSA Guideline No. 6 - Pension Plan Prudent Investment Practices Guideline, the companion Self-Assessment Questionnaire on Prudent Investment Practices On November 15, 2011, CAPSA released CAPSA Guideline No. 6: Pension Plan Prudent Investment Practices Guideline and its companion document the Self-Assessment Questionnaire on Prudent Investment Practices. The Prudent Investment Practices Guideline is intended to help plan administrators demonstrate the application of prudence to the investment of pension plan assets. Although the emphasis in pension plan asset investment varies depending on the type of plan, the guideline is relevant to all plan types, including DC pension plans. The self-assessment questionnaire was designed to help plan administrators review the investment practices of the pension funds for which they have responsibility, to assist the plan administrator in satisfying the requirements of the prudent person rule, and to identify areas of strength and areas for improvement. Plan administrators for DC pension plans are encouraged to consider all the sections in this questionnaire, rather than limiting their assessment to section 8 Defined Contribution Pension Plans. APPLICATION OF THE DC PENSION PLANS GUIDELINE This guideline applies to DC pension plans and pension plans with DC components. This guideline does not replace any legislative requirements. Page 4 of 15

5 The DC pension plan administrator is responsible for meeting any applicable legal requirements, including any legal/legislative requirements that may extend beyond the scope of this guideline. KEY PLAYERS IN DC PENSION PLANS The key players in the DC pension plan are: pension plan administrator the individual, group, body or entity that is ultimately responsible for the oversight, management and administration of the DC pension plan and its pension fund, as well as the investment of the pension fund. This function includes, but is not limited to, selecting and monitoring the activities of third-party service providers. employer a business or party that employs members for remuneration and who is required to make contributions to the DC pension plan on behalf of members, collect contributions (if any) from members and remit them to the pension fund. plan sponsor the individual or entity responsible for designing and establishing the DC pension plan and setting the benefit structure for various classes of members. The plan sponsor may also be responsible for amending and terminating the pension plan. The plan sponsor is often the employer. member an individual who has benefits accumulated in a DC pension plan. third-party service providers an entity or individual retained to perform some or all of the plan administrators duties. fund holder the financial institution or party that is retained by the plan administrator to hold the pension fund s assets in accordance with the terms of the fund holder agreement(s), the requirements of legislation (including the Income Tax Act (ITA)) and the terms of the DC pension plan. RESPONSIBILITIES RELATED TO DC PENSION PLANS The primary purpose of this section is to outline the responsibilities of various parties in relation to the DC pension plan. 2.1 Responsibilities of the Plan Administrator The plan administrator is responsible for the overall administration of the DC pension plan, and the administration and investment of the pension fund. The plan administrator also has fiduciary and other responsibilities to plan members, beneficiaries and other stakeholders which are outlined in CAPSA Guideline No. 4: Pension Plan Governance Guidelines and Self-Assessment Questionnaire. The DC pension plan and pension fund must be administered and invested in accordance with applicable pension standards legislation, the ITA and pension plan documents. While certain operational management tasks may be delegated to the thirdparty service providers, these should be clearly documented. For further details see CAPSA Guideline No. 4: Pension Plan Governance Guidelines and Self-Assessment Questionnaire. Further, if the pension plan is wound up, the plan administrator is responsible for ensuring that it is wound up in accordance with the requirements of applicable pension legislation and pension plan documents. The plan administrator is also responsible for: Introducing the plan to members. Providing investment information and decisionmaking tools to members, if it is a CAP. Providing on-going communication to members. aintaining the plan and the pension fund. nsuring that termination of either the plan or a member is done in accordance with the terms of the DC pension plan. Filing the required documents with the pension regulator. Page 5 of 15

