Bringing My Retirement Projects to Life

Participant’s Guide

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Bienvenue à BâtirenteCe Guide du participant contient tout ce dont vous avez besoin pour vousdoter d’un plan stratégique pour la retraite. Vous y trouverez des informationsgénérales sur la retraite ainsi que sur les rentes et les principales règlesprévues par les régimes publics de retraite. En utilisant le logiciel CalculateurRetraite ou la calculette Planirente, vous découvrirez le pourcentage de votresalaire que vous devrez épargner pour rencontrer vos objectifs de retraite.Enfin, avec le Test Minute, vous pourrez déterminer de façon précise votreprofil d’investisseur et choisir le fonds diversifié Bâtirente qui vous convient.

Bonne lecture.

The goal of your Bâtirente Plan is to allow you to accrue capital for your retirement. It offers you significant advantages that you will discover while consulting this Guide.

You will need to make some choices for your Bâtirente Plan:

1. Your Contribution Level In general, mandatory employee contributions are established through collective agreements.Depending on your situation, you may need to invest an additional amount to be able to retire when you want to. Take this opportunity to update your “game plan” for a successfulretirement.Consult Section of the Guide!

2. Investing Your ContributionsBâtirente gives you access to a diversified line of investment funds managed by prominent professionals. Take the time to establish your investor profile to make sure that the fund youchoose is a good match for your personal situation; this choice will have a direct impact on the amount of money that will accrue in your account.Consult Section of the Guide!

3. Designating BeneficiariesYou can designate who will be your beneficiary or beneficiaries should you die before retiring. If you do not designate any, your estate will be deemed to be your beneficiary.

In the case of simplified pension plans (Québec SIPP and federal SPP), defined contribution pension plans, locked-in RRSPs, locked-in retirement accounts (LIRA) and life income funds(LIF), spouses have priority over any other designated beneficiary. This means that death benefits will automatically be paid to them. SIPPs, as well as defined contribution pension plans,LIRAs and LIFs registered in Québec, allow spouses who wish to do so to waive their deathbenefits. This waiver must be confirmed in writing before the death of the participant. If you do not have a spouse, or if your spouse waived their death benefits, the benefits will devolve to your designated beneficiary or beneficiaries.

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Welcome to BâtirenteThis Participant’s Guide provides you with everything you need when you are thinking of retirement planning. You will find general information on retirement and the main characteristics of public plans. Using the Plannuitycalculator, you will figure out what percentage of your earnings you need to save to reach your retirement goals. Then, with the help of the Quick Test,you will establish your specific investor profile and choose the Bâtirente Diversified Fund that best suits you.

Enjoy your reading.

Bâtirente’s Pension Plans Goal

ATTENTION!

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These are general rules, and exceptionscould apply under some circumstances.

PLEASENOTE

Revocable or Irrevocable Beneficiary?

If you designate your beneficiary as revocable, you will be able to modify your designationwhenever you want. If you designate them as irrevocable, you will need to obtain their writtenconsent prior to proceeding with a change of beneficiary.

In Québec, when you designate your lawful spouse as your beneficiary without indicatingthem as revocable, their designation is deemed to be irrevocable. Other beneficiaries with nospecified status are deemed to be revocable.

You must thus pay special attention to the designation of your beneficiary or beneficiaries.

Exemption from Seizure

In Québec, amounts accrued in supplemental pension plans such as simplified pension plans(SIPP) or locked-in retirement accounts (LIRA) or life income funds (LIF) enjoy a legal protectionthat exempts them from seizure by creditors in case of personal bankruptcy.

On the other hand, amounts accrued in RRSPs or RRIFs are only exempt from seizureif the plans meet a number of conditions. As a consequence, Bâtirente RRSPs and RRIFs are exempt from seizure when the beneficiary that you designate is your lawful spouse, a direct ascendant (father, mother) or a direct descendant (child). They are also exempt from seizurewhen your beneficiaries are other persons–common-law spouse, for instance–designated byyou as irrevocable.

In addition, you must note that the Canadian legislation on bankruptcy and insolvencywas modified on July 7, 2008 to exclude all RRSPs and RRIFs from assets under bankruptcy,except for those contributions made within the last 12 months preceding the date of the bankruptcy. Nonetheless, these contributions would be exempt from seizure if the designationof their beneficiary meets the conditions described in the previous paragraph.

