Approved Minimum Retirement Fund (AMRF) and Approved Retirement Fund (ARF)
Welcome to Canada Life With a reputation for financial strength, stability and consistently high financial ratings from the independent rating agencies, Canada Life is part of the only life assurance group in Ireland to have a AA rating * from Standard & Poor s. Established in 1903, the Canada Life Group has grown to be a modern and dynamic international financial services business. We are part of Great-West Life, one of the world s leading life assurance companies. * The financial rating shown for Great-West Life is provided by Standard & Poor s. Standard & Poor s is a rating agency which provides ratings on the financial strength of companies. This information is correct at the time of going to print.
3 Pension Canada Life AMRF and ARF Contents Introduction 4 Eligibility 5 Approved Minimum Retirement Fund overview 6 How does an AMRF work? 7 Approved Retirement Fund overview 9 How does an ARF work? 10 About your Canada Life AMRF and ARF 12 Technical details 22 Questions and answers 26 More information 27
4 Pension Canada Life AMRF and ARF Introduction You ve worked hard, you ve saved hard and now it s time to enjoy your retirement. While it is impossible to predict exactly how long you will live, recent figures show that in Ireland today, a man retiring at 65 can expect to live to 81 and a woman retiring at 65 can expect to live to 84 *. These statistics suggest there is now a good chance that if you retire at 65 you could need to fund at least 20 years of retirement, and possibly many more and with improvements in medical diagnosis and treatment, many more people can expect to live even longer in the future. At this point in time there are options for you to consider in terms of your retirement savings. Do you choose to purchase a secure income but give up control of and access to your retirement funds, or do you keep control of your funds without the security of a guaranteed income? Choosing a Canada Life Approved Minimum Retirement Fund (AMRF) or Approved Retirement Fund (ARF) gives you control of your pension fund and you can continue to invest your savings and access your money (in the case of an ARF) and there may be a lump sum for your dependants when you die. With our reputation for financial strength, stability and our consistently high financial ratings from the independent rating agencies, Canada Life is part of the only life assurance group in Ireland to have a AA rating from Standard & Poor s **. When you invest with Canada Life you know that you are investing with the strongest life assurance group in Ireland. Warning: If you invest in this product you may lose some or all of the money you invest. Past performance is not a reliable guide to future performance. The value of your investment may go down as well as up. This product may be affected by changes in currency exchange rates. The income you get from this investment may go down as well as up. * Source: Central Statistics Office, 2010. ** The financial rating shown for Great-West Life is provided by Standard & Poor s. Standard & Poor s is a rating agency which provides ratings on the financial strength of companies. This information is correct at the time of going to print.
5 Pension Canada Life AMRF and ARF Eligibility After taking your tax-free lump sum on retirement, you have certain options in relation to the balance of your pension fund and these may include investing in an AMRF or ARF product if you are eligible to do so. Whether you can invest in an ARF or AMRF depends on certain rules laid down by the Revenue Commissioners. You can only invest in an AMRF or ARF if you have a certain type of pension fund A personal pension plan A Personal Retirement Savings Account (PRSA) An executive or company defined contribution pension plan including Additional Voluntary Contributions (AVCs) subject to the scheme rules allowing such an option A personal retirement bond (from a defined contribution plan where permitted under the scheme rules of the original scheme) If you decide you want to invest in an ARF, you must either have a guaranteed income of n12,700 per annum or you must have invested n63,500 in an AMRF or annuity. Please note that the eligibility rules and the maximum Contributory State Pension are subject to change. The maximum amount required to be invested in the AMRF is currently n63,500. If after taking your tax free lump sum, you have less than this amount, the balance must be used to either invest in an AMRF or used to purchase an annuity. In certain limited circumstances, your fund may qualify as a trivial benefit, in which case it may be possible to take the balance of your fund as a once-off taxable lump sum. Once you reach age 75 or you satisfy the minimum income requirements before then, the AMRF converts to an ARF and the rules pertaining to ARFs apply. Once you fulfil the AMRF requirements, or you satisfy the minimum guaranteed income requirements (currently n12,700 per annum), the balance of your pension fund can be used to invest in an ARF. Talk to your Financial Advisor for more information on the options available to you on retirement.