6 Ensuring employees are enrolled in the plan as required in accordance with the terms of the DC pension plan. Selecting and monitoring of third-party service providers. Selecting and monitoring investments options to be made available in the the DC pension plan. Many of the responsibilities of the plan administrator relate to the provision of information (and documents) to members. The information (and documentation) that the plan administrator provides to members should be written using plain language and in a format that assists in readability and comprehension. 2.2 Responsibilities of the Employer The employer is responsible for deducting and remitting contributions to the pension fund, within the time periods and in the amounts required by applicable pension standards legislation, the terms of the DC pension plan and any collective agreements. By fulfilling this responsibility, the employer meets its funding obligation and ensures the pension fund s assets are held separate and apart from its own assets. The employer is also responsible for keeping accurate and up-to-date records on each member s service and earnings, and any other information that is required by the plan administrator. In addition, the employer must provide this information to the plan administrator in a timely manner. 2.3 Responsibilities of the Plan Sponsor When DC pension plan sponsors decide to establish a plan, they assume certain responsibilities in their role as the DC pension plan sponsor. The DC pension plan sponsor is responsible for establishing the pension plan, and for ensuring that it always has a plan administrator. They are also responsible for making amendments to the pension plan and deciding if it should be wound up. The DC pension plan sponsor should ensure that decisions about establishing and maintaining the plan, any amendments to the plan and information about how those decisions are made, are properly documented and that the documents are retained. 2.4 Responsibilities of the Members For DC pension plans which allow members to make investment choices for their individual DC accounts, members are responsible for making investment decisions within the plan and for using the information and decision-making tools made available to assist them in making those decisions. DC plan members should consider obtaining qualified investment advice in addition to using any information or tools the plan administrator may provide. They should also notify the plan administrator of errors in their personal data which they identify. Depending on whether the plan permits members to make investment choices, examples of decisions made by DC pension plan members would include: If permitted by the terms of the DC pension plan, determining the amount they will contribute to the plan. Selecting investments. Determining the amount they will invest in any particular investment option. Determining whether they need to change their investment options. Review and select options at termination and file all documents required to make the election with the plan administrator. 2.5 Responsibilities of Third-Party Service Provider To the extent that the responsibilities of the plan administrator or plan sponsor are delegated to a service provider, the service provider is responsible for following these guidelines and any applicable legal requirements. Service providers should have the appropriate level of knowledge and skill to perform the tasks delegated to them and to provide any advice within their area of expertise which may be requested by the plan administrator. Page 6 of 15

7 2.6 Responsibilities of the Fund Holder The fund holder is the financial institution or party that is retained by the plan administrator to hold all or part of the pension fund s assets exclusively for the DC pension plan. Further details are available in CAPSA Guideline No. 5: Guideline on Fund Holder Arrangements. INFORMATION FOR MEMBERS DURING ACCUMULATION PHASE The CAP Guidelines provide guidance on the information that should be provided to members during the accumulation phase. This guidance includes: Providing Information to New Plan Members o Information on the nature and features of the plan. o Outlining the rights and responsibilities of members. o Investment options available in the plan so that members can make informed investment decisions. o How to transfer among investment options. o Description and amount of all fees, expenses and penalties relating to the plan that are borne by members. o How members can access additional information related to the plan and a description of the type of information that is available. Providing Investment Information and Decision-Making Tools for Members o Examples of investment information. o Examples of decision-making tools. o Factors to consider when establishing criteria for selecting service providers to provide investment advice to members. o o o o o Frequency and content of member statements. Access to additional information regarding the member s account upon request. Advance notice to members when there are significant changes in investment options. Information which should be provided to members if an investment option is added, removed or replaced. Performance reports for investment funds. The information provided in section 3.1 through 3.3 of the DC Plans Guideline is intended to supplement the information provided in the CAP Guidelines. It is the responsibility of the plan administrator to provide this additional information to members. 3.1 Information Regarding Investment Choices Some DC pension plans allow members to make investment choices for their individual DC accounts, although the plan usually provides a limited number of options from which these choices can be made. In other DC pension plans, the plan administrator is responsible for the investment decisions. In all cases, the investments must comply with the rules set out in pension standards legislation and the ITA. If a plan allows members to make investment choices, at a minimum, plan administrators should provide: Sufficient information to make informed investment decisions. Investment options that allow diversification. 3.2 Information Regarding Contributions Providing Ongoing Communication to Members Each jurisdiction has minimum legislative requirements regarding disclosure, and this guidance is in addition to these minimum requirements (where differences exist). Page 7 of 15

