A Old Sales Idea Revisited!!! Gil McGowan Vice-President, National Accounts Business Development Group Savings

Group RRSP? or a Combination Group RRSP / DPSP?

Case Study – Company ABC Company ABC – currently has a Group RRSP – 30 employees Employer contribution to a maximum of 5% of employee’s annual earnings Total payroll - $1.6M Annual contribution - $160K – based on employer / employee matching at 10% of payroll Approximate payroll taxes – E.I. / C.P.P. - $10,232 – combined employer / employee

Types of Corporate Capital Accumulation Plans Defined Benefit Pension Plans Defined Contribution Pension Plans Deferred Profit Sharing Plans Group Registered Retirement Savings Plans Supplementary Plans –Group Registered Education Savings Plans –Group Tax Free Savings Account –Group Non-Registered Payroll Savings Plans

Why a Group Savings Plan - Group RRSP Attracting and retaining key employees Enhancing productivity Complementing your current benefit program Providing tax advantages for you and your employees Remaining competitive in the marketplace and reducing employee turnover

Features of a Group RRSP Employee contributions go into the plan before taxes – immediate tax relief Employer in this situation will match up to a maximum of 5% of employee contributions Employees determine where they invest all contributions Employer must gross up the employee’s income to contribute into the Group RRSP – this generates payroll taxes!!!!! Contributions are vested immediately and not locked-in

Group RRSP Employee 5% Contribution $80,000 Immediate Vesting EE Controls Investment Option Partial/Full Withdrawals Employees contribution subject to payroll tax Employer 5% Contribution $80,000 Immediate Vesting EE Controls Investment Option Partial / Full Withdrawals Employer Contribution are subject to payroll tax!

Features of a Deferred Profit Sharing Plan A DPSP is an arrangement where an employer may share with either all or a designated group of employees the profits from the employer’s business The amounts payable by the employer are normally calculated by reference to profits, but can be calculated on another basis as long as they are paid out of profits and or retained earnings. The contributions made by the employer must be within 120 days of company’s year end.

Additional Features of a DPSP! Contribution limit is18% of the employee’s earned income to a maximum of one half of the Defined Contribution Pension limit - $12,465 for 2014 Employee receives a pension adjustment for employer contributions Employer contributions to a DPSP are not subject to payroll tax! No connected person can join the DPSP – a connected person is someone with over 10% ownership and their family members

Why are Group RRSP / DPSP is an option!!! V – employer contributions are subject to vesting rules, two years maximum - employer can determine the length of the vesting period E – employer contributions only – employer also has the option of determining where the money is invested S – having the employer’s contribution going into the DPSP stops withdrawals from the plan while employees still work at the company T – eliminates payroll taxes on the contributions the employer makes to the DPSP – where contributions to the Group RRSP are subject to – E.I. / C.P.P

Group RRSP / DPSP Employee 5% Contribution $80,000 Immediate Vesting EE Controls Investment Option Partial/Full Withdrawals Employees contribution subject to payroll tax Employer 5% Contribution $80,000 Two Year Vesting ER Controls Investment Option No Partial / Full Withdrawals Employer Contributions are not subject to payroll tax! Annual CPP/EI payroll tax savings - $ not including WC, EHT, Group Benefits

Summary – Payroll Tax Savings - $5, In most cases, where the employer is matching employee contributions, the Group RRSP – DPSP combination plan would be a good alternative The combination plan can do almost everything a Group RRSP plan can do with some added features like withdrawal restrictions, vesting, and the elimination of payroll taxes, which makes great business sense for the employer. Employees still have all the flexibility of using the money in retirement (unlike pension fund restriction). If and when they leave the company they can transfer their DPSP monies to their individual RRSP.

Building credibility with your business clients! Suggesting a Group RRSP / DPSP combination offers a small business owner an alternative to a Group RRSP – this builds on your professional advice and credibility. Your relationship will shift towards additional opportunities to cross sell other insurance and investment products to the business owner. The company’s accountant is likely to get involved allowing for additional networking Even if the company decides to implement or stay with the Group RRSP you have covered the topic!!

Looking Beyond the Group Plan Sale ! Cross – Marketing Opportunity! ABC Company / 30 employees / $40K avg. earnings $1.6M annual payroll Rollover of existing Group RRSP - $750K – Initial Sale Group RRSP and or DPSP – 5% employer / 5% employee matching contributions - $160K annual deposits Cross marketing within the Group Plan * High Net Worth / Business Owner Opportunity to meet with 30 employees on a individual basis Key Person Insurance on owners Critical Illness Insurance key managers Key Person Disability Insurance on owners Individual employee RRSP / TFSA / RESP accounts 48

CI Group Savings Plans Set-up / Support Simple and easy as outlined in our Administrative Guide Pre-population of applications / KYCs / transfer forms if applicable Group Purchase Confirmation showing employee and employer contributions for each plan member after each purchase Online access for Plan Administrator and Employees Sales and Marketing support through sales cycle