6 Pension Canada Life AMRF and ARF Canada Life Approved Minimum Retirement Fund overview Type of product Approved Minimum Retirement Fund (AMRF). Aim Risk Capital protected Time period Funds available Tax Depending upon eligibility, the AMRF is a single premium vehicle in which you can invest the proceeds of your retirement fund from a Personal Pension Plan, Personal Retirement Savings Account, Retirement Bond or Defined Contribution Occupational Scheme (including AVCs), where the scheme rules allow such an option. You can choose from a range of low, medium and high-risk funds. No. There are no guarantees provided in this product. Investment performance is not guaranteed and returns in respect of this product are dependent on fund performance. You may lose some or all of your original investment. Until age 75 or until you satisfy the guaranteed income requirement if earlier, when your AMRF automatically converts to an Approved Retirement Fund (ARF) Choose from a range of low, medium and high-risk investment funds. Income is taxed at your marginal rate of income tax including Pay Related Social Insurance (PRSI) and the Universal Social Charge (USC) where applicable. For more information please see Tax on page 20. Suitable Not suitable Charges If you want your retirement savings to remain invested and you only want to draw down the growth portion of your pension plan before you are 75 years of age (surrender penalties may apply). Once you reach age 75, or you satisfy the minimum income requirements before then, the AMRF converts to an ARF and the rules pertaining to ARFs apply. If you want to guarantee a certain amount of income, if you require access to your funds before you are 75, or if you don t meet the eligibility requirements. The charges on the Canada Life AMRF are dependent upon premium size and fund choice. Details on charges can be found in Technical details on page 22.
7 Pension Canada Life AMRF and ARF How does an AMRF work? Investing in the Canada Life AMRF What is an AMRF? An Approved Minimum Retirement Fund (AMRF) is a single premium personal retirement fund where you can keep your pension invested as a lump sum after you retire. You can make withdrawals from your AMRF but only on any growth in the value of your fund, which may be subject to early surrender penalties. You cannot withdraw from the underlying value of your fund. The value of your AMRF can be passed on to your estate when you die (subject to any applicable tax). AMRFs are only available for certain types of pension funds as outlined in the Eligibility section on page 5. You must be at least 50 and under 75 years of age and resident in Ireland when you start your AMRF policy. When you reach 75 years, of age or your minimum guaranteed annual income increases to at least n12,700, your AMRF will convert to an ARF. Talk to your Financial Advisor for more information on whether you are eligible for an AMRF. How much can I invest? You must invest n63,500 in your AMRF, or the value of your pension fund if less. The minimum investment for a Canada Life AMRF is n20,000. You can transfer funds from another AMRF into your policy (subject to Revenue Rules). You can also make additional lump sum payments at any time during your investment. Currently a minimum additional lump sum of n650 is required however, the maximum investment amount permitted in an AMRF is n63,500. You should note that the Revenue Commissioners only allow one AMRF policy per individual. Talk to your Financial Advisor for more information. Access to your retirement savings
8 Pension Canada Life AMRF and ARF Can I take a regular income or make withdrawals from my AMRF? You cannot take a regular income from your AMRF. You may only make withdrawals from any growth in the value of your policy before you are 75 years of age. If there is no increase in your policy value, you will not be able to make withdrawals from your AMRF. Withdrawals may be subject to early surrender penalties. For more information see Technical details on page 22. When you reach 75 years of age, or your minimum guaranteed annual income increases to at least n12,700, your AMRF will convert to an ARF and you will be able to take a regular income from your policy and the rules pertaining to ARFs will apply. There are specific tax rules relating to ARFs. For more information see the section on Tax on page 20 and How does an ARF work? on page 10. All withdrawals and surrenders from your AMRF are taxed as income at your marginal rate of tax including PRSI and USC where applicable. Talk to your Tax Advisor for more information on the taxes and charges that apply to you. Warning: It is important to be aware that any withdrawal from your Approved Minimum Retirement Fund will reduce the value of your investment.
9 Pension Canada Life AMRF and ARF Canada Life Approved Retirement Fund overview Type of product Approved Retirement Fund (ARF). Aim Risk Capital protected Time period Funds available Tax Depending upon eligibility, the ARF is a single premium vehicle in which you can invest the proceeds of your retirement fund from a Personal Pension Plan, Personal Retirement Savings Account, Retirement Bond or Defined Contribution Occupational Scheme (including AVCs), where the scheme rules allow such an option, once you have fulfilled the Approved Minimum Retirement Fund (AMRF) requirements. You can choose from a range of low, medium and high-risk funds. No. There are no guarantees provided in this product. Investment performance is not guaranteed and returns in respect of this product are dependent on fund performance. You may lose some or all of your original investment. There is no time limit. We recommend a term of at least 5 years. Choose from a range of low, medium and high-risk investment funds. Income drawn down or deemed to be drawn down is taxed at your marginal rate of tax including PRSI and USC where applicable. ARFs are subject to Imputed Distribution. For more details please see Tax on page 20. Suitable Not suitable Charges If you want control over your retirement fund, the ability to draw down on your fund value as a regular income and have access to your capital (subject to tax and the terms of the investment option(s) you choose). If you want a guaranteed income, or if you don t meet the eligibility requirements. The charges on the Canada Life ARF are dependent upon premium size and fund choice. Details on charges can be found in Technical details on page 22.