Using The Information and Tools Available to YouBâtirente gives you access to a great deal of information and to various tools to help you make informed decisions. These tools were developed by competent professionals to help youmake the right decisions. You must use them before you make your choices.

AdviceWhen participating to a Bâtirente Plan, you have free access to a team of specialized profes-sional advisors dedicated to providing you with the information and advice you may need.You can contact them on the phone during business hours for any question you may have regarding your investments, your plan, your planning or any other aspect of your retirement.You will find Bâtirente’s Member Services Department contact information on page 14.

InformationYou will receive at home a number of personalized reports: your investment statement, a biannual transaction statement, confirmation of individual transactions and tax slips. In addition,you will be able to consult your personal account at any time on line on CyberBâtirente, whereimportant information regarding Bâtirente Funds is updated daily. It’s easy. All you need to do is register on www.batirente.qc.ca.

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....I SAVING FOR RETIREMENT

We all hope to have the means to enjoy a wonderful retirement some day. You haveprobably started thinking about it. But have you truly taken the time to think about the meansyou need to put into action to make sure that it will be secure? If you have not already done so,wait no longer to bend to the task, so that you have enough time to accumulate the nest eggthat will allow you to complete the projects you are thinking of.

Specialists agree that individuals will generally require approximately 70 percent of the grossaverage annual income earned during their last three working years to maintain the same stan-dard of living at retirement. But, depending on your projects, you may need a bit more or a bitless. Your needs may also fluctuate over time according to your retirement lifestyle. You must takeinto account that a number of expenses such as health and leisure activities related expenseswill probably increase while others (mortgage, child care, etc.) will be reduced or eliminated.

Why not establish a budget just as if you had already retired? You could review your current expenses, and estimate what they would be after retirement. To do so, please refer to the calculation tables developed by Question Retraite in its Guide to Financial Planning forRetirement or on its Web site. You will find the contact information for Question Retraite in the“Additional Information” section on page 14.

Life expectancy has made tremendous leaps over the last century. According to Statistics Canadadata, men born in 1900 had a life expectancy of 45 years, while their female companionscould hope to reach age 48. Retirement planning was certainly not their main preoccupation.Today, in Québec, 65-year-old men can hope to live to age 831 while women of the same agecan hope to live beyond 862! Income must thus be budgeted for several decades.

The rise in the price of goods and services, commonly called “inflation”,can play a nasty trick on your retire-ment. Goods costing $10 in 1975 cost$30.10 twenty years later in 19953.Consequently, retirement incomeneeded to have tripled to maintain purchasing power.

Fortunately, the rate of inflationhas been relatively low over recentyears. Nonetheless, even supposing an average yearly inflation rate of 2.5 percent, goods costing $10 today would cost $12.80 in 10 years, $16.39 in 20 years and$20.98 in 30 years. For a 3.5 percent average inflation hypothesis, the same goods would cost $28.07 in 30 years. In addition to the amount required to have the desired income uponretirement, it is thus advisable to plan for an extra amount to meet inflation.

How Much Will You Need?

How Long Will Retirement Last?Why not analyze yourcurrent spending? Whoknows, you might beable to find more roomfor retirement saving in your budget. Thetens and hundreds ofdollars invested todaywill turn into thousandsover time.

T IP

Cost Evolution of $10 Goods

$30

$25

$20

$15

Years After $10Retirement: 0 5 10 15 20 25 30Average Yearly Inflation of : ■ 2.5% ■ 3.5%

1. Institut de la statistique du Québec.2. Ibid.3. Bank of Canada.

Watch Out for Inflation

II PUBLIC PLANS

Public plans provide a good basis but, in most cases, they will only provide a share of theretirement income you need. Since public plans have ceilings, they stop providing replacementbenefits beyond given income thresholds. The best way to make up the income portion not covered by such plans is to participate in the Bâtirente pension plan negotiated by your union.