8 Plan administrators should provide information which includes: Formulae for member s required contributions (if applicable) and an explanation of how to select or change a contribution rate (if members must elect a contribution rate within a particular range). Formulae for employer contributions. Timing of member and employer contributions. Treatment of voluntary contributions (if permitted). How and when contributions are vested and locked-in and an explanation of what these terms mean. Statement with amounts deducted by the employer from member s remuneration, and other amounts due to the pension fund by the employer. Description of how any transfers into the fund will be treated. 3.3 Information and Tools Regarding Projected Account Balance at Retirement In addition to following the CAP Guidelines, plan administrators should provide members with information to help them understand and estimate their plan benefits on retirement. They should consider providing members with the following information on an annual basis: Estimate of accumulated value of the member s account at retirement. Estimate of the benefit that will result from the accumulated value. Plan administrators should inform members that statements regarding future benefits are estimates. They should also include the assumptions used in estimating the future benefits. Plan administrators should describe to members the purpose of the pension plan. In particular, they should disclose if the plan is expected to provide an adequate retirement income in conjunction with other government pension programs or it is expected that additional sources of retirement income will be required. This may be best achieved by disclosing the targeted pension that is expected for a member (or sample of members) with qualifications on: Term the member would have to participate in the pension plan. Member s contribution rate (if optional under the pension plan). Member s assumed portfolio of investments. INFORMATION FOR MEMBERS WHO ARE APPROACHING THE PAYOUT PHASE Section 7 of the CAP Guidelines provides guidance on communicating to members on termination of participation in a plan, including retirement. The CAP Guidelines state that the termination of a member s participation should be done in accordance with the terms of the plan and any applicable legislative requirements. The CAP Guidelines also state that the following information should be provided: options available to the member; any actions the member must take; any deadlines for member action; any default options that may be applied if no action is taken; and the impact that the termination of plan membership will have on each investment option. This information, where applicable, is also expected to be provided if the member has no investment choice during the accumulation phase. It is the plan administrator s responsibility to provide this information to members in addition to any legislative requirements. Page 8 of 15

9 The information in section 4.1 is intended to supplement the information provided in the CAP guidelines. 4.1 Information Regarding Retirement Products It is expected that the plan administrator will provide information regarding all of the regulated retirement products available to members with respect to the payout phase, which may include (depending on legislation): Locked-in Retirement Account (LIRA) or Locked-in Registered Retirement Savings Plan (Locked-in RRSP); Locked-In Retirement Income Fund (LRIF); Life Income Fund (LIF); Life Annuity Contract; Prescribed Registered Retirement Income Fund (prrif); and Variable Benefit. Regulators expect that plan administrators and/or third-party service providers will provide mechanisms to help individuals choose between retirement products. Plan administrators should provide information which assists members in making informed decisions which strike a balance between protection from the risks inherent in the various products and achieving target replacement rates. Members should be provided with information regarding any unlocking options which may be available at the time of retirement. See Appendix A and Appendix B for a list of the information and general features that plan administrators should provide to members regarding each retirement product Locked-in Retirement Accounts (LIRA)/ Locked-in Registered Retirement Savings Plans (Locked-in RRSP) A LIRA is also known as a Locked-in RRSP. Money in a LIRA is to be invested for the purpose of purchasing a life annuity contract or transferring it to another vehicle that provides retirement income. A LIRA cannot be withdrawn or transferred except as permitted by the applicable legislation. A LIRA is similar to an RRSP in that it is an accumulation plan. Members would transfer their locked-in money from a DC pension plan into a LIRA if they do not want to receive retirement income yet, or are not allowed to commence retirement income yet under the rules of the applicable legislation. A LIRA is distinct from an RRSP in that the locking-in rules under pension standards legislation applies to a LIRA. In addition, pension standards legislation may impose other requirements, such as spousal 1 rights and creditor protection, which will vary by jurisdiction Locked-In Retirement Income Funds (LRIF) An LRIF is a locked-in registered retirement income fund (RRIF). Under an LRIF, the money is lockedin and may be used only to provide retirement income. An LRIF owner may determine their annual income from the LRIF, but it cannot be less than the minimum required by the ITA or more than the maximum permitted by applicable pension standards legislation. Depending on the jurisdiction, an LRIF can start no earlier than age 55 (or earlier if allowed by originating pension plan). Money in an LRIF can be transferred to a LIF, another LRIF, LIRA (before age 71) or used to buy a life annuity contract. The money can remain in an LRIF for the lifetime of the LRIF owner Life Income Fund (LIF)/ Restricted LIF (RLIF) A LIF is a locked-in RRIF. Under a LIF, the money is locked-in, and may be used only to provide retirement income. A LIF owner may determine their annual income from the LIF, but it cannot be less than the minimum or more than the maximum permitted by applicable pension standards legislation. Depending on the jurisdiction, a LIF can start no earlier than age 55 (or earlier if allowed by originating pension plan). Money in a LIF can be 1 Spouse, depending on jurisdiction, includes cohabiting common-law partners. Page 9 of 15

