CANADIAN MERCHANT SERVICE GUILD WESTERN BRANCH PENSION PLAN (Towboats)

Transcription

1 CANADIAN MERCHANT SERVICE GUILD WESTERN BRANCH PENSION PLAN (Towboats) 2004

2 Printed April 2005

3 Table of contents ABOUT THE PENSION PLAN... 5 PERSONAL INFORMATION... 7 FUNDING... 9 Required member contributions... 9 Required employer contributions... 9 Additional (member) voluntary contributions (AVC)... 9 Credited investment earnings Pension account balance Work and contribution history for BENEFITS Estimated and projected purchasing power of DC account What are the benefit entitlements if you die prior to retirement? Russell LifePoints Balanced portfolios and TD Lancaster Short-Term Investment Fund (STIF) FINANCIAL STATEMENT YOUR PERSONAL ESTATE CHECKLIST AN EXPLANATION OF YOUR PENSION PLAN Foreword Funding RETIREMENT DATES FORMS OF PENSION BENEFITS ON TERMINATION OF PLAN MEMBERSHIP...42 DEATH BENEFITS Benefits in the event of death prior to retirement... 44

4 Canadian Merchant Service Guild DISABILITY BENEFITS INVESTMENT MANAGEMENT APPROACH About SEI Investments SEI Money Market Fund Balanced 40/60 Fund Balanced 60/40 Fund Growth 80/20 Fund SELECTING AN APPROPRIATE FUND What is your Investor Profile? Investor Profile Questionaire OTHER DETAILS ABOUT YOUR PLAN Calculation of investment earnings Marriage breakdown Spousal waivers Assignment and collateral Investment policy and asset mix Administration of the plan Change of address Recovery of search fees Pension examples GLOSSARY OF TERMS RIGHTS TO INFORMATION

5 Western Branch Pension Plan Towboats About the pension plan The Canadian Merchant Service Guild Western Branch Pension Plan (Towboats) was founded on June 1, 1968 as the result of the collective agreement reached between members of the Council of Marine Carriers and the Canadian Merchant Service Guild. A joint board of trustees composed of three management and three union trustees manages the plan. For the purpose of the Canada Revenue Agency (CRA), the Income Tax Act and the regulations, the plan is recognized as a specified multi-employer pension plan (SMEPP). Until December 31, 1998, it had two distinct parts: a defined contribution (DC) or money purchase provision, and a defined benefit (DB) provision. PLAN CONVERSION EFFECTIVE JANUARY 1, 1999 Effective January 1, 1999, the defined benefit (DB) provision of the plan was converted to a defined contribution (DC) arrangement. Consequently, the plan is recognized as a defined contribution or money purchase plan. Members who had a vested entitlement under the defined benefit provision of the plan as of December 31, 1998, were given two options: Option A, converting the portion of their pension benefit earned from employer contributions to a money purchase arrangement effective January 1, 1999; or Option B, securing the employer funded benefit by authorizing the purchase of an immediate or deferred annuity equal in value to the entitlement promised to them prior to the conversion of the pension plan. The commuted value of each member s vested benefit calculated as of January 1, 1999 was deposited to the account of each member who chose Option A. The commuted value was based on the amount of pension payable to the member at his retirement date that would produce the highest present value determined in accordance with the Recommendations for the Computation of 5

6 Canadian Merchant Service Guild Transfer Values for Registered Pension Plans, issued by the Canadian Institute of Actuaries. The value credited to a member s account, however, could not exceed the prescribed amount as defined under subsection 8517 (1) of the Income Tax Act. Your opening account balance can be referenced under the heading pension account balance found on page 10 of this booklet. Both the employer s and your contributions are accumulated in a defined contribution account to which investment earnings are credited at the end of the fiscal year, based on the performance of the investments. In other words, a member s account will be credited with interest, gains and losses as can reasonably be attributed to the operation of the fund. At retirement, the amount of money in your account is used to either purchase a life annuity or a life income fund (LIF) of your choice from the financial institution offering the most competitive rates. Your plan has to conform to the Canada Revenue Agency regulations and the federal Pension Benefits Standards Act. These laws and regulations directly affect the assets in which the fund invests and type of benefit the plan can pay out. 6

7 Western Branch Pension Plan Towboats Personal information Name: SIN: Date of birth: Beneficiary: (Name) (SIN) (DOB) (Beneficiary) Spouse: (Name 2) Spouse s SIN: (SIN 2) Spouse s date of birth: (DOB 2) If your personal information is incomplete, or where personal figures regarding your benefits cannot be calculated, the corresponding field will show N/A. It is important to update any missing or incorrect information on your file. Simply contact the plan administrator, Coughlin & Associates Ltd., as indicated on the last page of this booklet. RESPECTING YOUR PERSONAL INFORMATION The administrator of your group pension plan is Coughlin & Associates Ltd. At Coughlin, we recognize and respect every individual s right to privacy. When personal information is provided to us, we establish a confidential file that is kept in the offices of Coughlin, or the offices of an organization authorized by Coughlin. We use the information to administer the group pension plan. We limit access to information in your file to Coughlin staff or persons authorized by Coughlin who require it to perform their duties, to persons to whom you have granted access, and to persons authorized by law. Coughlin uses your Social Insurance Number for the purposes of government reporting, identification and administration of your pension plan. Coughlin may exchange your personal information 7

8 Canadian Merchant Service Guild with the following persons, organizations or parties: financial institutions; government agencies; insurance companies; employers or former employers; your local union, plan trustees, pension advisory committee members, actuaries and auditors. Coughlin may use the personal information on file to provide you with additional information regarding any benefits to which you are entitled. 8

9 Western Branch Pension Plan Towboats Funding REQUIRED MEMBER CONTRIBUTIONS As outlined in the collective agreement between the Guild and certain members of the Council of Marine Carriers, you are required to contribute 7.5 per cent of your basic wages by payroll deduction. If you are party to a different collective agreement, the rate of contribution may differ. Contributions are remitted to the plan on a regular monthly basis. REQUIRED EMPLOYER CONTRIBUTIONS As set out in the collective agreement effective October 1, 2000, your employer(s) is/are required to contribute to the plan an amount equal to 8.5 per cent of your basic wages on a regular monthly basis. One per cent goes toward a disability fund and is not credited to your account (see pages 45-48). The employer contributions made on your behalf are not a taxable benefit to you until you collect a benefit. Employer contributions are included in the pension adjustment (PA) reported on your T4 to the Canada Revenue Agency each year. The one per cent disability contribution should not be included in the PA. ADDITIONAL (MEMBER)VOLUNTARY CONTRIBUTIONS (AVC) If you wish, you may make additional voluntary contributions (AVCs) to the plan by completing the appropriate application. The total additional amount that you may contribute to this plan and/or any RRSP is determined by tax rules that became effective in If you plan to make AVCs, it is your responsibility to ensure that you are familiar with the applicable legislation. If you are not sure, consult a tax adviser. To qualify as pension plan contributions, contributions must be made before December 31 of each year. 9

10 Canadian Merchant Service Guild CREDITED INVESTMENT EARNINGS The net rate of return credited to your account will take into consideration a portfolio change effective July 1, 2004, if you so elected. The net rate of return earned by the (new merge field 1) fund in 2004 was (new merge field 2). The net rate of return earned by the (merge field 1) fund to June 30, 2004 was (merge field 2) and the net rate of return earned by the (merge field 3) fund from July 1, 2004 to December 31, 2004 was (merge field 4). This rate was applied to your member contributions, employer contributions and additional voluntary contributions as shown below. PENSION ACCOUNT BALANCE Opening account balance (January 1, 2004)...$000,000,000 Member required contributions for $000,000,000 Employer required contributions for $000,000,000 Total contributions for $000,000,000 Investment earnings (loss) for 2004 on required contributions and account balance...$000,000,000 Subtotal...$000,000,000 Opening balance of assets transferred from other plan(s)...$000,000,000 Assets transferred in 2004 from other plan(s)...$000,000,000 Investment earnings (loss) for 2004 on transferred assets...$000,000,000 Subtotal...$000,000,000 10

11 Western Branch Pension Plan Towboats Opening balance of additional voluntary contributions (AVCs)...$000,000,000 AVCs made in $000,000,000 Investment earnings (loss) for 2004 on AVCs...$000,000,000 Subtotal...$000,000,000 Closing account balance (December 31, 2004)...$000,000,000 NOTE: The total contributions received in 2004 do not include the one per cent disability contributions made on your behalf to the disability account. WORK AND CONTRIBUTION HISTORY FOR 2004 The pension plan funding falls under the terms of the collective agreement, which defines the funding requirements. The following table summarizes the contributions received by the administrator on your behalf. It is very important that you verify and reconcile this data immediately. Should there be any discrepancies, please notify the administrator as quickly as possible. 11

12 Canadian Merchant Service Guild Work Month Name of Basic Contributions month processed employer earnings Employer member AVCs YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00,

