Sample Retirement Income Options

See below for examples of what your monthly pension might be at retirement.

They are separated into Life Annuity and Life Income Fund.

Retirement Income Options

A member's account balance at retirement can be used to provide some form of lifetime income in accordance with Manitoba legislation. The lifetime income can be provided through a Life Annuity, a Life Income Fund (LIF) or a combination of these two options. If a member, after leaving the school division, is not ready to start drawing retirement income then they can defer the commencement until a later date.

Life Annuity

A member's account balance can be used to purchase a life annuity from a life insurance company. A life annuity is a guarantee of income for life and if elected the lifetime of your spouse as well. There is no investment risk and no risk of outliving the income as the pension is paid for life. The table below shows the estimated monthly pension that would be payable depending on the size of your account balance, the age at which you retire, the form of annuity you choose and long-term interest rates at the time of purchase of the annuity. There is also an explanation of each form of annuity shown.

Account Balance at Retirement: $100,000 (3% underlying rate)   Age at Retirement
Form of Pension  

55

60

65

 
  Single Life Annuity Guaranteed 15 years  

$421

$462

$511

 
  Joint & 66 2/3% Survivor Annuity Guaranteed 15 years  

$388

$424

$469

 
  Joint & Survivor 100% Annuity Guaranteed 15 years  

$374

$407

$450

 
Long-term interest rate of 3.0%          
             
Account Balance at Retirement: $100,000 (4.0% underlying rate)   Age at Retirement
Form of Pension  

55

60

65

 
  Single Life Annuity Guaranteed 15 years  

$477

$516

$564

 
  Joint & 66 2/3% Survivor Annuity Guaranteed 15 years  

$445

$479

$522

 
  Joint & 100% Survivor Annuity Guaranteed 15 years  

$430

$462

$504

 
Long-term interest rate of 4.0%          
             
Account Balance at Retirement: $100,000 (5.0% underlying rate)   Age at Retirement
Form of Pension  

55

60

65

 
  Single Life Annuity Guaranteed 15 years  

$535

$573

$618

 
  Joint & 66 2/3% Survivor Annuity Guaranteed 15 years  

$504

$536

$578

 
  Joint & 100% Survivor Annuity Guaranteed 15 years  

$490

$519

$559

 
Long-term interest rate of 5.0%          


Single Life Annuity Guaranteed 15 years - The pension is payable for as long as you live. Should you die within fifteen years after your commencement the same pension will continue to be paid to the named beneficiary for the balance of the fifteen year period.

Joint & 100% Survivor Annuity Guaranteed 15 years The pension is payable for as long as you live. Commencing on the next payment after your death, your spouse, if living, will continue to receive the same pension that you received for the remainder of your spouse's lifetime. Should you and your spouse die before the end of the guarantee period (15 years), the pension payments for the balance of the guarantee period will be paid to the named beneficiary.

Joint & 66 2/3% Survivor Annuity Guaranteed 15 years The pension is payable for as long as you live. Commencing on the next payment after your death, your spouse, if living, will continue to receive the same pension that you received for the remainder of the guarantee period, if any, and then 2/3rds of the pension you were receiving for the remainder of your spouse's lifetime. Should you and your spouse die before the end of the guarantee period (15 years), the pension payments for the balance of the guarantee period will be paid to the named beneficiary.

These pension amounts are only an estimate since your account balance and annuity purchase rates may vary. Please be aware that these amounts are not guaranteed.

Life Income Fund

Instead of purchasing a life annuity with your account balance you have the right to transfer your locked-in account balance to a financial institution to provide a LIF (Life Income Fund). The LIF allows flexibility in the amount of income you receive in a given year. You maintain control of your principal and make the investment decisions for your LIF account. Each year you decide how much you wish to withdraw, subject to a legislated minimum and maximum amount. Payments from year to year would be dependent on the investment earnings on your account and the amount of pension withdrawn each year.

Please be aware that there is no guarantee of lifetime income since you are now investing your account balance where there may not be any future guarantees on your investment returns. As well, legislation now allows you more access to your funds under the prescribed transfer to a Registered Retirement Income Fund that is described below.

This option may create a benefit to the estate on death however the benefit is always taxable to the estate. Upon death the remaining LIF account is not locked-in and can be transferred tax-free to a surviving spouse's Registered Retirement Income Fund (RRIF), taken in cash or used to purchase a life annuity. If there is no spouse the benefit can be paid to the beneficiary or estate.

The following tables provide examples of the maximum monthly income that could be withdrawn under a Life Income Fund contract for an individual 60 and 65 years of age with an account balance of $100,000. The illustration assumes a fixed annual rate of interest of 3% and alternatively 5%, and assumes that the prescribed withdrawal percentages at each age do not change.

Sample Monthly Pension

The following tables give examples of the maximum monthly income payments under a LIF contract for an individual 60 and 65 years of age with an account balance at retirement of $100,000. The illustration assumes a fixed rate of interest at 5.0% and the maximum withdrawal percentages at each age have been fixed.

Age at Retirement: 60 Investment Return: 3%
Account Balance at Retirement: $100,000 Frequency of Payments: Monthly
Age Minimum Percentage Maximum Percentage Monthly Maximum Income Ending of Year LIF Account Balance

60

0.00%

6.70%

$558

$96,208

65

4.00%

7.20%

$489

$78,055

70

5.00%

7.90%

$426

$61,409

75

5.82%

9.10%

$371

$45,846

80

6.82%

11.50%

$326

$31,038

85

8.51%

16.00%

$264

$17,214

90

11.92%

20.00%

$141

$6,983


Age at Retirement: 60 Investment Return: 5%
Account Balance at Retirement: $100,000 Frequency of Payments: Monthly
Age Minimum Percentage Maximum Percentage Monthly Maximum Income Ending of Year LIF Account Balance

60

0.00%

6.70%

$558

$98,148

65

4.00%

7.20%

$541

$88,000

70

5.00%

7.90%

$520

$76,538

75

5.82%

9.10%

$501

$63,207

80

6.82%

11.50%

$487

$47,387

85

8.51%

16.00%

$439

$29,172

90

11.92%

20.00%

$260

$13,186


Age at Retirement: 65 Investment Return: 3%
Account Balance at Retirement: $100,000 Frequency of Payments: Monthly
Age Minimum Percentage Maximum Percentage Monthly Maximum Income Ending of Year LIF Account Balance

65

0.00%

7.20%

$600

$95,702

70

5.00%

7.90%

$522

$75,292

75

5.82%

9.10%

$455

$56,211

80

6.82%

11.50%

$399

$38,056

85

8.51%

16.00%

$324

$21,106

90

11.92%

20.00%

$172

$8,562


Age at Retirement: 65 Investment Return: 5%
Account Balance at Retirement: $100,000 Frequency of Payments: Monthly
Age Minimum Percentage Maximum Percentage Monthly Maximum Income Ending of Year LIF Account Balance

65

0.00%

7.20%

$600

$97,636

70

5.00%

7.90%

$577

$84,919

75

5.82%

9.10%

$556

$70,128

80

6.82%

11.50%

$540

$52,577

85

8.51%

16.00%

$487

$32,366

90

11.92%

20.00%

$288

$14,630


Prescribed Transfer to a Registered Retirement Income Fund (RRIF)

The legislation allows a LIF contract owner who is at least the age of 55 to apply for a one-time "prescribed transfer" of up to 50% of all of their locked-in funds under a LIF contract to a Prescribed RRIF contract that is not subject to any withdrawal limits. The Prescribed RRIF would provide you with greater income flexibility in retirement. However caution is need as it is much easier to exhaust your funds and hence your income in retirement.