Sources of Incometo Retire at 65 with 70 Percent of Salary

Pre-Retirement Salary: $30,000 $40,000 $50,000

*For illustration purposes

Old Age Security (OAS)Individuals are entitled to OAS from age 65. The benefits paid are taxable and their amount depends on the number of years of residence in Canada. As at January 1, 2009, the maximumamount is $516.96 per month. Retired individuals whose net income exceeds $64,718 (as atJanuary 1, 2008) are required to reimburse all or part of the OAS they receive.

Guaranteed Income Supplement (GIS)The GIS is a tax-free monthly benefit paid to Canadian residents receiving the OAS pension and whose income is very low. The amount of GIS is established yearly based on the entitled individual’s annual income.

On the other hand, an Allowance is paid to individuals aged 60 to 64 whose legal orcommon-law spouse has a low income and is receiving the GIS. A Survivor Allowance is alsopaid to low-income individuals aged 60 to 64 whose legal or common-law spouse is deceased.

Québec Pension Plan The Québec Pension Plan is a public plan with mandatory participation for salaried individuals.The plan’s benefits, based on employment earnings, are taxable. The full pension is payable at age 65. Its calculation is complex, but one can consider that it represents approximately 25 percent of eligible employment earnings.

Eligible employment earnings are subject to a ceiling ($46,300 as at January 1, 2009)and the maximum pension payable at 65 is $908,75 per month as at January 1, 2009. Attention: a large proportion of retired individuals receive a pension that is inferior to the maximum benefit. In 20074, the average monthly pension was $424.80.

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plan...Public Plans Will not Be Sufficient

■ Private plan ■ or personal savings■ Québec ■ Pension Plan■ Old Age Security■ pension

$7,511

$7,286

$6,203

$12,082

$9,715

$6,203

$17,892

$10,905

$6,203

* * *

4. Régie des rentes du Québec, Statistics, December 31, 2007.

Public Plan Benefits

This pension can be paid at age 60, under certain conditions. It is reduced by six percent for each year of anticipation prior to age 65. Should you retire at age 60, your benefitwould be reduced by 30 percent (5 years x 6 percent) and this, for the rest of your life.

To obtain from the Régie a projection of the pension you could be entitled to, ask theRégie des rentes du Québec for your Statement of Participation, by phone or on their Web site.If you have worked elsewhere in Canada, the Québec Pension Plan takes into account the contributions paid to the Canada Pension Plan to establish the amount of your pension benefit.

The plan also provides for a number of disability and death benefits.You will find the contact information of the various public pension plans in the “Additional

Information” section on page 14.

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Helen is 35 years old and the mother of twochildren, aged six and eight. Having goneback to work, she started contributing to thepension plan established by her union. Herannual salary is $35,000.

“I had to leave the workplace for severalyears for family reasons. Now that my two childrenare in school, I have gone back to work. Upon myreturn, I heard that the union had established a simplified pension plan (SIPP), and then hadimproved it by increasing both employer and employee contributions to 4 percent. I fully intendto take advantage of the plan to build a true pension fund for myself.

“Of course, with two kids, I cannot afford to save much. But, although my budget isquite tight, I intend to make the efforts required to accumulate enough savings to allowme to retire with peace of mind. Everyone deserves that. Since I have many years ahead of me, I chose the Diversified Intrepid Fund, a fund with a volatility slightly higherthan the volatility of the other Diversified Funds. By choosing one of the Diversified Fundsoffered by Bâtirente, I am getting the services of professional investment managers.Why should I deny myself? On top of that, I can check my investments on CyberBâtirenteand, when I have questions, I can get answers quickly by contacting the Member Services Department.”

Even though my budget is rather tight, I intend tomake the efforts required to accumulate enough savings to allow me to retire withpeace of mind.

The Case of Helen

Combined (Employer and Employee) Contribution Rate Required to Reach A 70 Percent of Income Goal at Age 65, Including Public Plans*

Contributions Starting at:

AveragePre-Retirement Salary Age 20 Age 30 Age 40 Age 50

$30,000 5.1% 7.1% 10.8%18.0% + 1.6%non-registered

$40,000 6.4% 8.9% 13.2%18.0% + 5.6%non-registered

$50,000 7.2% 10.2% 15.5%18.0% + 11.3%non-registered

*Based on the following hypotheses: average inflation of 2.5 percent and average annual return of 6 percent.