13 Western Branch Pension Plan Towboats YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, YYYY/MM YYYY/MM XXXXXXXXXXXXXXXXXXXXXXXXX $000, $00, $00, $00, NOTE: Only contributions remitted between February 1 and the year-end closing date (usually January 31 of following year) are listed above. Any current year remittances received after closing will appear in the next booklet. In connection with the annual audit of our records, please review your statement for pensionable earnings. Report contribution inaccuracies directly to our auditors: Bouris Wilson LLP, 1701 Woodward Drive, Ottawa, Ontario, K2C 0R4; Attn. Mr. James C. Dykstra, CA, (fax ; [email protected]), and to the plan administrator, Coughlin & Associates Ltd. 13

14 Canadian Merchant Service Guild Benefits ESTIMATED AND PROJECTED PURCHASING POWER OF DC ACCOUNT The following table identifies the estimated monthly pension that can be provided at age 65, including government programs. It also outlines what can be purchased from member and employer contributions, transfers-in from other plans and AVCs, where applicable. Please refer to the assumptions, indicated by the asterix(s), used to determine the data listed below. Estimate at age 65 At January 1, 2005 Source Estimated monthly pension 1. from pension account balance*... $000,000, from AVCs and investment returns*... $000,000, from funds transferred in from other plans with investment returns*... $000,000,000 Total estimated projected pension available at age $000,000, the present CPP benefit payable at 65 is**... $ the present OAS benefit payable at 65 is**... $ Total available at age $000,000,000 * Using the assumptions that the fund will earn 5.0 per cent per annum from January 1, 2005 until you reach age 65 and a joint and last survivor annuity is purchased, reducing to 60 per cent with a five-year guarantee when the interest rate is 5.5 per cent. ** Assumes you are eligible for the maximum benefit provided by government-sponsored programs (CPP & OAS). 14

15 Western Branch Pension Plan Towboats Based on the above assumptions, if you wish to retire at age N/A, the following table illustrates the estimated monthly pension that can be provided based on the earnings to date from government programs as well as purchases from member and employer contributions, transfers-in from other plans and AVCs, where applicable. Please refer to the assumptions used in determining these figures. Estimate at age N/A At January 1, 2005 Source Estimated monthly pension 1. from pension account balance*... $000,000, from AVCs and investment returns*... $000,000, from funds transferred in from other plans with investment returns*... $000,000,000 Total estimated projected pension available at age N/A... $000,000, the present CPP benefit payable at N/A is**... $ the present OAS benefit is not payable before N/A Total available at age N/A... $000,000,000 * Using the assumptions that the fund earns 5.0 per cent per annum from January 1, 2005 until you reach age N/A and a joint and last survivor annuity is purchased, reducing to 60 per cent with a five-year guarantee when the interest rate is 5.5 per cent. ** Assumes the early retirement reduction factor for CPP remains at six per cent per year of early retirement. 15

16 Canadian Merchant Service Guild If you wish to retire at age N/A, the following table, based on the above assumptions, illustrates the estimated monthly pension that can be provided based on the earnings to date from government programs as well as purchases from member and employer contributions, transfers-in from other plans and AVCs, where applicable. Please refer to the assumptions used in determining these figures. Estimate at age N/A At January 1, 2005 Source Estimated monthly pension 1. from pension account balance*... $000,000, from AVCs and investment returns*... $000,000, from funds transferred in from other plans with investment returns*... $000,000,000 Total estimated projected pension available at age N/A... $000,000, the present CPP benefit payable at N/A is**... N/A 5. the present OAS benefit is not payable before N/A Total available at age N/A... $000,000,000 * Using the assumptions that the fund earns 5.0 per cent per annum from January 1, 2005 until you reach age N/A and a joint and last survivor annuity is purchased, reducing to 60 per cent with a five-year guarantee when the interest rate is 5.5 per cent. ** CPP is not available before age

17 Western Branch Pension Plan Towboats WHAT ARE THE BENEFIT ENTITLEMENTS IF YOU DIE PRIOR TO RETIREMENT? Had you died on December 31, 2004, your benefits would have been payable as follows: Where death occurs before retirement: a) the pension account balance with investment earnings... $000,000,000 b) the value of funds transferred from other plans with investment earnings... $000,000,000 c) the additional voluntary contributions with investment earnings... $000,000,000 Death benefit value... $000,000,000 If you do not have a spouse, your beneficiary or estate will receive a lump sum refund of the death benefit, less applicable taxes. If you have a spouse at the time of your death, your spouse will receive the amount accumulated in your pension account and any accrued investment earnings as a death benefit. The spouse may transfer the death benefit to a locked-in registered retirement savings plan (LIRRSP) or purchase an immediate or deferred life annuity or life income fund from an insurance company. 17

18 Canadian Merchant Service Guild RUSSELL LIFEPOINTS BALANCED PORTFOLIOS AND TD LANCASTER SHORT-TERM INVESTMENT FUND (STIF) Performance to December 31, 2004 GROSS ANNUALIZED 1 year 2 year 3 year 4 year 5 year STIF Balanced Income Portfolio* Balanced Growth Portfolio* Long-Term Growth Portfolio* GROSS ANNUAL STIF Balanced Income Portfolio* Balanced Growth Portfolio* Long-Term Growth Portfolio* Note: All reported rates of return and net asset unit values are expressed in Canadian dollar terms and are gross of management fees. Historical returns are for illustration only and are not indicative of future performance. The indicated rates of return are historical annual compounded total returns including changes in unit values and reinvestment of all distributions and do not take into account investment advisory fees, account sales, redemption, distribution or optional charges payable by any securityholder which would have reduced returns. * The performance history of the LifePoints Funds is based on the actual performance of the underlying investments of the Russell Group of Funds. As of March 1/98, performance of these funds is based on actual fund unit prices. Copyright Frank Russell Canada Limited

19 Western Branch Pension Plan Towboats 2004 financial statement The following information has been taken from the 2004 auditor s report. CANADIAN MERCHANT SERVICE GUILD WESTERN BRANCH PENSION PLAN (TOWBOATS) Statement of changes in net assets available for benefits for the year ended December 31, 2004 Increase in assets Investment income Income from managed portfolio $572,946 $797,413 Interest income on current account 32,635 50,687 Net income on security transactions 4,434,568 3,697,709 Increase (decrease) in market value 5,649,450 7,991,883 Contributions Mandatory-employers 2,794,705 2,770,431 Mandatory-members 2,790,976 2,753,536 Disability 264, ,809 Voluntary 94,433 64,715 Transfer in 0 198,765 Total increase in assets $16,634,625 $18,554,948 19

20 Canadian Merchant Service Guild Decrease in assets Plan operation Administrative expenses $315,130 $311,865 Investment management fees 381, ,718 Benefits and refunds paid Purchase of retirement annuities 204, ,520 Death benefits 1,487,027 1,386,526 Refunds on termination and retirement 9,269,549 8,217,645 Total decrease in assets $11,658,140 $10,457,274 Increase (decrease) in net assets $4,976,485 $8,097,674 Net assets available for benefits at start of year 130,551, ,153,428 Transfer from contingency reserve 187, ,000 Net assets available for benefits at end of year $135,714,835 $130,551,102 20

21 Western Branch Pension Plan Towboats Your personal estate checklist IMPORTANT ACTIONS TO TAKE NOW 1. Draw up a will, if you have not already done so. Without a will, payments from your estate may be delayed and your intentions regarding the distribution of your estate may not be followed. Review your will and/or legal documents once a year for: changes in beneficiaries resulting from birth, death, marriage, etc.; changes in your financial situation resulting from maturity of children, illness, significant changes in assets, etc.; changes in federal or provincial tax, probate or property law that may affect your will; and changes in executors, trustees, and guardians for your children. 2. Review your insurance program to ensure it meets your present needs. 3. Verify the beneficiaries that you have named for your pension and insurance benefits. If you would like to change your beneficiaries, or name a beneficiary where you have none on record, complete a new beneficiary designation form available from the plan administrator. If you wish to designate someone other than your legal spouse, a spousal waiver must be signed and notarized. Refer to page Record your private financial matters on the following page: 21

22 Canadian Merchant Service Guild LOCATION OF IMPORTANT DOCUMENTS WILL My will is located at My executor is My lawyer is PERSONAL LIFE INSURANCE POLICIES Company Beneficiary Amount Bank accounts Bank Branch Account no. REGISTERED RETIREMENT SAVINGS PLANS Company Branch Account no. 22

23 Western Branch Pension Plan Towboats SAFETY DEPOSIT BOX Bank Branch Box no. OTHER IMPORTANT DOCUMENTS Mortgage Birth certificate Marriage certificate Passport 23

24 Canadian Merchant Service Guild PERSONAL ESTATE CHECKLIST 24

25 Western Branch Pension Plan Towboats An explanation of your pension plan FOREWORD This section is intended to be a factual, concise explanation of the major terms of your pension plan. Whether you are a new employee or one who has been a member of the plan for some time, you have an interest in the benefits that the plan provides and in the contributions that you and your employer make to fund these benefits. There are many areas where you will be required to make decisions that will eventually affect your benefits and those of your family. A careful study of this booklet will help you make the choices appropriate to meet your personal circumstances. The information contained in this booklet is correct and up to date as of December 31, Any future changes that may affect your benefits will be communicated to you. This booklet is not a legal document. If there is any conflict between it and the formal text of the pension plan, then the wording of the formal text will apply. MEMBERSHIP IN THE PLAN If you are a member of the Canadian Merchant Service Guild and employed by a company that is a signatory to a collective agreement between the Guild and the Council of Marine Carriers and/or other participating companies, you are required to participate in the plan. 25