10 transferred to another LIF, LRIF, LIRA (before age 71) or used to buy a life annuity contract. In some jurisdictions, all remaining assets in a LIF on Dec 31 st of the year the owner reaches a certain age must be used to buy a life annuity contract. An RLIF is a LIF that has been established in some jurisdictions to accommodate a one-time unlocking option of up to 50% of the value of the RLIF at age 55 or over Prescribed Registered Retirement Income Funds (prrif) A prrif is a RRIF subject to pension standards legislation. Under a prrif, the money is not locked-in so the prrif owner must withdraw the minimum amount required under the ITA but there is no maximum withdrawal amount. This provides retirees with flexibility in determining how much income is withdrawn annually and how the money is invested. However, pension standards legislation may have other requirements such as: o Spousal protection (e.g., breakdown of spousal relationship). o Creditor protection Variable Benefits Some jurisdictions permit variable benefits. A variable benefit is a retirement option paid directly from a DC plan. It provides retirees with flexibility in determining how much income is withdrawn annually and how the money is invested. Pension standards legislation may impose additional rules on the variable benefit Life Annuity Contract A life annuity contract provides a series of payments in return for a lump sum paid up front. A lump sum of money is transferred directly from a pension plan, LIRA, LIF, LRIF, prrif or variable benefit account to a life insurance company to purchase an annuity. In return, the issuer pays the member an annuity on a regular basis (monthly, quarterly, semiannually, or annually) for the remainder of the member s life. Pension standards legislation requires that the annuity be a joint survivor annuity if there is a spouse at the time the annuity is purchased. The exception to this is where the spouse waives his or her right to the survivor benefit under the annuity. INFORMATION FOR MEMBERS DURING PAYOUT PHASE 5.1 Information for Members During Payout Phase The only time that the plan administrator is responsible for ongoing communication during the payout phase is when the payout product is a variable benefit. In the case of a variable benefit, pension standards legislation details the information that the plan administrator must provide to the variable benefit owner. A provider of a variable benefit could also look to the relevant sections of the CAP Guidelines in determining what information should be provided. In the case of all other retirement products, the information provided to the plan owner will be stipulated by the institution holding the funds according to legislative requirements. ADVERSE AMENDMENTS FOR DC PENSION PLANS 6.1 Adverse Amendments for DC Pension Plans Adverse amendments are amendments which adversely affect the prospective benefits, rights or obligations of members or other persons entitled to payments from the fund. Although not an exhaustive list, the following may be considered to be adverse amendments for DC pension plans by some jurisdictions: Reduction of employer and/ or increase in employee contributions. Changes in expense allocation (e.g., who pays for administrative expenses). Changes to possible member retirement age. Lengthening vesting requirements (e.g., immediate to two years). Page 10 of 15