10 Pension Canada Life AMRF and ARF How does an ARF work? Investing in the Canada Life ARF What is an ARF? An Approved Retirement Fund (ARF) is a personal retirement fund where you can keep your pension invested as a lump sum after you retire. You can make regular withdrawals from your ARF to give yourself an income, access your capital at any time (surrender penalties apply in the first 5 years) and the proceeds of your ARF can be passed on to your estate when you die (subject to any applicable tax). Who can invest in an ARF? ARFs are only available for certain types of pension funds as outlined in the Eligibility section on page 5. You must be at least 50 years of age and resident in Ireland, when your ARF policy starts. Talk to your Financial Advisor for more information on whether you are eligible for an ARF. How much can I invest? You will need to invest a minimum amount of n20,000 for a Canada Life ARF. You can make additional lump sum investments into your ARF. Each additional contribution must be at least n650 or n12,500 if you are investing in the Focus 15 fund. Access to your retirement savings Can I take a regular income from my ARF? You can take a regular income from your ARF. You can choose to do this at the outset of your policy or during the term of your investment. Regular income is set up as a percentage of the value of your policy and the amount you receive may vary as the value of your policy changes. The minimum annual income you can request is 5% of the value of your policy, subject to a minimum of n125 per payment. The maximum annual income you can request is 10% of the value of your policy. The minimum residual value of your policy after each payment must be n1,250. If your policy value falls below this minimum amount, you will no longer be able to receive regular income. There is no charge for this facility and no surrender penalties will be applied to any income. However, payments will be treated as income and income tax, PRSI and USC will be payable where applicable. Under current taxation legislation, if you do not take a regular income of a certain value, you will be deemed to have drawn an income of either 5% or 6% of the value of your fund each year and an amount in respect of tax, PRSI and if applicable USC, will be deducted annually from your investment. This means you will in effect pay tax on income you did not receive and this is referred to as Imputed Distribution.
11 Pension Canada Life AMRF and ARF We recommend that you talk to your Financial Advisor and consider setting up a regular income. Regular payments will be set up as an annual income unless you specify at the outset that you want to receive regular payments from your policy at a different payment frequency: every month, every three months, or every six months. To make your regular payments, we will deduct units from your policy equal in value to the amount of your requested income. We will also automatically deduct any tax due and pay it directly to the Revenue Commissioners on your behalf. Please note, limits for regular income payments and minimum policy values are subject to review and may be changed at the discretion of Canada Life. Warning: It is important to be aware that any withdrawal (including withdrawals by way of regular income or payment of tax) from your Approved Retirement Fund will reduce the value of your investment. See the section on Tax on page 20 and talk to your Tax Advisor for more information on the taxes and charges that apply to you. Can I cash-in my ARF? You can choose to surrender some or all of the total current value of your fund at any time. The first partial surrender each year is free of administration charges. For any additional partial surrenders there is an administration charge of n25. Restrictions may apply on withdrawals from certain funds. If you make regular withdrawals from your ARF, your fund value will reduce and may reduce to zero in your lifetime. All withdrawals and surrenders from your ARF are taxed as income at your marginal rate of tax including PRSI and USC where applicable. Early surrender penalties may apply to a surrender, partial surrender or transfer of an ARF. See Technical Details - Charges on page 24 for more information on the charges that apply to your policy and talk to your Tax and Financial Advisors for more information on the taxes and charges that apply to you.
12 Pension Canada Life AMRF and ARF About your Canada Life AMRF and ARF Choice for your financial future Create a pension plan specific to your individual needs. Enjoy access to a wide range of funds across all the major asset classes, from liquidity and fixed-interest funds to equity and property funds. Details about the range of funds available and the risks attaching to the funds are outlined in How do I choose the best funds for me? on page 14. A flexible way to invest Create an investment plan to suit your changing needs. You can switch between the wide range of funds available during your investment, if your investment needs or preferences change. Your first two switches in each policy year are free. Any additional switches will be charged at n25 each. Please note, in certain circumstances there may be restrictions on when you can switch funds. In particular, this can apply to investments in a property fund. Make your money work for you Our experienced investment managers will aim to find investment opportunities for your money and will aim to provide you with access to the growth potential of the various asset classes within our range of funds. Access to your money when you need it If you invest in a Canada Life ARF, you can take a regular income from your investment or just take out money when you need to at any time during your investment. Withdrawals other than regular incomes, up to the allowable limit, may be subject to surrender penalties and other fees and any withdrawals will reduce the value of your underlying funds. See Access to your Retirement savings (ARF) on page 10. Please note, in certain circumstances there may be restrictions on when you can make withdrawals on your policy. In particular, this can apply to investments in a property fund. A lump sum on death ARF and AMRF also allow the value of your fund to be paid in a lump sum, subject to tax, to your estate when you die. Choose where to invest your Canada Life AMRF and ARF Your Canada Life AMRF and ARF allow you to choose from a wide range of funds covering various levels of risk and asset types. You can choose from funds investing in equities, property, fixed-interest and cashtype instruments or multi-asset funds investing in all or some of these assets, each offering a different investment strategy and level of risk in order to create a comprehensive and diversified investment solution tailored to suit you.