III FIGURING OUT HOW MUCH TO SAVENow that you have a better idea of your retirement needs and of the public plans you

are entitled to, you can figure out how much to save to reach your goals. We propose threetools to do so.

This table helps you figure out the percentage of your salary you need to contribute to reachthe income replacement goal of 70 percent, including public plans. For instance, if your averagepre-retirement salary is $30,000 and if you start saving at age 30, a combined contributionrate (employer and employee) to the Bâtirente Pension Plan representing 7.1 percent of yoursalary should allow you to retire at age 65 with 70 percent of your income.

But if you start at age 40, this rate climbs to 10.8 percent. This shows the importance of contributing as early as possible to your retirement plan. Attention! If you want to retire before age 65, you need to plan for additional investments. To know how much more, we inviteyou to use the Retirement Calculator.

To push your exploration a bit further, we suggest using the Plannuity calculator. This simple instrument allows you to determine even more precisely the percentage of your salary youneed to save.

You wish to draw a more detailed portrait of your personal situation? Bâtirente gives you accessto the Retirement Calculator on CyberBâtirente. By entering your personal information, thecharacteristics of the plans you are currently participating into and the savings already accumu-lated, you will discover how much income you can count on after retirement, including publicplans. You will see, in detail, year by year, the income you could receive from your retirementage up to age 100. You will also see the rate of savings required to reach your goals.

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1. The Contribution Rate Table

2. The Plannuity Calculator

3. The Retirement Calculator

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IV INVESTING YOUR SAVINGS FOR RETIREMENT

“Nothing ventured, nothing gained!” We all know this saying. It could not be truer when it comesto investments. Here are the main types of investments:

1. Guaranteed InvestmentsThis type of investment yields pre-established interests that you are sure to get. The long-termreturn on this type of investment is, with some exceptions, inferior to the returns that non-guaranteed investments would provide over the same period.

2. Non-Guaranteed InvestmentsThe value of these investments can fluctuate up or down (volatility) and their return is notknown ahead of time. This is why they are said to be “risky”. Over long periods of time, theygenerally provide higher returns than guaranteed investments.

Non-guaranteed investments includetwo major categories:

■ Fixed-income securities, such asbonds, provide regular interest income.Their market value moves counter to the movement of interest rates: itdecreases when interest rates increaseand it increases when interest ratesdecrease.

■ Variable-income securities, such as equity, can provide dividend income,but they are attractive above all for thelong-term growth of their value. Sincetheir market value fluctuates based oninvestor anticipations, their value canincrease or decrease over more or lessprolonged periods.

As a rule of thumb, the market value of fixed-income securities fluctuates less than that of variable-income securities; this is why they are deemed to be less risky. However, their long-termappreciation potential is lower than that of variable-income securities.

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Returns and Risks

Vo l a t i l i t y (R i s k ) High

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Hig

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Guaranteed InterestAccounts (GIA)

Fixed-Income Securities

Canadian Equity

Foreign Equity

DIV

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FU

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The Risk-Return Relationship

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Contrary to popular belief, a 1 percent variation in returns makes a bigdifference in the long run. Let us look at the case of Tom, Dick andHarry, all of them having invested $3,500 per year in their pension planfor 30 years.

Same Investment, Three Accrued Values

■ Tom is getting an average return of 4 percent; his accruedvalue is $196,300;■ Dick is getting an average return of 5 percent; his accruedvalue is $232,500, that is 18 percent higher than Tom’s;■ Harry is getting an average return of 6 percent; his accruedvalue is $276,700, that is 19 percent higher than Dick’s and 41 percent higher than Tom’s.

The 72 Rule

You want to know how many years you will need to double your investment?

Take the number 72 and divide it by your rate of return.

Thus, a $1,000 investment with a return of 8 percent will double in 9 years; the same$1,000 investment will take 24 years to reach $2,000 if the return rate is 3 percent (72 ÷ 3 = 24).

Conversely, you can figure out the rate of return you need to double you investment within a certain number of years: 72 divided by the number of years = required rate of return.

It is widely known that we must not put all our eggs in one basket. Indeed, investments madein our pension plans remain there for a long time. And who can say when equity will do betterthan bonds and inversely? This is why proper diversification between various asset categorieshelps to reduce risk and to maximize return. Thus, fixed-income securities help to stabilize your portfolio, while variable-income securities provide you with long-term returns.