26 Canadian Merchant Service Guild ENROLMENT CARD You must complete an enrolment card and submit it to the plan administrator. Enrolment cards may be obtained from your employer, the Guild or the plan administrator. To ensure accurate and efficient administration of your pension funds, all the information requested on the card must be provided. BENEFICIARY The enrolment card allows you to designate a beneficiary of your pension benefits. According to the federal Pension Benefits Standards Act 1985, if you have a spouse, either legal or commonlaw, he/she will automatically be the beneficiary of your pension benefits. A spouse may continue to retain certain rights to your pension benefits despite a breakdown in your marriage or common-law relationship. If you do not have a spouse at the time of your death, your named beneficiary or estate will be entitled to a refund of the accrued benefit. A designation or change of beneficiary must always be provided in writing to the administrator. The request must be dated and signed. FUNDING Required member contributions Please refer to page 9 for details. Required employer contributions Please refer to page 9 for details. Additional voluntary contributions (AVCs) Please refer to page 9 for details. 26

27 Western Branch Pension Plan Towboats PENSION BENEFITS FROM YOUR REQUIRED CONTRIBUTIONS AND THOSE OF YOUR EMPLOYER Upon your retirement, at or after age 50, your total contributions with investment earnings may be used to purchase a life annuity or a life income fund (LIF). The amount of pension that can be provided to you will depend on your age, the investment earnings of the fund and the interest rates prevailing at the time of your retirement. Pension examples are given on page 33 & 77 of this booklet. You may also transfer the total of your account with investment earnings to a locked-in registered retirement savings plan (LIRRSP). PENSION BENEFITS FROM ADDITIONAL VOLUNTARY CONTRIBUTIONS Upon your retirement, the total amount of your additional voluntary contributions with investment earnings may be used to purchase a life annuity or LIF for you. Alternatively, you can elect to have the total sum transferred to your own RRSP, or receive a cash refund with investment earnings, less withholding tax. 27

28 Canadian Merchant Service Guild Retirement dates You should notify the administrator at least two months prior to the effective date of your retirement. The administrator will send the appropriate forms for completion and will outline your retirement options. Retirement options will be provided no more than once in any six-month interval. To receive your pension benefits, you must complete the retirement application. You must also supply proof of age (a birth certificate, baptismal certificate or other acceptable evidence of age) and marriage certificate if the pension elected extends benefits to your spouse. An important note: to qualify for retirement benefits, the administrator must be in receipt of a letter from your most recent employer stating that you are retiring and have relinquished your seniority. Retirement benefits may not be paid until all employer contributions, including those payable on lay days, have been paid and received by the administrator. As per the collective agreement, employers are not obligated to remit contributions until the end of the month following the last month worked. Therefore, lay days and the final employer remittance may result in the first pension payment being delayed beyond your last day worked. INDIVIDUAL FINANCIAL SERVICES The administrator has an individual financial consultant on staff who is available to assist you. There is no consultation fee. You may contact the administrator to arrange an appointment to discuss your retirement, financial planning, estate planning, investments, life insurance and other financial matters. 28

29 Western Branch Pension Plan Towboats In order to allow sufficient time for a proper consultation and thorough planning, it is recommended that you arrange to discuss your pre-retirement planning and investment strategies at least three to five years prior to your anticipated retirement date. You should also schedule a visit with your financial advisor six months prior to your effective date of retirement or when your financial, marital or employment situation changes. Sessions are scheduled every quarter. NORMAL RETIREMENT DATE The normal retirement date of the plan is the first day of the month coinciding with or following your 60th birthday. CONTINUED EMPLOYMENT AFTER AGE 60 You may continue to contribute to the plan if you continue to be employed under the terms of the collective agreement after age 60. At retirement, your pension will be calculated in the same way as if you were retiring at age 60. The latest date at which your pension must commence is the end of the year in which you attain age 69. (See Postponed Retirement Date on the next page). EARLY RETIREMENT DATE You may retire earlier than age 60. An earlier retirement may be taken as early as of the first day of any month coinciding with or following your attainment of age 50. Early retirement will impact the amount of pension you will receive. PENSION FROM YOUR OWN CONTRIBUTIONS AND THOSE OF YOUR EMPLOYER The amount of pension you receive will be that which your pension account earnings can purchase for you from the most competitive federally licensed financial institution at the time you retire. Given that benefits are paid for life, and have to be paid over 29

30 Canadian Merchant Service Guild a longer period of time, your monthly benefit will be reduced by early retirement. Pensions payable on early retirement are subject to the same conditions governing the availability of optional forms of pensions as those payable on normal retirement. POSTPONED RETIREMENT DATE You may postpone your retirement date beyond age 60. However, the Canada Revenue Agency requires that all pensions commence payment by the end of the calendar year in which you attain age 69. A member who defers application for retirement benefits beyond the normal retirement date of age 60 will be entitled to the purchasing power of his pension account balance. In the event that you make application for your pension beyond the normal retirement date, your pension will not commence retroactively to your normal retirement date. Your pension will begin no earlier than the first of the month in which the necessary forms and supporting documents are completed and delivered to the administrator. RETURNING TO WORK AFTER YOU BEGIN RECEIVING A PENSION If you retire and begin drawing a pension or you transfer the assets to a locked-in registered retirement savings plan and subsequently return to work for a participating employer of the CMSG Western Branch Pension Plan (Towboats), a new account will be established in your name. Contributions made on your behalf after your retirement will be immediately vested and subject to the terms applicable to transfer/portability options set out by the plan text for pre-retirement contributions. Once you retire permanently, you may apply to receive the additional benefits that may be purchased with your accumulated pension account balance. 30

31 Western Branch Pension Plan Towboats INTEREST CREDIT POLICY AT RETIREMENT The funds are invested in the financial markets, which fluctuate daily. The value of your pension account balance will be calculated at retirement once the plan administrator has received all contributions leading up to your effective retirement date. The administrator maintains a unitization model which is updated monthly when all accounting and financial information is available from the various sources. Currently, it takes from one to two weeks from month-end to receive all information necessary to calculate the net investment earnings. For example, November s net investment return is available in early December. Retirees will be credited with net investment earnings or losses based on the most recent declared monthly unitization rate pro-rated to the date funds are paid out of the pension plan. For example, when the November unitization rate is declared on December 10th and funds are available to be paid on or after December 10th, but before the next month s unitization is declared, the interest calculation will be based on the year-to-date November 30th unitization rate, pro-rated to the date the funds are paid out of the plan. 31

32 Canadian Merchant Service Guild Example: Pension was purchased on December 10th. November unitization rate was declared on December 10th. November year-to-date net investment return was seven per cent for portfolio A. Interest factor used to calculate interest rate to December 10th of current year would be determined as follows: Same investment portfolio all year 7% x 365 DAYS X 344 DAYS = 7.2% 334 DAYS 365 DAYS If you submitted an election form to change portfolio mid-year (July 1st), interest will be calculated on the estimated rate of return of your portfolio from January 1st to June 30th. The remainder of the interest will be calculated using the estimated rate of return of the new portfolio for the balance of the calendar year. Change of portfolio mid-year - July 1st Year-to-date net investment return at June 30th was four per cent for portfolio A and year-to-date net investment return at November 30th was five per cent for portfolio B. Interest rate for portfolio A January 1st to June 30th 4% x 365 DAYS x 181 DAYS = 4.0% 181 DAYS 365 DAYS Interest rate for portfolio B July 1st to December 10th 5% x 365 DAYS x 163 DAYS = 2.4% 334 DAYS 365 DAYS 32

33 Western Branch Pension Plan Towboats Forms of pension HOW YOUR PENSION WILL BE PAID Federal pension legislation has a direct effect on how your pension is paid to you. If you have a spouse at the time of your retirement, you must choose a form of pension that will continue to be paid to him/her in the event that you die first. This is called the mandatory form of pension (see exceptions in Section B. on this page). If you do not have a spouse, your pension will be paid to you in one of the optional forms described below. A. NORMAL FORM OF PENSION Monthly pension benefits will be payable commencing on your retirement date. The pension consists of a joint and last survivor annuity reducing to 60 per cent on the death of the member and features a guarantee period of five years. Under this form of payment, you will receive a monthly income as long as you live. Should you predecease your spouse, the payments will continue to him/her at the full amount until the end of the guarantee period, at which time, they will reduce to 60 per cent and continue for the spouse s lifetime. When both you and your spouse are deceased, payments cease. In the event that both you and your spouse die within the five-year guarantee period, the payments will continue to your designated beneficiary or estate until the end of the guarantee period. B. MANDATORY FORM OF PENSION The federal Pension Benefits Standards Act requires that members with a spouse receive a pension in a form that will continue at a chosen percentage for the spouse s lifetime on the member s death. 33