13 Pension Canada Life AMRF and ARF What funds are available? The investment funds currently available with the Canada Life AMRF and ARF are shown below. Low-risk funds Canada Life Variable Deposit Fund Canada Life/Setanta Pension Liquidity Fund Canada Life/Setanta Pension Fixed Interest Fund Canada Life/SEI MoM Opportunistic Fixed Income Fund Canada Life/SEI MoM Global Fixed Income Fund Medium-risk funds Canada Life/Setanta Pension Consensus Fund Canada Life/Setanta Pension Balanced Dividend Fund Canada Life Pension Property Fund Canada Life/Setanta Pension Managed Fund Canada Life/SEI MoM Global Balanced Fund Canada Life/Merrion Managed Fund Canada Life/BlackRock Pension Managed Fund Canada Life Quadrivium Fund High-risk funds Canada Life/Setanta Pension Passive Equity Fund Canada Life/Setanta Pension Equity Dividend Fund Canada Life/Setanta Pension Equity Fund Canada Life/Setanta Income Opportunities Fund Canada Life/Setanta Pension European Equity Canada Life/Setanta Pension Focus 15 Fund* Canada Life/Setanta Pension Irish Equity Fund Canada Life/Morgan Stanley European Property Fund Canada Life/SEI MoM Global Equity Fund Canada Life/SEI MoM UK Equity Fund Canada Life/SEI MoM European Equity Fund Canada Life/SEI MoM US Equity Fund Canada Life/SEI MoM Japan Equity Fund Canada Life/SEI MoM Pacific Basin Equity Fund Canada Life/SEI MoM Emerging Markets Equity Fund *The minimum investment amount for the Canada Life/Setanta Pension Focus 15 Fund is n12,500. Canada Life retains the right to change the range of funds available from time to time. Annual fund management charges will be applied to your policy and these charges depend on the funds you have chosen. For details on the charges for each fund, please see Technical Details on page 22. For more information on the full range of funds available from Canada Life, please visit our website at www.canadalife.ie.
14 Pension Canada Life AMRF and ARF How do I choose the best funds for me? It is important to be realistic when choosing how and where to invest your money. Be clear about what your needs and investment goals are and consider how much risk you are comfortable with, what kind of return you are looking for and when you will need access to your money. Investment risk versus return Your attitude to risk is probably the most important factor affecting the funds you choose and you will need to decide how much risk you are willing to take with your money. All investments involve an element of risk. Even in funds considered low-risk there may be the potential to lose money due to fluctuations in interest rates or otherwise. The level of risk is linked to the potential level of return; usually, the higher the risk, the greater the potential for a good return on your investment. However, high-risk investments also tend to have more sudden, short-term negative changes in value, which may not suit some investors. When you invest, you want to get the best return for your chosen level of risk. If you want more modest, predictable returns, a low-risk fund may be best. If you are happy to let your investment rise and fall with the potential of higher returns in the long term, high-risk funds may suit you. The expected returns for different types of funds can also vary greatly. Investment time versus access to your investment Some funds are more suitable as long-term investments, giving your money time to grow while other funds are more suited to shorter investment times. Your financial needs in retirement is an important factor to consider when choosing funds. If you need to have immediate access to your investment, some funds such as property funds will not be suitable for you, as these types of funds may have restrictions on when and how you can withdraw your money. Talk to your Financial Advisor for more information and help on choosing the best funds for you.