Be aware, however, that it is not a simple matter of “getting a bit of everything” but rather,of establishing the right mix to get the maximum return for given volatility levels. You do notnecessarily have the same risk tolerance or the same investment horizon as your colleagues.

Bâtirente Diversified Funds offer great diversification between several types of investments,based on various combinations. Each of them is rebalanced periodically and aims at providinglong-term returns adjusted to specific risk-tolerance profiles.

Bâtirente Funds’ assets are entrusted to the best available managers for each invest-ment category. Their management and their performance are under constant scrutiny by the Bâtirente Investment Committee. With a Bâtirente Diversified Fund, you enjoy at all time a higher-performance, risk-adjusted and low-cost management global portfolio.

The Right Mix

The Importance of Returns

Dick

$232,500

Tom

$196,300

Harry

$276,700

Return 4% 5% 6%

Take the time to readthe relevant informationabout investment fundsand use the Quick Testto establish your in-vestor profile and toknow the correspondingBâtirente DiversifiedFund. If you make nospecific choices, yourcontributions will be invested in the defaultinvestment fund estab-lished by your group.

ADVICE

Where to Find Information on Funds Offered by Bâtirente:

■ In the documents appended to this Guide ■ On CyberBâtirente at www.batirente.qc.ca ■ In our various publications:– Monthly Bulletins– Biannual Letters– Annual Financial Reports■ With the Member Services Department at 1 800 463-6984

Bâtirente looks after the long-term interests of its members. This is why it pays attention notonly to the financial aspects of its investments, but also to their environmental, social andgovernance aspects. As a consequence, it exercises its voting rights at the annual meetings of companies in which it has invested, and it takes an active part in developing proper gover-nance rules and in adopting sound social and environmental practices.

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Bâtirente, A Responsible Investor

The Case of ManuelManuel, age 28, earns $38,000 a year.He has been participating in the Bâtirentesimplified pension plan (SIPP) establishedby his union for five years.

“Several years ago, my union negotiateda Bâtirente group RRSP that we transformedinto a simplified pension plan (SIPP) five yearsago. This allowed us to increase our employer’scontributions without increasing their expenses.We had first obtained a basic employer con-tribution of 3 percent of salary, and an equal contribution from salaried individuals. At our lastbargaining, we made a new gain. Now, when

we contribute 4 percent instead of 3 percent, our employer also contributes 4 percent.As far as I’m concerned, there is no question of waiving the employer’s additional 1 percent: I increased my contribution to 4 percent, the maximum, so that my employeris paying the full 4 percent employer contribution.

“I am saving systematically. My contributions are deducted automatically from my paycheque, and my taxes are adjusted immediately. I don’t even need to think aboutit. In addition, I transferred my personal RRSPs to Bâtirente so that I can enjoy their advantageous fee rate. I might be able to use them to buy a house. Who knows?

“Many of my older colleagues chose the Diversified Provident Fund because it isless volatile. For myself, because I’m still young, I decided to invest all my contributionsinto the Diversified Intrepid Fund.

“When I became a member of Bâtirente, I took the opportunity to put my affairs in order once and for all. Now, my mind is at rest.”

V LOWER MANAGEMENT FEESPooling the savings of a great many unionized individuals helps maintain management

fees at a level below the level generally charged by comparable investment funds available onthe retail market. In addition, Bâtirente’s policy is to reduce group fees according to the growthof their accrued assets.

This is one of the advantages that belonging to an associative pension system providesmembers with.

Where to Find Information on The Fees Applicable to Your Plan:

■ In the Appendix enclosed with this Guide (when applicable)■ With your Bâtirente Union Representative■ With the Member Services Department

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Jocelyne Houle-LeSarge, FCGA, Executive Directorand Secretary of the Institut québécois de planificationfinancière and President of Question Retraite.

Q. There is probably no magic recipe to provide oneself with a worry-free retirement, but theremust be a logical approach to this process…A. Of course. When you plan your retirement, there are two important things you should consider first: the money and what you want to do. In other words, how much money will youhave when you retire, and which projects would you like to, and could you, realize at thattime? Each individual must reflect on this as early as possible. Obviously, when you are young, this may be a difficult exercise to conduct but, if you wait to the end of your work life to do it, it could be too late.