34 Canadian Merchant Service Guild The law requires that, if you have a spouse, you must take a reduced pension that will continue at a minimum level of 60 per cent on the death of either you or your spouse. If you wish, you can provide a pension income greater than 60 per cent to your spouse (payments of up to 100 per cent are possible), but you cannot provide less. The only exceptions to this rule are: 1. if you do not have a spouse; or 2. your spouse agrees to waive his or her rights to a survivor pension. This can only be done by your spouse completing a special spousal waiver form that is available from the plan administrator. All spousal waivers must be notarized and bear an official seal. Please refer to page 75 for more information Definition of spouse For the purposes of the plan, a spouse means a person to whom you are legally married, or if you are not legally married, a common-law spouse means a person who has lived with you for at least one year and whom you have publicly represented as being your spouse. C. OTHER OPTIONAL FORMS OF PENSION In cases where the mandatory form of pension does not apply, the plan provides for other optional forms of pension. These include either a life annuity or a life income fund (LIF): Life annuities 1. Single life annuity with no guaranteed period Under this form of payment, you will receive a monthly income for as long as you live. The monthly income will cease upon your death. No death benefits are payable to a spouse, beneficiary or estate. This arrangement may suit you if you are single and have no dependants to support. 34

35 Western Branch Pension Plan Towboats 2. Single life annuity with a minimum guaranteed period This form of pension pays a monthly income for as long as you live. Should you die before a specified number of payments have been made (usually five, 10 or 15 years), the balance of the payments will continue to a named beneficiary or to your estate. Since there is a guarantee that payments will be made for a specified period, the amount of pension income you will receive is less than the life annuity only option. Example: If you choose a life annuity with a 10-year guarantee, you will receive a monthly payment as long as you live, with the provision that if you were to die before receiving 120 monthly payments, your named beneficiary or estate will continue to receive the balance of your monthly payments until a total of 120 payments have been made. As an alternative to the continuation of monthly instalments, the present value of the remaining payments may be paid in a lump sum. Once this provision has been met, no further payment will be made. 3. Joint and last survivor annuity Under this arrangement, you will receive a monthly income as long as you live. Should you predecease the joint annuitant (your spouse), payments will continue to your spouse at the chosen percentage for the spouse s lifetime. When both you and your spouse are deceased, payments cease. Your plan will offer a variety of survivor benefits. The most common are 50, 60, 66 2/3, 75 or 100 per cent of the amount payable immediately prior to your death. 4. Joint and last survivor annuity with a guaranteed payment period Under this form of payment, you will receive a monthly income as long as you live. Should you predecease your 35

36 Canadian Merchant Service Guild spouse, payments will continue to your spouse at the full amount until the end of the chosen guarantee period, at which time, they will reduce based on the level of survivor benefit chosen and continue for the spouse s lifetime. When both you and your spouse are deceased, payments cease. In the event that both you and your spouse die within the guarantee period, the payments will continue to your designated beneficiary or estate until the end of the chosen guarantee period. As there is a provision for payments to continue to a joint survivor for life as well, the amount of pension income you will receive under Option 3 or 4 is less than the single life annuity with or without a guarantee period. This type of annuity can help married couples with their retirement planning. Life income fund (LIF) A LIF is an alternative to a life annuity. LIFs provide increased flexibility by enabling individuals to defer the purchase of an annuity to the end of the year in which they turn 80 years of age. The 2005 Federal Budget proposes to eliminate the requirement to convert federally regulated pension funds held in a LIF to an annuity at age 80. These changes will be reflected in next year s booklet. While in the LIF, locked-in monies provide an adjustable flow of retirement income within a specified range of minimum or maximum withdrawals. At the same time, control over the balance of the locked-in capital and its investment is retained by the purchaser. Plus, investment earnings continue to accrue on a taxsheltered basis. In essence, the LIF is like a bank account for the time between your retirement age and the end of the year in which you turn age 80. You must draw an income from this account within the prescribed minimum and maximum payment levels. At no time can you cash-in your account. 36

37 Western Branch Pension Plan Towboats One advantage of the LIF is that you may time the purchase of the annuity. Your purchasing power can be greatly affected by the interest rates in effect on the date of purchase. A LIF offers the potential for you to wait for a peak in interest rates while still earning a retirement income. At death, the surviving spouse is automatically entitled to the balance in the LIF contract. The funds retain their locked-in status and may be used to purchase a life annuity, be transferred to another LIF or transferred to a locked-in registered retirement savings plan (LIRRSP). If you do not have a spouse and die prior to purchasing an annuity, the remaining principal in the LIF is refunded to your named beneficiary or estate, less the applicable taxes. WHAT IS THE MINIMUM WITHDRAWAL FORMULA? The minimum withdrawal formula is calculated by dividing the balance in the LIF at January 1 of each year by 90, less the planholder s age on the same date. Minimum withdrawal formula: Amount in LIF at start of year 90 - Planholder s age at start of year = minimum dollar withdrawal in year WHAT IS THE MAXIMUM WITHDRAWAL FORMULA? Regulations permit cash withdrawals up to the maximum during the initial fiscal year of a LIF, provided the planholder is 50 years of age and the transfer has not been made from another LIF. In the initial year, the maximum is pro-rated based on the number of months the fund has been in existence. 37

38 Canadian Merchant Service Guild The maximum withdrawal formula is designed to ensure that sufficient money remains in the LIF to purchase a life annuity at age 80. The interest rate used to calculate the maximum annual withdrawal may be determined by: 1. using an interest rate not to exceed six per cent for all years; or 2. using an interest rate that is not higher than the prescribed rate (published in the Bank of Canada Review under identification number CANSIM V122487, formerly B14013) for the first 15 years and a rate that does not exceed six per cent for the remaining years. The interest rate chosen will ultimately affect the balance in the fund that is available for the purchase of a life annuity. A lower interest rate results in a lower maximum annual withdrawal amount. As a consequence, the balance available to purchase an annuity at age 80 may be higher. It should be noted that this interest factor has no connection to the interest rate generated by the investments supporting the LIF. The investment options available in a LIF provide the potential for an increase or reduction in future income. As a result, the maximum amount available to be withdrawn will change every year. Maximum withdrawal formula: Amount in LIF at start of year Present value of payments of $1 per year to end at age 90 = maximum dollar withdrawal in year 38

39 Western Branch Pension Plan Towboats The following table shows the minimum and maximum percentage of the LIF balance at start of the year, which must be withdrawn annually. The minimum withdrawal rates expressed as a percentage of the LIF balance (as per the table) are fixed. The dollar amount of the withdrawal must be calculated yearly based on this fixed percentage. The maximum annual withdrawal at each age must be recalculated on January 1 of each fiscal year. The dollar amount of the withdrawal must be calculated yearly based on the applicable percentage for that year. Minimum withdrawal Maximum withdrawal Age at as a percentage as a percentage start of the LIF balance of the LIF balance of year at start of the year at start of the year % 5.67% % 5.71% % 5.76% % 5.80% % 5.85% % 5.90% % 5.96% % 6.02% % 6.08% % 6.16% 60* 3.33% 6.24% % 6.32% % 6.42% % 6.52% % 6.63% % 6.75% % 6.89% % 7.04% % 7.20% 39

40 Canadian Merchant Service Guild Minimum withdrawal Maximum withdrawal Age at as a percentage as a percentage start of the LIF balance of the LIF balance of year at start of the year at start of the year % 7.39% % 7.59% % 7.82% % 8.08% % 8.38% % 8.72% % 9.11% % 9.55% % 10.07% % 10.68% % 11.40% * For example, the minimum annual withdrawal at the start of the year for a person aged 60 whose LIF has a balance of $200,000 is: $200,000 x 3.33 per cent = $6,660 (the minimum withdrawal for the fiscal year). In the first year of the LIF, the minimum withdrawal amount is zero. The planholder must begin receiving annual payments at least equal to the minimum before the end of the second year. If the planholder does not initiate the withdrawal, the carrier must make the payment to the planholder. NOTE: The preceding table is based on the CANSIM V122487, formerly B14013 interest rate (November 2004 of 4.87 per cent for the first 15 years following January 1, 2005 and 6.0 per cent thereafter. The CANSIM V is the Government of Canada marketable bonds, average yield for maturities over 10 years. This is a monthly rate published by the Bank of Canada. This is the approved rate used in the calculation of the maximum withdrawal as a percentage of the LIF balance at the start of the year. 40

41 Western Branch Pension Plan Towboats * For example, the maximum annual withdrawal for a person aged 60 whose LIF has a balance of $200,000 is as follows: $200,000 x 6.24 per cent = $12,480 (the maximum withdrawal for the fiscal year) WHAT HAPPENS IF THE LIF PLANHOLDER DIES BEFORE A LIFE ANNUITY HAS BEEN PURCHASED? If the planholder dies before a life annuity has been purchased, the planholder s spouse or, if there is no spouse, another named beneficiary or the estate, is entitled to receive a benefit equal to the balance in the fund. A spouse who is not living separate and apart from the owner of the LIF at the owner s date of death will be entitled to receive a death benefit equal to the balance of the LIF. The balance of the LIF can either be used to acquire an immediate or deferred life annuity, be transferred to another LIF, or transferred to a locked-in registered retirement savings plan. 41