15 Pension Canada Life AMRF and ARF Choosing where to invest Some funds invest in a single asset class while others are more diversified and invest in multiple asset classes. Our funds invest in a range of asset types including equities, property, fixed-interest, cash-type instruments and commodities, each offering a different investment approach and level of risk. The major asset types are as follows: Cash-type instruments Cash-type instruments have a lower risk than other asset types but also tend to have smaller returns. They are often compared to leaving money on deposit at a bank and are best suited to cautious investors who do not want too much risk. Even in cash-type instruments there may be potential to lose money and the return on the investment may not keep pace with inflation so the inflation-adjusted value of the investment may drop. Fixed-income Fixed-income securities, or bonds as they are also known, are essentially loans issued by governments or corporations to investors. Investors lend money to governments or large companies, who issue a bond in return promising to pay interest on the loan at regular intervals and pay back the full amount at an agreed future date. Fixed-income securities, or bonds, are usually seen as a low-risk investment, though there is still the potential to lose money. Property Investing in property as an asset class usually refers to investing in commercial office, retail or industrial property, allowing investors to benefit from the potential returns available without having to invest the large amounts of money and time needed to buy a commercial property. However as property is less liquid than other asset types, there may be limits to when investors can switch or cash-in their investment. Property funds are usually considered medium-risk investments. Equities (or stocks) Equities, or stocks as they are also known, represent units of ownership in a company that are traded on stock markets around the world. Stock prices are volatile which means they can go up and down on a daily basis, but equities tend to have better positive long-term returns than many other types of funds. Equities are usually considered high-risk investments and are not suitable for short-term investment. Commodities Commodities are basic goods and raw materials, such as grains, gold, beef or oil that are traded in markets or exchanges around the world, often through futures contracts. Commodity prices are determined by supply and demand, so values can change daily. They are viewed as a high-risk investment but can offer higher returns and can be a good way to add diversity to an investment portfolio but are not suitable for short-term investment.
16 Pension Canada Life AMRF and ARF How is my money invested? You can choose to invest in up to ten different funds and your money will be used to buy units in the funds you have chosen. After your money has been invested, the value of your investment will be linked to the units in your chosen funds. The value of fund units can change every day, for example due to changes in the value of the underlying investments. The actual amount invested in your chosen funds is calculated as the amount of premium you pay multiplied by the relevant allocation rate. Your allocation rate will depend on how much you have invested in your ARF or AMRF, and the product structure chosen. Minimum allocation rates for AMRF are shown in the table below. AMRF premium amount Allocation rate n20,000 to n63,500 100% Minimum allocation rates for ARF are shown in the table below. ARF premium amount Allocation rate n20,000 to v149,999 100% n150,000 to n599,999 101% v600,000 or more 101.25% Your allocation rate may be different. Talk to your Financial Advisor for more information on the allocation rate that will apply to your plan. How will fund performance affect my investment? The value of your AMRF/ARF depends on the performance of the assets underlying the funds you are invested in. The value of your fund can go down as well as up. Talk to your Financial Advisor for more information.
17 Pension Canada Life AMRF and ARF Switching funds A Canada Life AMRF/ARF gives you the flexibility to switch funds when you want to. Switching funds lets you change your investment choices as your circumstances change. Please note, in certain circumstances there may be restrictions on when you can switch funds. In particular, this can apply to investments in a property fund. How do I switch funds? We strongly recommend that you talk to your Financial Advisor before you switch funds to make sure that you choose the best funds for you. You can also contact our Customer Services Team by phone on 1850 203 203, by email at customerservices@canadalife.ie, or online by visiting www.canadalife.ie/ customer-services. Your first two switches each year are free. Any additional switches will be charged at n25 each.
18 Pension Canada Life AMRF and ARF Management of your money Who will manage my investment? Your investment manager will depend on your choice of funds. Setanta Asset Management Limited ( Setanta ) is Canada Life s primary asset manager. Setanta was established in Ireland in 1998 and has grown steadily since then. With a Dublin-based team, Setanta is focused exclusively on the business of asset management. Setanta provides clients with a full range of investment options that covers the entire risk and reward spectrum, from liquidity and fixed-interest funds, to equity based funds. As well as Setanta Asset Management, Canada Life offers access to a range of additional investment managers to offer an even broader level of choice. Our other investment partners include but are not limited to; SEI Investments, Merrion Investment Managers and Morgan Stanley. SEI Investments (SEI) is a global leader in Manager-of-Managers (MOM). The MOM concept is a sophisticated investment approach, which builds up a portfolio of specialist investment managers around the world rather than a portfolio of individual stocks and bonds. BlackRock is one of the world s pre-eminent asset management firms and a premier provider of global investment management, risk management and advisory services to institutional, intermediary and individual investors around the world. Merrion Investment Managers has built a reputation upon a proven approach to investment management that has delivered consistently strong performance not only in years when markets have risen but also during periods when markets have fallen. Merrion Investment Managers focuses on controlling risks, while obtaining the maximum return available within the market. Morgan Stanley Investment Management (MSIM) is a client-centric organisation dedicated to providing investment and risk-management solutions to investors worldwide. How can I keep up to date with my fund performance? You can access daily fund price and fund performance information for a select range of our funds through the daily fund price and fund performance update on www.canadalife.ie. You may also ask us to provide you with a policy statement on paper. If you request this statement it will include information such as the value of your policy. Please talk to your Financial Advisor for further information. As the value of your investment may go down as well as up, we strongly recommend that you review your AMRF or ARF with your Financial Advisor on a regular basis.
