February 2018 Edition

Fidelity recently announced that changes will be made to the glidepath of the Fidelity ClearPath Target Date Funds.

The manager’s forward-looking views on market behaviour and the economy lead them to expect market volatility to return to higher levels than what has been seen recently. As a result, they expect diversification over short-term periods to become even more important. These views are what prompted the changes to the glidepath, which will primarily affect investors with shorter investment horizons and can be summarized as follows:

• Compared to the current glidepath, there will be less exposure to equity starting 10 years before retirement until the Income Fund is reached, where the allocation remains at 21%. At retirement, the equity allocation will go from 56% to 49%.
• For investors closer to the target retirement date, expsure to real return bonds and short-term bonds will be added through a reduced exposure to investment grade bonds and equities.

The implementation of these changes will begin at the end of February and will likely take a few months to be completed.

If these funds are offered in your plans and if you have any questions related to the changes, please contact your client relationship manager.

The recent market turbulence in early February reminded investors that stock markets remain risky. Investors had lost sight of the fact that everything that goes up might go down. Following a 10% fall in the US stock market after the peak reached in late January, the stock market is officially in a correction.

Despite the recent comeback of the volatility and days of negative returns, we believe the fundamental economic and financial data are healthy. Corporate earnings have never been higher. We should see continued volatility in the markets for some time before the return of a consolidation and a more stable trajectory of the indices. We are closely monitoring the situation, as well as observing the performance of various funds offered on our platform.

To limit losses in times of volatility, you may want to recommend the following suggestions to your retirement savings plan members:

• Maintain a diversified portfolio that will limit losses during market turbulence
• Maintain a portfolio composition in line with their investor profile
• Remain focused on their investment objective

Desjardins Insurance is proud to announce that three new funds will be added to our group retirement savings platform on March 16, 2018. These funds, which are presented below, will enhance our offer thanks to the addition of quality investment options in different asset classes.

CC&L Canadian Equity Growth Fund

This fund is managed by CC&L Investment Management, an independent investment management firm based in Toronto and Vancouver that offers strategies across a broad range of asset classes. The fund, which invests primarily in Canadian large cap equities, is managed according to CC&L’s quantitative investment process, which focuses on companies that exhibit strong fundamental characteristics. Furthermore, the fund’s stock selection puts an emphasis on growth characteristics.

Global Alpha Global Small Cap Equity Fund

This fund is managed by Global Alpha Capital Management, an investment management firm that is part of the CC&L Financial Group and is focused exclusively on the management of foreign small cap equity portfolios. The fund, which invests primarily in global small cap equities, focuses on adding value from security selection while minimizing the risk factor. Its investment philosophy is based on identifying good companies with unrecognized growth potential.

Desjardins Global Bond Fund (Lombard Odier)

This fund, managed by Desjardins Investments, is sub-advised by Lombard Odier Investment Managers, the asset management division of Lombard Odier, one of Europe's largest private banks and headquartered in Switzerland. The firm, which is known for its expertise in several asset classes and strategies, was one of the first to use strategic beta approaches. The fund invests primarily in fixed income securities of government issuers in OECD member countries and in investment-grade fixed income securities of corporate issuers throughout the world. It is based on a systematic investment approach that applies fundamental factors to determine the weighting assigned to each issuer in order to obtain exposures which reflect the creditworthiness of issuers.

If these funds are offered in your plans and if you have questions related to the changes, please contact your client relationship manager.

International Women's Day is on March 8, 2018. Let this be seen as an invitation to reflect on the challenges of saving money for your female employees.

Generally speaking, women benefit from a longer retirement because they live longer and tend to leave the labour market earlier. In 2015, the average age of retirement for women was 62.7 years, whereas the average for men was 64.1 years. This might lead to the assumption that women are better prepared for retirement than their male peers, but this is not the case. We know that the average RRSP contribution External link. Opens in a new window. for women in 2015 was $2,430, while the average for men was $3,600, which means that men contributed nearly 50% more to their RRSP.

How do we explain this savings gap?

To begin with, according to the OECD External link. Opens in a new window., Canadian women earned about 18.2% less than their male counterparts in 2016.

The second reason for this savings gap is that the average number of hours worked External link. Opens in a new window. per week is lower for women. Paid work occupies an average of 33.2 hours compared to 39.5 hours for men. According to Statistics Canada, women are more likely to work part-time because they are probably caring for their children

The savings gap could also be attributed to the fact that women's careers are interrupted more often, and these absences can have a negative impact on their career progression. The average length of interruptions is 18.5 months for women and 8.6 months for men; these interruptions are explained by parental leave and absence from work for family reasons. These absences also have long-term consequences for salary progression. Several studies examine the stigma of work absences and job interruptions, as well as a decrease in the number of career advancement opportunities and salary increases.

What can you do to favourably reduce the retirement savings gap for your employees?

• Encourage them to start saving early in their careers.
• Encourage them to participate in their group plan and maximize their contribution.
• Promote the introduction of automatic payroll deductions.
• Encourage them to use retirement financial planning tools such as On Target Retirement^®, the online retirement calculator available at dfs.ca/participant External link. Opens in a new window. .

Each year, employers and Desjardins must issue the various receipts and slips required for employee tax returns.

We’ve put together cheat sheets on the slips to be issued for the plan(s) you offer.