42 Canadian Merchant Service Guild Benefits on termination of plan membership You are entitled to receive a termination benefit 18 months after you have terminated your employment in the towboat industry. 1. TERMINATION BEFORE COMPLETION OF TWO YEARS OF PLAN MEMBERSHIP If you have less than two years of membership at the time you leave the plan, you will be entitled to a refund of all your required and additional voluntary plan contributions together with the credited investment earnings (loss) to the date of your termination from the plan. 2. TERMINATION AFTER TWO YEARS OF PLAN MEMBERSHIP If you have more than two years of plan membership, you are not permitted to receive any refund of your required contributions in cash. However, you will receive a pension at age 60 or earlier based on your contributions and those of your employer. You have the choice of: transferring your accumulated member and employer contributions with investment earnings (loss) to a lockedin registered retirement savings plan (LIRRSP) or life income fund; transferring them to another registered pension plan; or establishing a deferred annuity or life income fund in your name. 42

43 Western Branch Pension Plan Towboats Additional voluntary contributions may be refunded in cash or transferred to an RRSP at any time. A former plan member who is entitled to receive a deferred life annuity commencing at or after age 50 can apply to have his/ her accumulated member and employer contributions with investment earnings (loss) transferred to a locked-in registered retirement savings plan (LIRRSP) once he/she has satisfied the required waiting period. Within 30 days following receipt of notification of his termination of plan membership, the plan administrator will provide a former plan member with a written statement outlining the benefits to which he/she is entitled under the terms of the plan. The 18-month waiting period has been extended to all members over age 50 who wish to transfer their pension benefits to a LIRRSP or a LIF. To waive the 18-month waiting period, active members may submit proof of termination of employment to the plan administrator. A letter from the member s employer is required. It must provide the termination or retirement date and confirm that the termination or resignation has resulted in a loss of seniority and all benefits. It must also confirm that all pension contributions, including those payable on lay days, have been remitted to the plan. The 18-month waiting period is automatically waived for disabled members wishing to retire. INTEREST CREDIT POLICY ON TERMINATION Please refer to page 31, Interest Credit Policy at Retirement. The same methodology applies. 43

44 Canadian Merchant Service Guild Death benefits BENEFITS IN THE EVENT OF DEATH PRIOR TO RETIREMENT Amount of death benefit The death benefit payable in the event of your death shall be the sum of your required member and employer contributions and any additional voluntary contributions credited with investment earnings. Death prior to retirement If you have a spouse at the time of your death, then (s)he will receive a pension commencing on or before his/her 60th birthday. The spouse may elect to transfer the death benefit to a LIRRSP, a LIF, or request the purchase of an immediate or deferred annuity on his/her behalf. In the absence of a spouse, the death benefit will be payable as a lump sum cash settlement, less applicable taxes, to your designated beneficiary or your estate. Interest credit policy at death Please refer to page 31, Interest Credit Policy at Retirement. The same methodology applies. 44

45 Western Branch Pension Plan Towboats Disability benefits DEFINITION OF DISABILITY To receive disability credits, you must have five years of membership in the plan and have been actively contributing to it during the five-year period prior to the onset of the disability, and 1. have been receiving WCB benefits for at least 52 consecutive weeks and are continuing to receive those benefits, and are unable to return to work because of that disability; or 2. are receiving long-term disability benefits from the Canadian Merchant Service Guild Western Branch Benefit Plan. Members who are not covered under the Canadian Merchant Service Guild Western Branch Benefit Plan are not eligible. COMMENCEMENT OF DISABILITY Disability credits will be earned from the start date of the longterm disability benefits or the date on which you will have received WCB benefits for one year. PROOF OF DISABILITY AND CONTINUED DISABILITY To be provided with the disability credits, notify the plan administrator in writing when you become disabled. It is your responsibility to provide such proof of disability and/or continued disability as and when requested by the plan administrator. UNION DUES To continue to be eligible for disability credits, a disabled plan member must be in good standing with the union. 45

46 Canadian Merchant Service Guild APPLICATION FOR DISABILITY BENEFITS Under the terms of the plan, members receiving WCB benefits must apply for disability benefits within 60 days following the end of the plan year. Failure to meet this deadline may result in the forfeiture of any disability benefits payable for that plan year. PROOF OF CONTINUED DISABILITY At your own expense, you will provide any information required by the trustees to determine your eligibility for disability credits. CONTRIBUTIONS WHILE DISABLED Neither you nor your employing company are required to contribute to the plan while you are disabled. DISABILITY BENEFITS TO BE PROVIDED WITH RESPECT TO EMPLOYER CONTRIBUTIONS While disabled, you will be credited with employer contributions. The amount of the employer contributions will be based on what your wages would have been had you continued to be employed on the same basis as in the 12-month period immediately prior to the onset of your disability. Effective January 1, 2001, the disability pension credits will be prorated accordingly when a member is assessed with a partial WCB benefit. No contribution will be credited after the termination of the long-term disability or WCB benefits, or once you accept a lump sum settlement in respect to these benefits. In the event that there are insufficient funds in the disability credit account to fully credit you with all of your deemed contributions, you will receive a proportionate credit for the year. 46

47 Western Branch Pension Plan Towboats DISABILITY BENEFITS TO BE PROVIDED WITH RESPECT TO THE PLAN MEMBER CONTRIBUTIONS While disabled, you will be credited with contributions that you would have otherwise made to the plan. The credited rate is based on the terms of the most recent applicable collective agreement had you not become disabled, based on what your wages would have been had you continued to be employed on the same basis during the 12-month period immediately prior to the onset of the disability. Effective January 1, 2001, if you are assessed with a partial WCB benefit, your disability pension credits will be pro-rated accordingly. No contribution will be credited after the termination of your longterm disability or WCB benefits, or once you accept a lump sum settlement in respect to these benefits. In the event that there are insufficient funds in the disability credit account to fully credit each disabled plan member with all of his or her deemed contributions, each disabled plan member will receive a proportionate credit for the year. DEATH OF A DISABLED OR PREVIOUSLY DISABLED PLAN MEMBER If you die while disabled and received disability credits prior to your retirement under the terms of the plan, the death benefits will be calculated giving full credit for the deemed contributions, which were credited to you during your disability. TERMINATION OF ACTIVE PLAN MEMBERSHIP FOR A DISABLED OR PREVIOUSLY DISABLED PLAN MEMBER In the event of the termination of active membership of a plan member who had previously been disabled under the terms of this plan, his/her benefits on termination will be calculated giving him/ her full credit for the contributions which were credited to him/her during his or her period of disability. 47

48 Canadian Merchant Service Guild STATUS OF PLAN MEMBER WHILE DISABLED Other than retirement or death prior to retirement, you will not be terminated from the plan while disabled for any reason. FUNDING OF THE DISABILITY BENEFITS - DISABILITY CONTRIBUTIONS Effective October 1, 1995, an employing company will contribute an amount equivalent to one per cent of basic wages to the plan. These funds will be used to specifically fund the disability benefits provided by the plan. During the course of a plan year, the plan administrator will accumulate the disability contributions in a separate disability credit account. At the end of each plan year, the plan administrator will withdraw from the account the amount required to provide the necessary disability contribution allocations for that plan year. The balance of money (if any) in the disability credit account will be allocated to the general membership. Contributions will only be credited up to the maximum amount permitted by the available funds and will not exceed the plan member s deemed contributions for the period of disability. 48

49 Western Branch Pension Plan Towboats Investment management approach The board of trustees introduced some fundamental changes to the fund s investment management philosophy and process. In light of the demographics of the plan membership and the volatility of financial markets, a study was undertaken to examine the appropriateness of the asset mix and the investment risk allocation. It was concluded that the membership would be better served if a more diversified investment approach were adopted based on four different risk profiles (i.e. conservative, moderate, aggressive and ultra-conservative). As people approach retirement, their risk tolerance changes while their assets need to be sheltered from market volatility. To answer to these objectives, on August 1, 2000, the Frank Russell Company was hired as the fund s investment manager to replace the former investment management structure. In the fall of 2000 and spring of 2001, membership meetings were held to inform members of these changes. Members received an information kit outlining the changes in detail. In 2001, all members were automatically invested in the Balanced Growth Portfolio. Its asset mix is: 40 per cent Fixed Income Fund; 30 per cent Canadian Equity Fund; 15 per cent US Equity Fund; and 15 per cent Overseas Equity Fund. Since January 1, 2002, members have had the opportunity to switch from one portfolio to another once a year. And, beginning January 1, 2004, members can switch portfolios twice a year. 49

50 Canadian Merchant Service Guild (Please note that if you do not make an election by June 15 and December 15 of the year, your assets will remain in the same portfolio for another six months or until you make an alternate choice.) Member election forms must be received by the plan administrator on or prior to June 15 and December 15 of each year to qualify for a change in portfolio on the July 1 or January 1 immediately following. As part of the governance monitoring process, the fund has a statement of investment policies and procedures. In this policy are defined performance objectives for investment managers to achieve over a four-year period. On a quarterly basis, the Board of Trustees monitors the performance against the stated objectives. Frank Russell Canada was hired in the third quarter of While over the four years they have marginally beaten the passive benchmarks, they failed to provide consistent quarterly added value or better relative performance compared with their peers. Effective January 5, 2005, the board of trustees passed a resolution to terminate the services of Frank Russell Canada and hire SEI Investments. ABOUT SEI INVESTMENTS SEI Investments is a leading global provider of outsourced business solutions, managing approximately $138 billion in assets for investors in 12 countries, including approximately $5 billion in Canada. Since 1968, they have helped institutions, individuals and their advisors create and manage wealth. They offer a range of innovative products, services and technologies, including their leading manager-of-managers investment process. With 1,800 employees worldwide, they are proud to be named one of Fortune magazine s 100 Best Companies to Work For. SEI is a publicly held NASDAQ-listed corporation with 40% employee ownership. 50