19 Pension Canada Life AMRF and ARF How do I make a withdrawal from my policy? Only the growth portion of an AMRF can be withdrawn. If you have an ARF, you can withdraw money from your investment at any time. The minimum partial surrender amount is n650 and you must have at least n1,250 remaining in your policy after each withdrawal. If you have an ARF, you can also fully surrender your investment at any time. Only the growth portion of an AMRF can be withdrawn. If you make a withdrawal or surrender your policy within the first five years of the payment of any single premium you will have to pay surrender penalties. Surrender penalties for the Canada Life AMRF/ARF are shown in the table below. Surrender occurrring in the year since investment Surrender penalty as a proportion of the units surrendered Year 1 5% Year 2 5% Year 3 5% Year 4 3% Year 5 2% Year 6 onwards No surrender charge Separate surrender penalties are calculated and separate periods apply in respect of the initial single premium payment and any subsequent additional single premiums. Additional withdrawal fees may also apply. The first withdrawal each year is free of administration charges. For any additional withdrawals there is an administration charge of n25. It is important to be aware that any partial withdrawal from your policy will reduce the value of your investment. Please note, in certain circumstances there may be restrictions on when you can make withdrawals on your policy. In particular, this can apply to investments in a property fund. All withdrawals are taxed as income at your marginal rate of tax including PRSI and USC if applicable. To make a withdrawal from your Canada Life AMRF or ARF, you must confirm this request in writing to Customer Services Team, Canada Life House, Temple Road, Blackrock, Co. Dublin. How is death benefit calculated? Following notification of death, the amount payable will be calculated as 100% of your policy fund value on the day after Canada Life receives all requirements, less any applicable tax. Please note, in certain circumstances there may be a delay in making payments on your policy. In particular, this can apply to investments in a property fund. In these circumstances, your death benefit will be based on the value of your fund when the payment is made. If you die during the term of your policy, the remaining value of your AMRF/ARF can be paid to your estate subject to the deduction of any applicable tax. All payments from an AMRF/ARF are taxed as income but under current legislation, there are certain exceptions to this on death depending on the beneficiaries of the fund. Your estate is resposible for discharging any applicable capital acquisitions tax. Talk to your Tax and Financial Advisors for more information on the tax liabilities associated with death. For more information on how to claim payment on death, contact our Customer Services Team by phone on 1850 203 203, by email at customerservices@canadalife.ie, or online by visiting www.canadalife. ie/customer-services.
20 Pension Canada Life AMRF and ARF Tax This section relates to tax applicable to an individual. Tax rules are subject to change. For more information please visit the Revenue Commissioners website at www.revenue.ie. You should talk to your Tax Advisor about the tax efficiency of an ARF and AMRF, for your particular circumstances. Any investment growth on your AMRF and ARF funds will grow free of exit tax or capital gains tax throughout the lifetime of the policy. The current rate of exit tax is 33% and the current rate of capital gains tax is 30% for individuals. Please note that unrecoverable withholding tax may be applied to investment income in certain jurisdictions. All income payments, withdrawals and surrenders from your AMRF/ARF are taxed as income at your marginal rate of tax including PRSI and USC where applicable. The marginal rate of tax is currently 20% or 41% depending on your income. Based on information provided to Canada Life by the Revenue Commissioners, we will deduct any tax due and remit it directly to Revenue on your behalf. For ARFs, Canada Life may also be required to deduct tax on the basis of an Imputed Distribution. What is Imputed Distribution? Under Section 18 of the Finance Act 2012, if you are over 60 years of age on the first of January in a year and invested in an ARF, income tax (and if applicable, PRSI and USC) must be deducted from your ARF policy every calendar year on the basis that you have taken a minimum withdrawal amount from your fund in that year. If the minimum withdrawal amount is not actually taken in that year, Canada Life is required to deduct tax on the basis that the minimum withdrawal was taken. The minimum withdrawal amount is calculated by multiplying the value of your fund on the 30 November each year by the Imputed Distribution rate. If actual withdrawals are made in the calendar year which are less than the minimum withdrawal amount, then the tax is applied to the difference between the minimum withdrawal amount and the actual withdrawal. This deemed, or notional additional withdrawal is referred to as an Imputed Distribution. The Imputed Distribution rate is either 5% or 6%, depending on the size of your relevant fund. Income tax, PRSI and possibly USC will apply to any Imputed Distribution. Relevant fund means the total value of all ARF(s) (post 6th April 2000) and Vested Personal Retirement Savings Accounts* (PRSA(s)) beneficially held by you as at 30 November each year. Where your relevant fund is under n2million, an Imputed Distribution rate of 5% applies and where it is over n2million, the rate is 6%. Any increases to the minimum withdrawal amount in the future may mean that you will have to make additional withdrawals, or increase your regular income amount to meet this requirement. Please note that tax rules are subject to change. Under the Finance Act 2012, a further requirement was introduced where the value of your relevant fund is over Ê2million and you have multiple ARF(s)/Vested PRSA(s) with different providers whereby you must appoint one of those managers as nominee. You are also obliged to advise the other manager/managers (i) that the appointment of the nominee is a compulsory appointment; and (ii) the name, address and telephone number of the nominee. Please talk to your Tax Advisor for further details in relation to Imputed Distribution and the taxes, payments and charges that apply to you. More information on tax is also available from the Revenue Commissioners.
