UBC FACULTY PENSION PLAN RETIREMENT OPTIONS

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Russell Harrison
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1 UBC FACULTY PENSION PLAN RETIREMENT OPTIONS

2 This brochure will provide you with general information about the options available to you upon your retirement. These options fall into two categories: I. Those available to you under the UBC Faculty Pension Plan II. External Options available to you through financial institutions The information in this guide will assist you in choosing the option(s) best suited to you based on your own personal and financial circumstances. I. UBC Faculty Pension Plan Options Defer your decision Purchase a UBC VPLA Receive UBC RRIF-TYPE Payments Receive UBC LIF-TYPE Payments Withdraw Cash II. External Options Transfer to an external RRIF Transfer to an external LIF Purchase an external life annuity Transfer to an external RRSP You can use all or part of your UBC Faculty Pension Plan account balance for any combination of options shown above. This way, the Plan provides you with a flexible way to structure your retirement income and tailor it to your needs.

External Options available to you through financial institutions The information in this guide will assist you in choosing the option(s) best suited to you based on your own personal and financial

3 I. UBC Faculty Pension Plan Options There are five retirement options available through the UBC Faculty Pension Plan: 1 DEFER YOUR DECISION: LEAVE FUNDS INVESTED IN THE UBC FACULTY PENSION PLAN If you do not require the funds immediately, you can elect to leave your assets invested in the pension plan until December 1st of the year you reach age 71. Source: Locked-in and non locked-in funds Lower investment management fees compared to retail funds. Gives you time to evaluate your need for retirement income before committing to another option. 2 PURCHASE A UBC VARIABLE PAYMENT LIFE ANNUITY (VPLA) Provides monthly payments for life. Death benefits may be provided depending on the option elected. Monthly pension is adjusted each year depending on investment performance of the Balanced Fund and the mortality experience of all retirees and spouses receiving a benefit. You choose either a 4% or 7% investment earnings assumption. This assumption is used to determine the initial amount of your benefit during the first year of retirement. It also impacts the changes in the monthly pension in each subsequent year. Pension income is taxable. Provides an alternative to purchasing an annuity from an external financial institution. The amount of your monthly benefit changes annually, based on market performance and mortality experience. Source: Locked-in and non locked-in funds 3 RECEIVE UBC RRIF-TYPE PAYMENTS Works like an external Registered Retirement Income Fund (RRIF) but assets remain invested in the UBC Faculty Pension Plan. No maximum withdrawal limit. Payments may be made monthly, quarterly, semiannually, or annually. You make all investment decisions. You may use the remaining account balance to purchase an annuity at any time. Source: Non locked-in funds only. Your funds remain in the UBC Faculty Pension Plan and the same investment fund options are available to you. Lower investment management fees compared to retail funds. As there is no maximum withdrawal limit, you must be careful not to exhaust your RRIF-Type Payments earlier than you would like. Depending on the investment options you choose, the value of your account balance may be impacted by fluctuations in market conditions.

Source: Locked-in and non locked-in funds Lower investment management fees compared to retail funds. Gives you time to evaluate your need for retirement income before committing to another option.

4 4 RECEIVE UBC LIF-TYPE PAYMENTS Works like an external Life Income Fund (LIF) but assets remain invested in the UBC Faculty Pension Plan. There is an annual maximum withdrawal limit based either on your age or the previous year s investment return if higher. You make all investment decisions. You may use the remaining account balance to purchase an annuity at any time. Source: Locked-in funds only. Your funds remain in the UBC Faculty Pension Plan and the same investment fund options are available to you. Lower investment management fees compared to retail funds. There is a limit to the amount of money that can be withdrawn. Depending on the investment options you choose, your account balance may be impacted by fluctuations in market conditions. 5 WITHDRAW CASH You can elect to withdraw funds in cash. Source: Non locked-in funds only. Partial withdrawals can be made monthly. No administrative charge. Withdrawals are taxable. Does not qualify for spousal pension income tax splitting. II. External Options The following are some of the retirement options available from Canadian financial institutions: 1 TRANSFER TO AN EXTERNAL RRIF Works like the UBC RRIF-Type Payments but a RRIF must be purchased from an external financial institution. No maximum withdrawal limit. May use the remaining balance to purchase an annuity at any time. Source: Non locked-in funds only. You will need to transfer your account to a financial institution. As there is no maximum withdrawal limit, you must be careful not to exhaust your RRIF earlier than you would like. Depending on the investment options you choose, your account balance may be impacted by fluctuations in market conditions. Possibility of higher investment management and administrative fees.

You may use the remaining account balance to purchase an annuity at any time. Source: Locked-in funds only.

5 2 TRANSFER TO AN EXTERNAL LIF Works like the UBC LIF-Type Payments but a LIF must be purchased from an external financial institution. There is an annual maximum withdrawal limit based either on your age or the previous year s investment return if higher. You make all investment decisions. You may use the remaining balance to purchase an annuity at any time. Source: Locked-in funds only. You will need to transfer your account to a financial institution. There is a limit to the amount of money that can be withdrawn. Depending on the investment options you choose, your account balance may be impacted by fluctuations in market conditions. Possibility of higher investment management and administrative fees. 3 PURCHASE AN EXTERNAL LIFE ANNUITY Provides guaranteed payments for life. Death benefits may be provided depending on the option elected. Source: Locked-in and non locked-in funds. Monthly income will be contingent upon interest rates at the time of purchase. For example, if you purchase a fixed payment annuity when interest rates are low, the monthly income will be lower than if it was purchased in a higher-interest environment. Choice of fixed, escalating or variable lifetime payment options may be available. 4 Things TRANSFER TO AN EXTERNAL RRSP Source: Non locked-in funds may be transferred to a non locked-in RRSP. Locked-in funds must be transferred to a locked-in RRSP. to think about Assets remain tax-sheltered until withdrawn. Cash withdrawals from a non locked-in RRSP are taxable. No cash withdrawals are allowed from a lockedin RRSP. Does not provide you with a regular stream of income if assets remain in RRSP. Possibility of higher investment management and administrative fees. Gives you time to evaluate your need for retirement income before committing to another option. Must be converted to a source of income by the end of the calendar year in which you reach age 71.

You may use the remaining balance to purchase an annuity at any time. Source: Locked-in funds only. You will need to transfer your account to a financial institution.

6 Pension Administration Office T (604) Wesbrook Mall F (604) Vancouver, B.C. V6T 1Z1 fpp@hr.ubc.ca

Pension Options. In Alberta, the money that is held for you in a pension plan must be used to provide you with a lifetime income when you retire.

Pension Options. In Alberta, the money that is held for you in a pension plan must be used to provide you with a lifetime income when you retire. RON GRAHAM AND ASSOCIATES 100, 10585-111 Street,Edmonton, Alberta T5H 3E8 Telephone (780) 429-6775 Facsimile (780) 424-0004 rgraham@rgafinancial.com Pension Options In Alberta, the money that is held for