51 Western Branch Pension Plan Towboats MEETING YOUR RETIREMENT GOALS WITH SEI FUNDS SEI Investments understands the issues faced by group retirement plan members like yourself. Their goal is to help you achieve your retirement objectives and give you and your family the kind of future you deserve. SEI provides an array of fund options and makes investing easy for you. The SEI funds are based on a manager-of-managers approach to investing. This approach incorporates multiple managers, multiple investment styles and multiple asset classes in one single fund. The SEI funds follow an investment philosophy that is disciplined and scientific. SEI s philosophy is based on four principles: asset allocation, portfolio structure, multiple specialist managers and continuous portfolio management. These principles all work together to deliver an investment program that makes sense in any financial climate. INVESTING MADE SIMPLE The SEI funds have been designed to take into account difference financial situations, retirement goals, tolerance for risk and levels of investment knowledge. Regardless of what your investment objectives are, the SEI funds will meet your needs. Once you have selected a fund that matches your financial situation, you need only revisit your selection on a semi-annual basis or when a major life event occurs, such as marriage, buying a house, or having children. Altering your investment choice is only necessary when your investment objectives or tolerance for risk changes. The funds deliver a sophisticated multi-manager, multi-style, multi-asset class structure without the confusion and complexity associated with creating one. SEI makes investing simple for you. 51

52 Canadian Merchant Service Guild 52

53 Western Branch Pension Plan Towboats ABOUT SEI LIFEPATH FUNDS The SEI LifePath funds are based on a manager-of-managers investment process that offers diversified portfolios that maximize return potential and your exposure to investment risk. SEI combines multiple specialist managers with different investment styles to provide you with the optimal mix of assets, investment styles and exposure to dozens of independent portfolio managers. The SEI LifePath funds ensure you don t put all your eggs in one basket. PORTFOLIO MANAGER RESEARCH AND SELECTION PROCESS SEI selects portfolio managers using a scientific, time-tested approach that s based on the firm s experience with thousands of portfolio managers across all market cycles. This rigorous step-bystep process starts with evaluating each potential manager s performance against a benchmark that s relevant to their investment style. The process then ends with a qualitative examination of the portfolio management firm itself that involves personal interviews and on-site visits. SEI s portfolio manager research and selection process shrinks a universe of thousands of potential portfolio managers down to a select few that meet all of SEI s criteria. MONITORING PORTFOLIO MANAGERS AND YOUR RETIREMENT INVESTMENTS You need not worry about replacing portfolio managers if their performance isn t meeting your objectives. You also need not worry about your asset mix moving away from your target. (Your asset mix is the mix between stocks and bonds.) SEI manages EVERY MANAGER, EVERY TRADE, EVERY DAY TM SEI believes this high level of attention is the only way to provide the risk control you require to ensure that your retirement savings stay on track and meet your objectives. 53

54 Canadian Merchant Service Guild PARTICIPATING MANAGERS AT A GLANCE CANADIAN EQUITY FUND PCJ Investment Counsel Jarislowsky Fraser Limited Seamark Asset Management Ltd. Goodman & Company Laketon Investment Management MFC Global Investment Management Montrusco Bolton Investments, Inc. CANADIAN SMALL COMPANY EQUITY FUND Beutel Goodman & Company, Ltd. MFC Global Investment Management Montrusco Bolton Investments, Inc. Large Cap Market Driven Large Cap Value Large Cap Value Large Cap Growth Large Cap Growth Small Cap Value Small Cap Growth Value Value Growth CANADIAN FIXED INCOME FUND Beutel Goodman & Company, Ltd. Value Focused Connor, Clark & Lunn Investment Management Value Focused Addenda Capital Inc. Duration Management AEGON Capital Management Inc. Investment Grade Credit Co-operators Investment Counselling Investment Grade Credit J. Zechner Associates Inc. Investment Grade Credit U.S. LARGE COMPANY EQUITY FUND Aronson + Johnson + Ortiz, LP LSV Asset Management Sanford C. Bernstein & Co., Inc. Goldman Sachs Asset Management Montag & Caldwell Investment Counsel McKinley Capital Management, Inc. Peregrine Capital Management, Inc. Transamerica Investment Management, LLC U.S. SMALL COMPANY EQUITY FUND BlackRock Advisors, Inc. Lee Munder Investments, Ltd. Relative Value Contrarian Value Deep Value Relative Growth Quality Growth Momentum Growth Long-Term Growth Emerging Growth Value Growth 54

55 Western Branch Pension Plan Towboats EAFE EQUITY FUND AllianceBernstein Morgan Stanley Investment Management McKinley Capital Management, Inc. Capital Guardian Trust Company EMERGING MARKETS EQUITY FUND Alliance Capital Management, LP The Boston Company Asset Management, LLC SOCIAL INTEGRITY CANADIAN EQUITY FUND Seamark Asset Management Ltd. Laketon Investment Management SOCIAL INTEGRITY BOND FUND Connor, Clark & Lunn Investment Management Addenda Capital Inc. Co-operators Investment Counselling Value Relative Value Momentum Growth GARP Growth Value Value Growth Value Focused Duration Management Investment Grade Credit MONEY MARKET FUND MFC Global Investment Management REAL RETURN BOND FUND Senecal Investment Counsel LONG DURATION BOND FUND Beutel Goodman & Company, Ltd. INTERNATIONAL SYNTHETIC FUND U.S. MIDCAP SYNTHETIC FUND U.S. LARGE CAP SYNTHETIC FUND CANADIAN INDEX FUND CANADIAN LARGE CAP INDEX FUND TD Asset Management 55

56 Canadian Merchant Service Guild CANADIAN FIXED INCOME INDEX FUND YMG Capital Management Inc. FUTURES INDEX FUND 3XL FUTURES INDEX FUND Mount Lucas Management Corp. ENHANCED GLOBAL BOND FUND Strategic Fixed Income, LLC 56

57 Western Branch Pension Plan Towboats SEI MONEY MARKET FUND Investment objective The objective of the SEI Money Market Fund is to earn current interest income at the highest possible rate of return consistent with preservation of capital and liquidity. The fund is directed towards purchasers who need short-term, high-quality investment vehicles. For most investors, the fund compliments cash management opportunities while significantly enhancing returns, quality and liquidity. The fund allows subscribers to maintain a high level of liquidity by investing in short-term instruments while enjoying enhanced returns delivered by one of Canada s top investment managers, MFC Global Investment Management. Investment strategy The Money Market Fund is primarily invested in short-term debt securities issued or guaranteed by the government of Canada as well as other Canadian issuer short-term investments such as Bankers Acceptances and Corporate paper. All non-government securities must have a minimum R-1 credit rating or higher (as determined by the Dominion Bond Rating Service). This ensures the fund maintains a high overall level of quality. The fund is designed to add value through active management and has a dollar-weighted average term to maturity not exceeding 90 days. The fund manager incorporates computer models and analytical techniques to forecast changes in the yield curve and interest rates. Maturities matching the above-mentioned constraints are then selected to provide the highest total yield. Fund benchmark Scotia Capital Markets 30-Day T-Bill Index 57

58 Canadian Merchant Service Guild BALANCED 40/60 FUND Investment objective The objective of the fund is to provide conservative returns of both capital growth and income. Investment strategy The fund is well diversified between equities and bonds with an emphasis on bonds to reduce fund volatility. The fund is designed for short to mid-term investors with a 5 to 10 year investment time horizon. The Balanced 40/60 Fund is appropriate for registered and nonregistered accounts. 58

59 Western Branch Pension Plan Towboats FUND ALLOCATION Canadian Equity Canadian Equity Fund 13% Canadian Small Company Equity Fund 1% Canadian Large Cap Index Fund 1% Foreign Equity U.S. Large Company Equity Fund 11% U.S. Small Company Equity Fund 2% U.S. Large Cap Synthetic Fund 1% U.S. MidCap Synthetic Fund 2% EAFE Equity Fund 7% Emerging Markets Equity Fund 1% International Synthetic Fund 1% Fixed Income Canadian Fixed Income Fund 37% Long Duration Bond Fund 6% Real Return Bond Fund 10% Enhanced Global Bond Fund 7% 59

60 Canadian Merchant Service Guild BALANCED 60/40 FUND Investment objective The objective of the fund is to provide moderate returns of both capital growth and income. Investment strategy The fund is well diversified between equities and bonds and is designed for short to midterm investors with a 5 to 15 year investment time horizon. The Balanced 60/40 Fund is appropriate for registered and nonregistered accounts. 60

61 Western Branch Pension Plan Towboats FUND ALLOCATION Canadian Equity Canadian Equity Fund 27.0% Canadian Small Company Equity Fund 2.0% Canadian Large Cap Index Fund 1.0% Foreign Equity U.S. Large Company Equity Fund 10.0% U.S. Small Company Equity Fund 2.0% U.S. Large Cap Synthetic Fund 1.0% U.S. MidCap Synthetic Fund 5.0% EAFE Equity Fund 8.5% Emerging Markets Equity Fund 2.5% International Synthetic Fund 1.0% Fixed Income Canadian Fixed Income Fund 30.0% Real Return Bond Fund 6.0% Enhanced Global Bond Fund 4.0% 61

