SunWise Elite Plus | Guaranteed Minimum Withdrawal Benefit (GMWB)

Guaranteed income protection strengthened by automatic resets

Story of Michael

In 1997, six years before he plans to retire, Michael invests $200,000 in SunWise Elite Plus.

Michael has a long-term investment horizon, so he selects an asset mix of 70% equities and 30% income. In the late 1990s, equity markets were booming and Michael is confident his retirement nest egg will grow substantially by the time he retires at the end of 2003. Like everyone else, he’s unaware of what’s ahead over the next decade or so.

At the end of 1999, Michael receives a reset. That growth plus the bonuses increase his RGWB to $279,514 and his guaranteed income to $13,976. All further bonuses are calculated on this higher value.

Michael is pleased with his investment in SunWise Elite Plus and confident he will be able to retire as planned. However, world equity markets experience a sharp downturn starting in 2000. However, Michael’s guaranteed income for life is locked in and he continues to benefit from an annual 5% income bonus each year until he retires. At age 65, he receives a reset which increases his annual income to $16,771.

Markets continue to be disappointing throughout the decade, with another major downturn during 2008-2009. Without SunWise Elite Plus and an annual guaranteed income for life, Michael would have run out of money by the time he was 77.

Investment gains are automatically locked in at the end of every third calendar year throughout the life of the contract. An additional reset is triggered on December 31 in the year the annuitant turns 65 and starts a new three-year cycle. During the 15-year bonus period, resets also increase the value of the bonus because subsequent bonuses are calculated on the higher amount.

The illustration below shows how SunWise Elite Plus guaranteed income for life would have performed from 1997-2008. It clearly shows how investment gains in the late 1990s would have been locked in with the automatic resets and how the guaranteed income would have been protected against the sharp market declines of 2000-2002 and 2008-2009.

For illustration purposes, the sequence of returns of the market cycle (1997-2008) is repeated throughout the 30-year period.

Enhanced income – automatic resets*

Enhanced income – automatic resets*

* Illustration assumes 70% equity/30% income asset mix (Equity is one-third each S&P/TSX Composite Index, S&P 500 Index, and MSCI World Index; income is DEX Universe Bond Total Return) based on historical rates of return, gaining on average 1.0% per year. Annual withdrawals are assumed to be 5% of the LWA Threshold Amount. Subject to legislated minimums and maximums and certain conditions.


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