11 6.2 Disclosure of Adverse Amendments for DC Pension Plans Some jurisdictions may require the DC plan administrator to provide written notice to certain parties such as affected members and other plan beneficiaries, and trade unions (if applicable), before an adverse amendment is registered. These could include but are not limited to: Deferred vested member. Active member. Pensioner/retired member. Surviving pension partner (spouse of a deceased member) who is entitled to or is receiving a benefit from the plan; Former pension partner who is entitled to benefits from the plan due to a property settlement due to a breakdown in a spousal relationship. Beneficiary of a deceased member who has not yet been paid out. Trade union of affected member. Plan administrators should normally provide a written explanation of the amendment within a prescribed time limit required by the appropriate legislation. Page 11 of 15

12 APPENDIX A This appendix provides an overview of the principal information plan administrators should provide members regarding each retirement product. Information Plan Administrators Should Provide to Members Locked-in Retirement Account (LIRA) or Locked-in Registered Retirement Savings Plan (Locked-in RRSP) Locked-In Retirement Income Fund (LRIF) Life Income Fund (LIF) or Restricted LIF (RLIF) Prescribed Registered Retirement Income Fund (prrif) Variable Benefit Life Annuity Contract Explanation of the retirement product. Where and how the retirement product can be purchased (or set up). Spousal consent or waiver requirements if a spouse does not want a joint survivor annuity or wants the percentage going to the survivor to be less than prescribed. Any restrictions on allowable investments. Explanation of the rules found in the ITA which apply to the retirement product. Requirement to collapse and purchase another retirement product by the end of the calendar year in which the member reaches 71 years of age (or other age as may be required by the ITA). Formula for determining the minimum amount that must be taken out each year.

13 Information Plan Administrators Should Provide to Members Locked-in Retirement Account (LIRA) or Locked-in Registered Retirement Savings Plan (Locked-in RRSP) Locked-In Retirement Income Fund (LRIF) Life Income Fund (LIF) or Restricted LIF (RLIF) Prescribed Registered Retirement Income Fund (prrif) Variable Benefit Life Annuity Contract Formula for determining the maximum amount that can be taken out each year. Explanation of any unlocking rules which will apply once the money is transferred to the retirement product. For example, some jurisdictions allow unlocking for financial hardship, small amounts, shortened life expectancy and non-residents of Canada. Options related to the naming of a beneficiary. Disposition of assets option upon death. Spousal rights and protection. Creditor protection. Transfer options available. Whether or not the variable benefit owner can continue to contribute to the pension plan. Options if money remains in the retirement product. Page 13 of 15

14 APPENDIX B This appendix provides a comparison of the various product features plan administrators should describe to members regarding each retirement product. General Features of Retirement Products Locked-in Retirement Account (LIRA) or Locked-in Registered Retirement Savings Plan (Locked-in RRSP) Locked-In Retirement Income Fund (LRIF) Life Income Fund (LIF) or Restricted LIF (RLIF) Prescribed Registered Retirement Income Fund (prrif) Variable Benefit Life Annuity Contract Assets remain tax sheltered until taken/received as income. Possible to un-retire by transferring money to LIRA (before age 71). Income is predictable and guaranteed for member s lifetime. May also be guaranteed for spouse s lifetime, depending on the type of annuity. Owner does not assume investment risk. Protections under pension law which apply to the retirement product and not to other products which are not regulated under pension law. For example, spousal rights. Owner controls the investment of the assets. Payouts are similar to those of a life annuity contract as income is spread over expected lifetime. In some jurisdictions, the owner can take the investment gains in a previous year if that amount is greater. Flexibility means that the payouts each year can be structured to meet the

15 General Features of Retirement Products Locked-in Retirement Account (LIRA) or Locked-in Registered Retirement Savings Plan (Locked-in RRSP) Locked-In Retirement Income Fund (LRIF) Life Income Fund (LIF) or Restricted LIF (RLIF) Prescribed Registered Retirement Income Fund (prrif) Variable Benefit Life Annuity Contract owner s needs subject to minimums and maximums in certain products. Member will continue to deal with the provider of the DC pension plan, and so does not have to establish a new relationship with a financial services provider. Owner assumes the investment risk. Value/income may fluctuate as fund value fluctuates depending on investments. Page 15 of 15