62 Canadian Merchant Service Guild GROWTH 80/20 FUND Investment objective The objective of the fund is to provide higher long-term returns through capital growth and income. Investment strategy The fund employs an aggressive growth strategy with diversification between equities and bonds. A largely significant allocation to equity is implemented to allow opportunity for higher returns through capital growth. The fund is designed for mid to long-term investors with a 10 to 20 plus year investment time horizon. 62

63 Western Branch Pension Plan Towboats The Growth 80/20 Fund is appropriate for registered and nonregistered accounts. FUND ALLOCATION Canadian Equity Canadian Equity Fund 19.0% Canadian Small Company Equity Fund 5.0% Canadian Large Cap Index Fund 1.0% Foreign Equity U.S. Large Company Equity Fund 6.5% U.S. Small Company Equity Fund 3.0% U.S. Large Cap Synthetic Fund 16.5% U.S. MidCap Synthetic Fund 7.0% EAFE Equity Fund 12.5% Emerging Markets Equity Fund 4.0% International Synthetic Fund 5.5% Fixed Income Canadian Fixed Income Fund 13.0% Real Return Bond Fund 5.0% Enhanced Global Bond Fund 2.0% 63

64 Canadian Merchant Service Guild Notes: Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus or other offering document of the mutual fund before making an investment in the mutual fund. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the SEI Money Market Fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Mutual funds are not guaranteed, their values change frequently and past performances may not be repeated. The information contained herein is for general information purposes only and is not intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment. You should not act or rely on the information contained herein without obtaining specific legal, tax, accounting and investment advice from an investment professional. This communication does not constitute any offer or solicitation to residents of the U.S. or the U.K., or to anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such a solicitation. Benchmark to the SCM 30-Day T-Bill Index is effective December 1, SUPERIOR COVERAGE OF MANAGERS AND STYLES You need not worry about selecting the right portfolio managers. The SEI funds are based on the manager-of-managers approach to investing, giving you access to over 30 different portfolio managers, with different investment styles. These best-of-class portfolio managers are located across the globe. The manager-of-managers structure reduces your exposure to the performance of a single manager. 64

65 Western Branch Pension Plan Towboats SEI selects and hires managers using a scientific, time-tested process based on experience with thousands of investment managers across all market cycles. Managers are combined so that their skills and investment styles complement one another. This blend of managers produces a truly diversified portfolio with minimal risk. DAILY MONITORING Plan members invested in the SEI funds need not worry about portfolio rebalancing. SEI monitors the funds on a daily basis to ensure that original asset mixes (the mix between stocks and bonds) stay on target. Regardless of which SEI fund you are invested in, rest assured that the funds are monitored on a daily basis to ensure that portfolio structures stay intact and managers continue to do what they were hired for. SEI monitors EVERY MANAGER, EVERY TRADE, EVERY DAY TM. This high level of attention given to the SEI funds ensures you have the risk control you are looking for. Managing your retirement funds is an ongoing process. SEI is your partner in helping you build your assets so you and your family can have the kind of future you deserve. 65

66 Canadian Merchant Service Guild Selecting an appropriate fund WHAT IS YOUR INVESTOR PROFILE? There are many things to think about when developing an investment strategy. How will the risk of inflation affect your retirement savings? How does market risk, (the possible loss of some or all of your money) relate to return? Are you confident enough to be comfortable with uncertainty or will you be more likely to worry about ups and downs in investment returns over short periods? These and many other questions about your investor personality need to be considered as you develop your investment program. To begin with What are your investment objectives? Are you primarily concerned with preserving your savings? Or are you more inclined to see your savings grow substantially? How about your time horizon... how many years do you have to invest before your anticipated retirement? If you are just starting out, you have time on your side and you could tolerate short-term market fluctuations. This allows you to be more aggressive in your investment choices because you have time to ride out the ups and downs of the stock market. If you are closer to your retirement years, your comfort level with the inevitable ups and downs of the investments in your portfolio may be low. You may want to choose investments with lower risk and less growth potential. 66

67 Western Branch Pension Plan Towboats Every individual has a unique situation and resources to build from, so before we continue let s take a look at you and see what your risk tolerance level is. Knowing your risk tolerance helps you to develop an investment strategy for your personal investment style. Remember: only you can decide what is appropriate for your own financial situation. The investor profile questionnaire on the next page is only a guide and you may have individual circumstances beyond the scope of this questionnaire. INVESTOR PROFILE QUESTIONNAIRE Instructions: Make one choice per question and enter the corresponding points in the box. Investment objectives QUESTION 1 Which of the following best describes your investment objectives? (a) Preserving savings and earning a moderate amount of current income (1 point) (b) Generating a high amount of current income (2 points) (c) Generating some current income and growing my assets (3 points) (d) Growing my assets substantially (4 points) 67

68 Canadian Merchant Service Guild QUESTION 2 Five years from now, what do you expect your standard of living to be? (a) The same as it is now (1 point) (b) Somewhat better than it is now (2 points) (c) Substantially better than it is now(3 points) QUESTION 3 Ten years from now, what do you expect your portfolio value to be? (a) The same as or a little more than it is today (1 point) (b) Moderately greater than it is today (2 points) (c) Substantially greater than it is today (3 points) QUESTION 4 What is your current income requirement (interest plus dividends) from this portfolio? (a) More than 4% (1 point) (b) 2% to 4% (2 points) (c) 0% to 2% (3 points) 68

69 Western Branch Pension Plan Towboats QUESTION 5 What do you want to do with the income generated by your portfolio? (a) Receive all income (1 point) (b) Receive some and reinvest some (2 points) (c) Reinvest all income (3 points) Time horizon QUESTION 6 What is the time frame for you to achieve your financial goals? (a) 0 to 5 years (1 point) (b) 5 to 10 years (2 points) (c) 10 to 15 years (5 points) (d) 15 years or longer (10 points) QUESTION 7 What is your primary financial goal? (a) Wealth preservation (1 point) (b) Education funding (2 points) (c) Retirement planning (5 points) (d) Long-term wealth accumulation (10 points) 69

70 Canadian Merchant Service Guild QUESTION 8 What is your age? (a) Over 66 (1 point) (b) 56 to 65 (2 Points) (c) 46 to 55 (5 points) (d) Under 46 (10 points) Risk tolerance QUESTION 9 You just received a substantial sum of money. How would you invest it? (a) I would invest in something that offered moderate current income and was very safe (1 point) (b) I would invest in something that offered high current income with a moderate amount of risk (2 points) (c) I would invest in something that offered high total return (current income plus capital appreciation) with a moderately high amount of risk (3 points) (d) I would invest in something that offered substantial capital appreciation even though it had a high amount of risk (4 points) 70

71 Western Branch Pension Plan Towboats QUESTION 10 Which of the following statements best describes your reaction if the value of your portfolio suddenly declined 15%? (a) I would be very concerned because I cannot accept fluctuations in the value of my portfolio (1 point) (b) If the amount of income I received was unaffected, it would not bother me (2 points) (c) I invest for long-term growth but would be concerned about even a temporary decline (3 points) (d) I invest for long-term growth and accept temporary changes due to market fluctuations (4 points) QUESTION 11 Which of the following investments would you feel most comfortable owning? (a) GIC s, Money Market (1 point) (b) Government Bonds (2 points) (c) Stocks of older, established companies (3 points) (d) Stocks of newer, growing companies (4 points) 71

72 Canadian Merchant Service Guild QUESTION 12 How optimistic are you about the long term prospects for the economy? (a) Pessimistic (1 point) (b) Unsure (2 points) (c) Somewhat optimistic (3 points) (d) Very optimistic (4 points) After completing the investor profile questionnaire, add your score. Total score: Then compare your total score to the ranges below which are used to determine your investor profile. Total score less than 24 Type of investor Conservative Moderate Balanced greater than 48 Aggressive 72

73 Western Branch Pension Plan Towboats What type of investor are you? Selecting Funds Now that you have completed the investor profile questionnaire and have identified the type of investor you are, you need to choose the SEI LifePath fund that matches your investor profile. Score: less than 24 Type of investor: conservative Most appropriate fund: SEI Money Market Fund Score: 24 to 36 Type of investor: moderate Most appropriate fund: SEI Balanced 40/60 Fund Score: 37 to 48 Type of investor: balanced Most appropriate fund: SEI Balanced 60/40 Fund Score: Above 48 Type of investor: aggressive Most appropriate fund: SEI Growth 80/20 Fund 73

74 Canadian Merchant Service Guild Other details about your plan CALCULATION OF INVESTMENT EARNINGS The plan administrator will credit investment earnings or losses to your account at the net rate earned or lost by the invested funds, based on the audited financial statements. To determine the interim return or loss on investment credited for refunds, death benefits and retirement benefits during the plan year, the administrator will determine the interim rate using the actual net rates earned or lost by the fund after allowing for applicable expenses and capital appreciation and depreciation, whether realized or unrealized. When information or data is unavailable to determine the present monthly net rate, the administrator will refer to the most recent month(s) of the fiscal period whereby information is available and project the year-todate return or loss on a pro-rata basis to the settlement date. For an example, please refer to page 32. Net investment earnings (losses) history Short-Term Balanced Balanced Long- Investment Fund Income Growth Term Growth 2001 n/a n/a % n/a % 0.545% % % % 9.034% % % % 7.538% 9.294% % 74