Q. What is the role of pension plans?A. Tax regulations allow us to save every year, until we retire, up to 18 percent of our employment earnings. The savings we accrue in simplified pension plans or registeredretirement savings plans can grow in a tax shelter until we convert them into retirement benefits. Saving in a pension plan is clearly better. When you have access to a true pensionplan, it is clearly less trouble because you don’t have to do anything. It is better because it is systematic. It is better because on top of your contributions, your employer is con-tributing, and both contributions are growing over time. It is quite advantageous comparedto individuals who don’t have these plans.

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The Case of Sylvia

Sylvia, age 55, has three grown-up children.She intends to retire in five years.

“It has been demonstrated that supple-mental pension plans are the best way to have the means, one day, to carry out your retirementprojects. For us, it’s now been about ten yearssince, with our union, we negotiated our pensionplan. At first, we had requested many tenders, but we quickly realized that Bâtirente was a veryadvantageous solution for a small group like

ours. By joiningother CSN unions,

we got a retirement system that has neverstopped improving. Now, everybody is participating in thesimplified pension plan (SIPP). Our four retirees are happy that they were able to remain within a Bâtirente plan for their retirement benefits.

“A few more years and it will be my turn. I made my calcula-tions and I will be able to retire at age 60. Five years to go.That is why I started reducing the volatility of my investments.

I had always invested my contributions in the Diversified Intrepid Fund but, two years ago, I started progressively transferring my

assets to the Provident Fund and that is where I now am investing all my contributions.It’s easy. All I had to do was to phone our Member Services Department.”

Just a few more yearsand it will be my turn. I made my calcu-lations… Five years to go. That is why I started reducing the volatility of my investments.

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At age 64, Albert is earning $40,000 peryear and has been participating to a pensionplan negotiated by his union for 14 years. His savings are now reaching $150,000, as follows:• $95,000 accrued in his Bâtirente pensionplan, including his voluntary contributions; • $40,000 from his previous supplemental pension plan transferred 14 years ago to aBâtirente LIRA;• $15,000 accrued into Fondaction, the CSNlabour-sponsored fund.

“Only a few more weeks to go before I retire. I’m ready. Actually, I’ve been seriouslypreparing for it for quite a long time. I have a secret. In the past, I never withdrew any money from my plan during the period when we had a group RRSP. I even made additional contributions to Bâtirente and to Fondaction to maximize my retirement savings and to get the famous 70 percent of my last working years’ income that willallow me to retire without financial worries.

“I got information about the OAS and the QPP. These two plans will provide mewith 37 percent of my employment earnings as soon as I reach age 65.

“I also learned that I could keep my money in Bâtirente Funds to continue enjoy-ing their full advantages. The amounts that I have accumulated will be transferred to a registered retirement income fund (RRIF) and a life income fund (LIF) offered byBâtirente. They will be invested into the Diversified Patrimonial Fund, which is especiallydesigned for retired individuals.

“Consequently, I will finally be able to devote myself to my passion, cabinet-making, and to let the professionals chosen by Bâtirente do the work for me!”

Only a few more weeks to go before I retire.I’m ready. Actually, I’ve been seriously preparing for it for quite a long time.

The Case of Albert

TO TAKE FULL ADVANTAGE OF YOUR BÂTIRENTE RETIREMENT PLAN:

Figure out the amount you need to save using the Plannuity calculator or the RetirementCalculator.

Select the Bâtirente Fund(s) that best match(es) your investor profile with the help of the Quick Test questionnaire.

Fill out your enrollment or modification form, and give it immediately to your group representative.

Any question? Feel free to consult one of our Member Services Department specialists (1 800 463-6984). They are there for you.

ADDITIONAL INFORMATION

Régie des rentes du Québec (RRQ)1 800 463-5185www.rrq.gouv.qc.ca

Old Age Security Program (OAS)Human Resources andSocial Development Canada1 800 277-9915www.hrsdc.gc.ca

Question RetraitePartners for RetirementFinancial Securitywww.questionretraite.com

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STEPS TOFOLLOW 1

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BÂTIRENTEwww.batirente.qc.ca

Member Services Department1 800 463-6984batirente@ssq.qc.ca