nee oosit

ook els rome “MarylousMe ona ald °

Marylou McDonald .i is.a stock broker in Vancouver. She writes “Investment Lindate a regular
‘column concerning investment matters, which appears in the Terrace Standard,.Her address is
Odlum Brown Ltd., Box 10012, Van., B. C. V7¥ 1A3. She can be reached at 669-1600.

Group RRSP an attractive
option for small business

By MARYLOU McDONALD

.. An idea whose time has surely
‘come if you own your own
business or work for a small
_. business. firm, is the Group

RRSP.
Not surprisingly, one of the
“top. priorities on an employee
“wish list?" is some form of

‘“retirement savings or pension
-. plan. . Despite the fact that our
“<.population is aging, Statistics

“Canada records indicate that

~~ only half of the work force par-
ticipate ina Registered Pension
: Plan. ;

“Not withstanding the fact
“that employees want retirement
-plans, complex pension reform
legislation and talk of possible

_ mandatory. inflation, indexing

“shag, sent employers’ running for -
". cover or to less expensive: and.

“onerous ‘alternatives:
* The ‘traditional Defined
-Benefit.Plan, which is still the

-mest common Employer Spon. .

‘sored Retirement plan,

ife.:. -

“say

7 proposition!”
7 Another,

7 ‘employer contribites a | set
Jamount. tothe fund but there

‘are 10 guarantees. ‘as to the [-
-. amount paid out: The funds are’ |
a dnvested ‘and the pension payout -:

> depends on: theamount ac-
‘cumulated: by the retirement

guarantees: a set. ‘payment for’:

“Should the plan not have. suf. “
ficient’ funds 'to meet its obliga- -
tions, “the employer must ante F

‘up the’ difference. An expensive

and ‘increasingly
’ popular ‘plan. is the Defined:
"..Contribution’ or Money ‘Pur- :
-chase Plan, With the latter, ‘the

~~ date’ and a investment returns a

— All risk is borne by the
employee

— Group RRSP’s are easy
and inexpensive to establish and
administer as they do not fall
under Pension regulation,

— There is no prescribed for-
mula for company contribu-
tion.

Employee Advantage:
— Full portability: should an
. employee change jobs, he/she is
free to cash in ct transfer and
maintain the plan as an in-
dividual RRSP.

— Immediate vesting: the
RRSP belongs to the individual
not the employer. —

‘— More effective cash
Management due to smaller,
regular contributions via
payroll deductions spread out
over the year; immediate tax
deductions. for the contributed
amounts. ;

— Choice and personal con-
trol over how the money is in-
vested.

— Spousal RRSP’s are eligi-
ble.

_ More interest
fo ‘your RRSP money.

YKGBONUS —¥.SSBONUS

Po ror agg990

On 15-20 month Term-RRSP for
1-5 year Term-RRSP 1989/90 Contributions,
Contributions* Renewals, transfers .

“Existing deposits or transfers are not eligible or this bonus.
Offers subject tochange or wih ys time.
: Offers opie Manh 11590.

> Get more out of your RRSP.

| =

Your Authorized Agent is;
Frank Donahue.

Skeena Mal}.
"Terrace, B t..

Teh 635-2307

ee wt ea

RRSP & tax
planning

Life insured annuities. are
worth a close examination -

By MAR¥YLOU McDONALD

At this time of the year. peo-
ple are searching for a method
of sheltering their income from
the tax man and may have
chosen to contribute to a
Registered Retirement Savings
Plan. These plans or RRSP’s, as
they are called, are available
from all financial institutions
regardiess of size or location;
and come in many different
styles and offering a myriad of
options at various price levels
and growth rates.

lt can bea mess to those who
aren't acquainted with the op-
tions available and their risks,
In previous columns this week
and last, the options available
have been discussed ablely, by
some very knowledgeable peo-
ple who have provided some

_ fascinating options.

I would like to present an
alternative to those of you who
are at an age when you should
be concerning yourself with a
Maturing RRSP. As has been
mentioned before you must
divest your RRSP by December

' 3L of the year in which you

reach your 71 birthday.
There are three basic routes
you can choose from when you

. do decide to make that move.

A) Cash in the RRSP and
pay all taxes owing. This is not a
particularly attractive option
because the income is taxed at

your highest marginal tax rate.
: + B). ‘Annuities: of a certain :
“type: and'different: returns” ‘and
restrictions. -

C) Registered Retirement
Income Funds,

It is a combination of B and
C that I think is a very attractive
alternative, and I] would like to
outline the general principles
behind “Life Insured An-
nuities.”?

_ Life Insured annuities are a
two-poart contract with a life
insurance company. Under the
first part of the arrangement
you make a lump sum payment
to purchase a monthly annuity
for the rest of your life,

Under the second part, you
purchase a life insurance policy
for up to 100% of the purchase
price of the annuity. Premiums
are paid on each policy each

month so your yield is derived .

on the net amount, and the

higher the age of the mdvidil
at the time of purchase of the
annuity, the greater the return.

When the after-tax monthly
het annuity income is compared
with after-tax income from a
traditional interest-bearing in-
vestment, the insured ‘annuity,
comes out ahead. The -
equivatent pre-tax annual yield
will range up to 15% if you are
70 years old or 20% if you. are ,
80 years old.

Results also vary dependirig
on your sex (men do a little bet-
ter}, marginal tax rate and
whether you are a non-smoker.

The benefits of an insured an-.
nuity may well be wrath an in-
vestment of your time to see just
how one could -be tailored to

your situation.

Instant Tax Receipts

This year combina complete convenience with a flexible RRSP
that olfers 6 savings choices and no administrative cast.

Call ma far your frea copy of our RASP booklet.

Spectrum Mutual Funds are distributed through Sun Lite
Orstribution Services Inc. (Sunetco), a Mutual Fund Dealer, a
subsidiary of Sun Lifa Assurance Company of Canada.

The prospectus provides datailed information on the securities
offered. A copy af the prospectus may be obtained irom our
ottica.

306-4546 Park Ave., Terrace, B.C.

For more Information call:
Lyle Harvey, Sales Manager

635-6146

Ss Sun Life

Distribution
Services inc.

Monthly deposits.
the easy way
. to save.

ry. Oe
wat i ty V/A

Instant
Tax Recelpts

_ Woo yu vet in Gi un and tee

A batter way to
build your future.

At the Credit inton, your Fagisterad Retirement Sav-
logs: Plan earns a competitive interes! rate weth no. Of
fees cf any kind. Soe us fiw about building your
future financial security!

Terrace & District

Credit

Union

4650 Lazelle Avenue, Terrace, B.C.

635-7282