Payout products

Advantages

• More flexible than an annuity, which requires regular, fixed withdrawal amounts
• Investment income isn’t taxed until withdrawn
• No maximum withdrawal limit, but Canada Revenue Agency sets a minimum

Details

• Investment options typically identical to those in RRSP
• RRSP funds must be converted to RRIF by December 31 of year the person turns 71
• Just like RRSP, money held in RRIF grows tax-free until withdrawn

Advantages

• Money grows tax-free until withdrawn
• When holder dies, money goes to beneficiary
• Guaranteed lifetime income

Details

• To ensure lifetime income, withdrawals subject to annual minimum and maximum
• Locked-in assets must be converted to LIF no later than December 31 of year the person turns 71

Advantages

• Guaranteed lifetime income
• When annuitant dies, money goes to beneficiary

Details

• Life annuity: provides income for life
  Payments tend to be higher, but stop when annuitant dies
• Guaranteed annuity: provides guaranteed income for life
  If annuitant dies before end of guarantee period, money goes to beneficiary
• Joint and last survivor annuity: provides income for life
  When annuitant dies, payments transferred to surviving spouse at predetermined percentage

Advantages

• Simple ─ Payments are drawn directly from the DCPP
• Cost-effective ─ Plan members benefit from the DCPP’s lower management and investment fees
• Exclusive ─ The investment funds carefully selected by the retirement committee are still available to plan members
• Practical ─ Plan members can still enjoy the full range of services offered by Desjardins Insurance

Details

• Variable benefit accounts are like LIFs because the rules around payment frequency (annual or monthly if applicable) are similar
• There is no need to transfer locked-in funds and non-locked-in funds, when applicable, out of the plan when plan members turn 71 or want to start receiving payments
• When some provinces allow non-locked-in funds to be transferred from the DCPP to a variable benefit account, they will now be locked in
• No minimum withdrawal amount is required before age 72
• The annual minimum withdrawal amount is established by the Income Tax Act
• The annual maximum withdrawal amounts are determined by each province’s pension laws where variable benefit accounts are offered
• Variable benefit payments are considered income and plan members will need to pay taxes on them
• Eligibility criteria and eligible amounts vary from one province to another.
• Variable benefits are available in most provinces, except New Brunswick, Newfoundland and Labrador, and Prince Edward Island
• In British Columbia and Alberta, the payout product is called “Life Income Type Benefits”