21 Pension Canada Life AMRF and ARF * Vested PRSA is (a) a PRSA in respect of which assets of the PRSA have been made available to, or paid to, the PRSA contributor or to any other person; or (b) for PRSA Additional Voluntary Contributions (AVCs), a PRSA where benefits become payable to the individual under the main scheme on or after 7 November 2002. If you have not already opted to take out an Approved Minimum Retirement Fund (AMRF), it may be possible to deduct the amount required to be invested in an AMRF from the aggregate value of your Vested PRSA(s) (but this deduction can only be made once if you happen to own more than one Vested PRSA). Please speak to your Tax Advisor for further details. Please note that tax rules are subject to change. Talk to your Tax Advisor for more information on the taxes, payments and charges that apply to you. More information on tax is also available from the Revenue website at www.revenue.ie.
22 Pension Canada Life AMRF and ARF Technical details AMRF - Policy details Minimum term Minimum entry age Until age 75, or until your minimum guaranteed annual income is above n12,700 if earlier. 50 (51 next birthday). Maximum entry age 74. Minimum contribution Minimum additional lump sum contribution Minimum allocation rate Death benefit n20,000. n650. v12,500 for Focus 15 Fund. AMRF premium amount Allocation rate v20,000 to n63,500 100% Talk to your Financial Advisor for more information. 100% of the value of your fund on the day after Canada Life receives all requirements following notification of death less any applicable tax. Please note, in certain circumstances there may be a delay in making payments on your policy. In particular, this can apply to investments in a property fund. In these circumstances, your death benefit will be based on the value of your fund when the payment is made.
23 Pension Canada Life AMRF and ARF ARF - Policy details Minimum term This is a whole of life contract. Minimum entry age 50 (51 next birthday). Maximum entry age N/A. Minimum contribution Minimum additional lump sum contribution Maximum contribution n20,000. n650. n12,500 for Focus 15 Fund. No maximum. Allocation rate ARF premium amount Allocation rate n20,000 to n149,999 100% n150,000 to n599,999 101% n600,000 or more 101.25% Talk to your Financial Advisor for more information. Death benefit 100% of the value of your fund on the day after Canada Life receives and all requirements following notification of death less any applicable tax. Please note, in certain circumstances there may be a delay in making payments on your policy. In particular, this can apply to investments in a property fund. In these circumstances, your death benefit will be based on the value of your fund when the payment is made.
24 Pension Canada Life AMRF and ARF AMRF/ARF - Charges The following charges apply to the Canada Life ARF and AMRF: Policy fee There is no policy fee. Bid offer spread No bid offer spread will be applied to your plan. The annual management charge is equal to 1.50% each year for most funds. Exceptions are shown below: Annual management charge Canada Life/Setanta Pension Consensus Fund 1.425% Canada Life/Setanta Pension Passive Equity Fund 1.45% Canada Life Quadrivium Fund 1.75% Canada Life/BlackRock Managed Fund 1.75% Canada Life/SEI MoM Opportunistic Fixed Income Fund 1.80% Canada Life/SEI MoM Global Fixed Income Fund 1.80% Canada Life/SEI MoM Global Balanced Fund 2.10% Canada Life/SEI MoM Global Equity Fund 2.10% Canada Life/SEI MoM UK Equity Fund 2.10% Canada Life/SEI MoM European Equity Fund 2.10% Canada Life/SEI MoM US Equity Fund 2.10% Canada Life/SEI MoM Japan Equity Fund 2.10% Canada Life/Morgan Stanley European Property Fund 2.15% Canada Life/SEI MoM Pacific Basin Equity Fund 2.30% Canada Life/SEI MoM Emerging Markets Equity Fund 2.40% These are subject to review and may be increased in the future. The annual management charge will already have been applied when we are declaring the fund price. At the end of each policy year a bonus equal to 0.50% of the value of your fund will be added to your plan in the form of extra units. When payable, this bonus has the effect of reducing the effective management charge by 0.50% from those listed above. Depending on the product structure, an additional management charge equal to 0.50% per annum may apply to your plan. This charge will be deducted every 6 months via unit cancellation. If applicable, this will increase your effective annual management charge by 0.50% from those listed above. Please talk to your Financial Advisor for further details on this charge and whether it will apply to your plan.
