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SFU Academic Pension Plan

SFU Academic Pension Plan. Debbie Wilson Plan Administrator September 25, 2014. Basic Structure Of Plan. Plan type: defined contribution , or money purchase Contributions made by SFU: 10% of basic salary, less a CPP offset to a maximum of $419.40 per year

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SFU Academic Pension Plan

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  1. SFU Academic Pension Plan Debbie Wilson Plan Administrator September 25, 2014

  2. Basic Structure Of Plan • Plan type: defined contribution , or money purchase • Contributions made by SFU: 10% of basic salary, less a CPP offset to a maximum of $419.40 per year • For a $150,000 salary, SFU contributes $14,580.60 per year • Plan members are permitted to make contributions, on a voluntary basis; these contributions are tax deductible • Each plan member has an account at Sun Life to which their contributions are directed each pay period

  3. Investment of Contributions • Each plan member is responsible for determining how their contributions will be invested • Board of Trustees have selected 9 investment options, which are regularly monitored • GIC’s, money market, bond, equity, balanced funds • If a plan member does not make an active decision about investment of their funds, the balanced fund is the default option • There is no restriction on the number of funds that you can choose • You can change your investment choice at any time

  4. Options on Retirement • Options depend on when the contributions were made – contributions made before 1993 are more flexible; they were made before pension legislation was enacted in BC • Pre 1993 contributions and investment income can be transferred to a Registered Retirement Income Fund (RRIF) or can be taken in cash (less withholding tax) • Post 1992 contributions and investment income are locked-in; they must be used to provide a lifetime income. They can be transferred to an insurance company to provide you with an annuity, or they can be transferred to a Life Income Fund (LIF)

  5. RRIF and LIF • Money must start to be withdrawn in the year after you set up the account • There is a minimum amount that must be withdrawn, based on your age • The LIF has a maximum withdrawal amount that can not be exceeded each year, based on your age • For the LIF you can choose the withdrawal amount between the minimum and the maximum, and this choice can change every year • You select the frequency of payments (monthly, quarterly, etc) • On your death, the remaining money is paid to your beneficiary

  6. Payout Schedule • At age 65 with an account of $500,000, you need to withdraw between $20,000 and $36,000 • At age 71 with an account of $500,000, you need to withdraw between $36,900 and $40,500

  7. Life Annuity • You exchange your funds in return for a monthly income for your lifetime (and your spouse’s lifetime, if elected) • You can select an annuity that has a guarantee period, that provides income to your spouse on your death, that is indexed to inflation • For a given amount of money, the insurance company will determine the amount of monthly income based on your age, and based on interest rates at the time of purchase • Once purchased, you can not change any of the details

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