mcgill university pension plan planning for retirement
TRANSCRIPT
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McGill University Pension PlanRetirement Information Session
The presentation can be accessed online at: http://www.mcgill.ca/hr/pensions/mupp/sessions
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MS Teams Etiquette
• All participants have been muted
• Please disable your camera
• During the question period, if you have a question, please
▫ use the “chat” function
• Any questions not answered during the session can be emailed to: [email protected].
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This presentation is intended to inform you about the McGill Pension Plan & the importance of integrating pension investment decisions to your financial management.
This is not financial advice & should not be taken as such. It is meant to alert you to the matters to look into.
Your individual needs & circumstances may not be adequately addressed by the info contained in this presentation.
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Learning Objectives
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Understand the importance of planning your retirement;
Identify the settlement options available to you & the decisions you need to make;
Understand the need to review your investment strategy; and
Learn which benefits are offered post-retirement and eligibility requirements;
Learn where to get more information.
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McGill provides the following post-retirement benefits:
Supplemental Health Plan
Dental Plan
Life Insurance Plan
For more information: http://www.mcgill.ca/hr/benefits/insurance/change-coverage
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Post-Retirement Benefits
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Minimum age 55
Minimum 10 years continuous service
Participated in the benefit plans for a minimum of 10 consecutive years
And: Must be a resident of Canada
Coverage is dependent on eligibility for Medicare (RAMQ)
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Eligibility Requirements
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Cost sharing is: 70% paid by retiree & 30% paid by McGill
Eligible dependents can continue coverage
Spouse can continue coverage upon death of pensioner
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Supplemental Health Plan
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Coverage identical to that of actives (such as hospitalization, physiotherapy etc..)
Exceptions: Prescription drugs and Emergency Travel Assistance
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Coverage - Supplemental Health Plan
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At age 65, Quebec residents will be automatically registered with RAMQ Drug Plan
Dependents under 65 must also be covered by the RAMQ Drug Plan; contact the RAMQ to register dependents
McGill Health Plan may cover drugs not listed on RAMQ formulary
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Quebec Drug Plan - RAMQ
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Out-of-country/province coverage Emergency medical expenses/assistance Coverage includes pre-existing conditions
• Medical condition must be stable 90-days per trip 100% reimbursement of eligible expenses
For more information: http://www.mcgill.ca/hr/benefits/insurance/travel
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Travel Insurance - Supplemental Health Plan
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New employees hired as of January 1, 2010 – not eligible to dental plan at retirement
Cost is paid 100% by retiree
Eligible dependents can continue coverage
Spouse can continue coverage upon death of pensioner
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Dental Plan
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No residency requirements
Plan reimburses expenses based on Quebec Fee Guide for General Practitioners
Same plan for actives and pensioners
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Dental Plan - continued
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Coverage continues at retirement
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Life Insurance
• Until age 65: 50% of pre-retirement salary to $50,000• 65 +: 50% of pre-retirement salary to $30,000• McGill pays 100%
Basic Coverage
• Can maintain insurance purchased before retirement• Maximum = $100,000• Retiree pays 100%• Rates based on age• Can reduce coverage at any time
Optional Coverage
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Why save for retirement?
30 40 50
20 60 70 80 90Career Begins Current AverageAge 23 Retirement Age 61
Current Life Expectancy of a 60-year-old:MALE = age 86.9 increasing to age 94.5FEMALE = age 88.9 increasing to age 95.5
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35+ working years 25+ years inretirement
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Projected Life Expectancy18
Source: CPM2014 Publ Improvement Scale B
86
87
88
89
90
91
92
93
94
95
96
60 65 70 75 80 85 90
Aver
age
Life
Expe
ctan
cy
Male FemaleAge
Maximum Recorded Life Expectancy: 122 years – Jeanne Calment (France)
Aver
age
Life
Exp
ecta
ncy
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Canadians need 60% to 70% income replacement in retirement.
Only 50% of Canadian have access to a pension plan.
How much will I need?
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Forecast spending needs in retirement
Forecast after-tax income from all sources
Determine the gap between needs & income
Determine additional savings needed by target retirement date
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Will I have enough in retirement?
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Building your
Retirement McGill University Savings Program• MUPP (49%)*• GRSP• GTFSA
Government Programs• Quebec Pension Plan (24%)• Old Age Security (12%)
Personal Savings• RRSP• TFSA
* based on a pre-retirement income of $58,700 at age 65, annualized rate of return of 5.5% and interest rate assumption of 5.0% at settlement.
Where your retirement income comes from
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Assuming an inflation rate of 2.5%
Income 10 years 15 years 20 years 25 years 30 years
$30,000 $38,403 $43,449 $49,158 $55,618 $62,927
$50,000 $64,004 $72,415 $81,931 $92,697 $104,878
$70,000 $89,606 $101,381 $114,703 $129,776 $146,830
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Inflation & Purchasing Power
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You can view your Statement of Participation on the RetraiteQuebec website: https://www.retraitequebec.gouv.qc.ca/en/services-en-ligne-outils/Pages/seances-information-outils-planification.aspx or you can request one by telephone.