25 Pension Canada Life AMRF and ARF Surrender penalties will apply in the first five years after the payment of any single premium. The surrender penalties are as follows: Surrender and partial surrender penalties Surrender occurring in the year since investment 1 5% 2 5% 3 5% 4 3% 5 2% 6+ None Surrender penalty as a proportion of the units surrendered Separate surrender penalties are calculated and separate periods apply in respect of the initial single premium payment and any subsequent additional single premiums. Partial encashment fee Switching The first partial encashment in each policy year is free of administration charges. Additional partial encashments incur an administration charge which is currently n25. This charge is subject to review and may be increased in the future. There is no charge for the first two fund switches in each policy year. Additional switches will be charged at n25 each. This charge is subject to review and may be increased in the future. Buying and selling costs The value of your policy may be affected by the costs associated with buying and selling the assets underlying your policy. When applicable, these costs will reduce the value of your fund. Tax All income payments, withdrawals and surrenders are subject to your marginal rate of income tax, PRSI and USC where applicable. In the case of an ARF, if required, Canada Life will deduct tax on the basis of an Imputed Distribution. Tax rules are subject to change. Talk to your Tax and Financial Advisors for more information on the taxes and charges that apply to you.
26 Pension Canada Life AMRF and ARF Questions and answers Are there any age limits? You must be over 50 when your ARF starts. You must be over 50 and under 75 years of age when your AMRF starts. Is there a charge for making a withdrawal? The first withdrawal each year is free of administration charges. For any additional withdrawals there is an administration charge of n25. You will have to pay surrender penalties if you make any surrenders in the first five years following any premium payments made to your policy. All withdrawals are taxed as income. For more information see Technical Details on page 22 and How does an AMRF work? on page 7 and How does an ARF work? on page 10. Please note, in certain circumstances there may be restrictions on when you can make withdrawals on your policy. In particular, this can apply to investments in a property fund. Can I transfer to another AMRF/ARF? In certain circumstances you may be able to transfer to another ARF or AMRF. If you want to transfer to another Canada Life policy or to another provider in the first five years following any premium payments made to your policy, surrender penalty charges will apply. See Technical Details on page 22 and talk to your Financial Advisor for more information. Please note, in certain circumstances there may be restrictions on when you can transfer your policy. In particular, this can apply to investments in a property fund. Can I sell or assign my AMRF/ARF? You cannot sell or assign your plan. Where a valid pension adjustment order has been made following a judicial separation or divorce, the pension may be split in accordance with legislation, Revenue Rules or any requirements of Canada Life. Can I change my mind? Yes. A 30-day cooling off period applies to your policy. This means that if you change your mind and decide that you would no longer like to proceed with your policy, you can cancel your policy at any time within 30 days of the receipt of your policy documents. Simply send a written cancellation request, signed and dated, to: The Manager, New Business Department, Canada Life House, Temple Road, Blackrock, Co. Dublin. You must also return your Original Policy Document. Canada Life will return the money you have paid, less any costs associated with buying and selling the assets underlying your policy and any losses incurred by Canada Life as a result of fluctuations in the value of the assets underlying your policy, during the period from inception of the contract to the date we receive written notification of cancellation. Talk to your Financial Advisor for more information.
27 Pension Canada Life AMRF and ARF More information For more information on your policy we recommend that you speak to your Financial Advisor. You can also contact our Customer Service Team by phone on 1850 203 203, by email at customerservices@canadalife.ie, or online by visiting www.canadalife.ie/customer-services. For information on the full range of products and funds available from Canada Life, please visit our website at: www.canadalife.ie. More information on AMRFs and ARFs is available from the Pensions Board website at www.pensionsboard.ie. Tax rules are subject to changes, for more information visit the Revenue Commissioners website at www.revenue.ie.
Important Information Please refer to your Policy Conditions and Policy Schedule for full details of your Canada Life policy. If there is any discrepancy between this brochure and the Policy Conditions and Policy Schedule, the terms of the Policy Conditions and Policy Schedule shall prevail. This document does not form part of any contract. For full details of all our products, please refer to the specific product Policy Conditions. The information contained in this document is based on current legislation and is, therefore, subject to change. The contents are intended as a guideline only and should not be construed as advice or an interpretation of the law. Whilst every care has been taken in the preparation of this document, Canada Life accepts no responsibility whatsoever for any errors or omissions in the information contained herein or for any loss occasioned to any person acting or refraining from acting as a result of any statement in this document. You should always seek advice of an appropriately qualified professional. Canada Life House, Temple Road, Blackrock, Co Dublin. T 1850 203 203 F 01 210 2020 E customerservices@canadalife.ie W www.canadalife.ie CANMU627 04/13 Canada Life Assurance (Ireland) Limited is regulated by the Central Bank of Ireland.