RRSP (Registered retirement savings plan)

NR4 External link. Opens in a new window. (non-resident)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

RRSP External link. Opens in a new window. receipt

• Issued by Desjardins
• When: January and March
• Details: Contributions from the previous year and the first 60 days of the current year

T4 (and RL-1 External link. Opens in a new window. in Quebec)

• Issued by employer
• When: Annually, at the end of February of the following year
• Details: Salary, tips, employment commissions and other remuneration (e.g. employer contributions)

T4RSP External link. Opens in a new window. (and RL-2 External link. Opens in a new window. in Quebec)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

DPSP (Deferred profit sharing plan)

PA External link. Opens in a new window.

• Issued by employer
• When: Annually
• Details: To be reported on the T4

NR4 External link. Opens in a new window. (non-resident)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

T10 External link. Opens in a new window.

• Issued by Desjardins or by employer (You might have the responsibility of producing the T10 slip, please consult your contract.)
• When: March, June, September, and December
• Details: PAR (restores RRSP contribution room after the forfeiture of unvested contributions)

T4A External link. Opens in a new window. (and RL-2 External link. Opens in a new window. in Quebec)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

T4 External link. Opens in a new window. (and RL-1 External link. Opens in a new window. in Quebec)

• Issued by employer
• When: Annually, at the end of February of the following year
• Details: Salary, tips, employment commissions and other remuneration

SPP (Simplified pension plan)

PA External link. Opens in a new window.

• Issued by employer
• When: Annually
• Details: To be reported on the T4

NR4 External link. Opens in a new window. (non-resident)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

T4A External link. Opens in a new window. (and RL-2 External link. Opens in a new window. in Quebec)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

T4 External link. Opens in a new window. (and RL-1 External link. Opens in a new window. in Quebec)

• Issued by employer
• When: Annually, at the end of February of the following year
• Details: Salary, tips, employment commissions and other remuneration

DCPP (Defined contribution pension plan)

PA External link. Opens in a new window.

• Issued by employer
• When: Annually
• Details: To be reported on the T4

NR4 External link. Opens in a new window. (non-resident)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

T10 External link. Opens in a new window.

• Issued by Desjardins or by employer (You might have the responsibility of producing the T10 slip, please consult your contract.)
• When: March, June, September, and December
• Details: PAR (restores RRSP contribution room after the forfeiture of unvested contributions)

T4A External link. Opens in a new window. (and RL-2 External link. Opens in a new window. in Quebec)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

T4 External link. Opens in a new window. (and RL-1 External link. Opens in a new window. in Quebec)

• Issued by employer
• When: Annually, at the end of February of the following year
• Details: Salary, tips, employment commissions and other remuneration

TFSA (Tax-free savings account)

NR4 External link. Opens in a new window. (non-resident)

• Issued by Desjardins
• When: Annually
• Details: Income earned between the time of the plan member’s death and the withdrawal of funds

T3 External link. Opens in a new window. (and RL-16 External link. Opens in a new window. in Quebec)

• Issued by Desjardins
• When: Annually
• Details: Income earned between the time of the plan member’s death and the withdrawal of funds

T4 External link. Opens in a new window. (and RL-1 External link. Opens in a new window. in Quebec)

• Issued by employer
• When: Annually, at the end of February of the following year
• Details: Salary, tips, employment commissions and other remuneration (e.g. employer contributions)

NRP (Non-registered plan)

NR4 External link. Opens in a new window. (non-resident)

• Issued by Desjardins
• When: Annually
• Details: Income, capital gains and capital losses allocated by the funds (including those arising from a withdrawal)

T3 External link. Opens in a new window. or T5 External link. Opens in a new window. (and RL-16 External link. Opens in a new window. or RL-3 External link. Opens in a new window. in Quebec)

• Issued by Desjardins
• When: Annually
• Details: Income, capital gains and capital losses allocated by the funds (including those arising from a withdrawal)

T4 External link. Opens in a new window. (and RL-1 External link. Opens in a new window. in Quebec)

• Issued by employer
• When: Annually, at the end of February of the following year
• Details: Salary, tips, employment commissions and other remuneration (e.g. employer contributions)

VRSP (Voluntary retirement savings plan)

VRSP receipt

• Issued by Desjardins
• When: January and March
• Details: Employee contributions from the previous year and the first 60 days of the current year

T4A External link. Opens in a new window. (and RL-2 External link. Opens in a new window. in Quebec)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

NR4 External link. Opens in a new window. (non-resident)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

T4 External link. Opens in a new window. (and RL-1 External link. Opens in a new window. in Quebec)

• Issued by employer
• When: Annually, at the end of February of the following year
• Details: Salary, tips, employment commissions and other remuneration (e.g. employer contributions)

RRIF (Registered retirement income fund)

NR4 External link. Opens in a new window. (non-resident)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or in the case of death

T4 External link. Opens in a new window. (and RL-1 External link. Opens in a new window. in Quebec)

• Issued by employer
• When: Annually, at the end of February of the following year
• Details: Salary, tips, employment commissions and other remuneration

T4RIF External link. Opens in a new window. (and RL-2 External link. Opens in a new window. in Quebec)

• Issued by Desjardins
• When: Annually
• Details: Withdrawal or receipt of a payment from the plan, or in the case of death

The cheat sheets above are intended for general information only and should not be considered tax advice. While reasonable steps have been taken to ensure the accuracy of this information, Desjardins makes no representation or warranty as to the accuracy of this information, which may no longer be complete, accurate and up to date.