75 Western Branch Pension Plan Towboats Due to the fluctuations in the monthly returns, members may benefit by timing their retirement date appropriately. Please consult with the administrator for information. MARRIAGE BREAKDOWN If you need the assistance of the plan administrator to provide information to a court in connection with a marriage breakdown, you will be required to directly pay for the cost of the services provided to you. Under the Family Relations Act, your spouse is entitled to all or a portion of the pension accumulated during the relationship as described in the court order or separation agreement. In any case, the pension entitlement assigned to your spouse continues to be subject to the locked-in provisions. SPOUSAL WAIVERS Pension legislation protects the rights of your spouse. It is important for you to realize that your spouse or common-law partner is entitled to different types of pension benefits at different times during your membership in the plan. For example, although your spouse may agree to waive his/her entitlement to a preretirement death benefit, this does not affect his/her entitlement to pension benefits on marriage breakdown, or on your death. There are basically three triggering events: legal separation or divorce; retirement; and death. Three distinct waivers are required. On legal separation or divorce, your former spouse is entitled to a share of the assets accumulated during the relationship. On retirement, you must select a form of pension which will provide a survivor pension of at least 60 per 75

76 Canadian Merchant Service Guild cent of the amount payable prior to your death. On death, your surviving spouse is entitled to 100 per cent of the assets in your account, less any assets which were previously assigned to a former spouse or common-law partner. All waivers must be notarized at your expense. ASSIGNMENT AND COLLATERAL Under present pension legislation, you can neither use the value of this plan as collateral for a loan nor assign your pension to any company or person, unless the assignment arises from a marriage breakdown under British Columbia s Family Relations Act. INVESTMENT POLICY AND ASSET MIX The trustees are responsible for collecting the required contributions and for investing them for the good of the plan and its beneficiaries. The written Statement of Investment Policies and Procedures (SIP & P) is a comprehensive document that defines the investment guidelines, performance objectives and monitoring benchmarks of the plan. It ensures that investment managers and the custodian stay within the limits established by the trustees in concert with their professional advisors. ADMINISTRATION OF THE PLAN The trustees of the plan represent the Guild and the employers equally. They are charged with the responsibility of ensuring that the plan conforms to all pension legislation in Canada. They are responsible for ensuring that the assets of the fund are invested for maximum growth, consistent with prudent investment policies. They are also responsible for seeing that all of the necessary records are kept to enable benefits to be calculated and paid in the event a member leaves the plan through termination, death or retirement. 76

77 Western Branch Pension Plan Towboats The trustees meet regularly to review the investment managers reports and deal with any new business. If you have any questions concerning the plan or your pension benefit entitlements, contact the plan administrator or one of the trustees listed on page 83. CHANGE OF ADDRESS This booklet has been sent to every member for whom a current address is available. It is important to inform the plan administrator and union of any address changes. RECOVERY OF SEARCH FEES In the event that your whereabouts are unknown at the date you attain the normal retirement age, or at other times when it is necessary to send you important information about your entitlements under the Plan, the plan administrator will attempt to contact you through the Human Resources Development Canada, National Search Unit. The fee for this service is currently $10.00 per person, plus 7% GST. This fee will be deducted from your account each time a search is conducted. PENSION EXAMPLES Estimated purchasing power If you have $1,000 of accumulated member and employer contributions and investment earnings, then based on an interest assumption of five, six or seven per cent at retirement, you can expect to receive a monthly pension, payable in the normal form, of approximately the following amount: 77

78 Canadian Merchant Service Guild Age Monthly pension assuming interest rate at retirement of: 7 % 6 % 5 % 50 $6.38 $5.72 $ $6.42 $5.77 $ $6.48 $5.83 $ $6.53 $5.88 $ $6.59 $5.95 $ $6.66 $6.02 $ $6.73 $6.09 $ $6.80 $6.16 $ $6.88 $6.25 $ $6.96 $6.34 $ $7.06 $6.43 $ $7.15 $6.53 $ $7.26 $6.64 $ $7.37 $6.75 $ $7.49 $6.88 $ $7.62 $7.01 $

79 Western Branch Pension Plan Towboats Glossary of terms ACTUARY: A professional trained in making financial projections of pension funds. Based on economic forecasts of interest, inflation and other trend factors, an actuary prepares financial forecasts for the plan and provides opinion(s) regarding its solvency. BASIC WAGES: The amount of wages as outlined in the collective agreement between certain members of the Council of Marine Carriers or other collective agreements. BENEFICIARY: A person, or the estate of a member, entitled under the terms of the plan to receive pre-retirement or post-retirement survivor benefits on the death of the member. Under the federal Pension Benefits Standards Act (1985), a legal or common-law spouse is automatically considered to be the beneficiary. COMMUTED VALUE: The calculation is used to determine the lump sum value of the deferred pension benefit earned from employer contributions prior to plan conversion on January 1, It is calculated in accordance with the Recommendations for the Computation of Transfer Values issued by the Canadian Institute of Actuaries (CIA). DEFERRED LIFE ANNUITY: A monthly pension that commences at some point in the future, usually at or after age

80 Canadian Merchant Service Guild DISABLED: For the purposes of this plan, a member who is receiving disability benefits from either the Workers Compensation Board or from the long-term disability plan covering members of the Canadian Merchant Service Guild. Disabled members must meet certain criteria before becoming eligible to receive disability credits. FUND: The pool of money representing the total of member contributions, employer contributions and investment earnings. It is from this pool that retirement, death and termination benefits are paid. INVESTMENT RISK: The trustees appoint money managers to invest the assets of the fund. There is always a choice to be made between risk and return. Money managers take some investment risk to enhance the performance of the fund. LIFE ANNUITY: A specified income paid monthly for the lifetime of the pensioner. It is the same as a monthly pension. LIFE INCOME FUND (LIF): A financial vehicle that allows you to draw an income while the balance of funds continues to grow on a tax-sheltered basis. An alternative to a life annuity which presently allows you to defer the purchase of annuity to age 80. This is subject to change as per the 2005 Federal Budget (see pages 36-41). LOCKED-IN: The legislated conditions that limit the amount of cash refund you can receive from the plan. Locking-in legislation requires that, under certain conditions, your refund from the plan must be used only to provide a pension benefit at retirement. 80

81 Western Branch Pension Plan Towboats LOCKED-IN REGISTERED RETIREMENT SAVINGS PLAN (LIRRSP): A LIRRSP means a registered retirement savings plan as defined in the Income Tax Act. MEMBER: A member of the Guild who is employed by a participating company and who is entitled to receive benefits under the plan because of contributions he/she has made to it. NET CREDITED INTEREST: Based on the investment performance of the fund, the trustees will set a rate of return each year, which will be used to credit your contribution account. Four rates will be declared; one for each of the SEI LifePath funds. SPOUSE: A person who is married to you or who has lived with you for at least one year and who you have publicly represented as your spouse. TERMINATION OF MEMBERSHIP: Plan membership shall cease when a plan member does not have contributions remitted on his or her behalf by a participating company for a period of 18 consecutive months. VESTING: The degree to which a plan member is entitled to the pension provided by employer contributions. The qualification for vesting is based on age and service or years of plan membership. Different vesting rules apply to contributions made before and after January 1, 1987 (reference page 42 for more details). 81

82 Canadian Merchant Service Guild Rights to information The outline of the pension plan that is illustrated in this booklet does not create or confer any contractual or other rights. The plan is subject to amendment and modification from time to time at the trustees discretion as circumstances warrant. All rights and obligations with respect to the plan will be governed solely by the official documents governing the Canadian Merchant Service Guild Western Branch Pension Plan (Towboats). On reasonable written notice members, former members, members spouses, beneficiaries or authorized representatives may review any documents relating to the plan at offices of either the Guild or the administrator. Photocopies are available at a fee. AVAILABLE DOCUMENT Annual information returns; Audited financial statements; Collective agreement; Custodian agreement; Investment manager agreements; Plan document; Statement of investment policies and procedures; and Trust agreement; Please keep this booklet as a permanent record. We hope that you will find it helpful in understanding your interest in the plan. Please advise the administrator of any errors or omissions. 82

83 Western Branch Pension Plan Towboats BOARD OF TRUSTEES Guild: Employers: R. Cahill B. Geen T. Monteski B.E. Sims D. Overstall G. Wilson ADMINISTRATOR Effective January 1, 1997 Coughlin & Associates Ltd. P.O. Box 3517, Station C Ottawa, ON K1Y 4H5 Tel. (613) toll-free (888) Fax (613) [email protected] CMSG office 218 Blue Mountain Street Coquitlam, BC V3K 4H2 Tel. (604) Fax (604) AUDITOR Bouris, Wilson LLP CUSTODIAN Royal Bank of Canada CANADA REVENUE AGENCY REGISTRATION NUMBER PBSA REGISTRATION NUMBER E & OE 83