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Source: Guide to financial planning for retirement 2018-2019 Edition. Available at:http://questionretraite.ca/outils/guide-de-
planification-financiere-de-retraite/
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Source: https://www.rrq.gouv.qc.ca/en/retraite/rrq/calcul_rente/Pages/montant_rr.aspx
A financial planner can help you choose the best time to begin receiving your pension, depending on your financial resources and overall needs.
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Age of eligibility: age 65
Voluntary deferral of the OAS• available since July 2013• defer OAS pension by up to five years • enhanced monthly benefit of 0.6 percent per
month of deferral
Old Age Security (OAS)
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*Income above $79,054 (in 2020) subject to clawback = 15% of the excess
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Age
55 60 65 71
Earliest company pension may be available
Earliest CPP/QPP is available
Traditional retirement age
Earliest OAS is available
Latest registered savings plans must be converted to retirement income
Personal savingsWork part time
McGill Pension PlanRRSP converted to income
Old Age Security (for life)Canada/Quebec Pension Plan (for life)Reduced CPP/QPP
Sources of retirement income
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Types of Pension Plans
• Pension is based on a formula tied to service & salary
Defined Benefit
• Retirement income is based on contributions, the investment return accumulated at retirement as well as market conditions
Defined Contribution
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McGill University Pension Plan
• Applies to members who became eligible to join on or after January 1, 2009
• Referred to as “Part B” of MUPP
Defined Contribution
Plan
• Applies to members who joined prior to January 1, 2009
• Defined Contribution + Defined Benefit = Hybrid
• Referred to as “Part A” of MUPP
Hybrid Plan
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Access and Manage your Account
Access your Sun Life account via the link provided on the McGill University Savings Program website: http://www.mcgill.ca/hr/pensions/mupp/mupp-login.
On mysunlife.ca• View Account balances, included defined benefit (Part A) • Personal & fund rates of return• View your Statements• Use the Retirement Planner • Monitor your investments with Morningstar• Transfer in external holdings
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Potential Supplemental Retirement Benefitmysunlife.ca: my financial centre > Accounts > Balances
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Supplemental Retirement Benefit Value (SRBV) – DB MinimumApplies to members of Part A (hybrid plan) only
SRBV
Opt
ions
Paid as a Transfer ValueAmount over the Maximum Transfer Limit of Income Tax Act paid in
cash less withholding taxes
Paid as a pension (default)In order to generate annuity quotes – marital declaration is required and
must be dated within 6 months of the request for a quote*
*www.mcgill.ca/hr/forms
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mysunlife.ca > my financial centre > resource centre > my money tools37
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Retirement planner– available online!38
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No mandatory retirement age in Quebec
Normal Retirement Date (“NRD”)• Last day of the month in which you reach age 65
Early Retirement Date• You may retire as early as age 55
Delayed Settlement• If you continue to work after NRD, must settle your account no later
than the December 31st of the year in which you reach age 71
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When can I retire?
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Steps to take to retire
Provide notice of retirement in writing:• Admin & Support – advise your immediate supervisor• Academic – refer to Regulations -
https://www.mcgill.ca/secretariat/policies/academic or Academic Personnel Office - https://www.mcgill.ca/apo/academic-personnel-office
Ensure your area processes your retirement in WorkdayAttend the Settlement Options & Decumulation Information Sessions -
http://www.mcgill.ca/hr/pensions/mupp/sessionsOnce Sun Life receives your last contributions, they will issue a settlement
package to you – you can settle or defer settlement
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Further information – please register for a Settlement Options Information Sessionhttp://www.mcgill.ca/hr/pensions/mupp/sessions
A brief overview of settlement options. For more information, please sign up for a “Settlement Option Information Session”.
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You can “retire” from the University without having to settle your MUPP holdings = defer settlement
Ability to settle MUPP holdings:• Earliest of termination, retirement or if you continue to
work, the year in which you turn age 71 or• Latest: December 31st of the year in which you turn 71.
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Retirement vs. Settlement
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Subject to locking-in provisions!
Lump-Sum Cash Payment is available if:
a) Value < 20% of YMPE in year or termination, or
b) If over age 65 and total value in DC, LIF, LIRA < 40% of YMPE, or
c) Non-Resident (Canada) for at least 2 years.
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Can I cash out my pension plan?
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MUPP
Purchase an external
annuityCombo –annuity & LIF/LIRA
LIRA or LIFGroup /
Individual
NEW! Variable Benefit
SRBVTransfer value
SRB pension
Defer Settlement (latest age
71)
Settlement Options
LIF = Life Income FundLIRA = Locked In Retirement AccountVB = Variable BenefitSRBV = Supplemental Retirement Benefit ValueSRB = Supplemental Retirement BenefitGroup = McGill University Retirement Income Program
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