B4 - Sunday, September 16, 1984 - North ShoreNews

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Beyond RRSPs
into annuities

ike interest rates in general, annuity rates
have been dipping downward of late, which
leads us to some thoughts about new trends
in the annuity field, particularly with regard to

RRSPs.

The purchase of an annuily
is one of the few options you
have when you convert or
*‘cashin’’ you RRSP savings.
There are essentially only two
other options: you can take
the money in cash, in which
case you pay tax on il; or you
convert it into a Registered

Retirement tncome Fund
(RRIF).
Whatever your decision,

you must act between the age
of 60 and 71. If you fail to
make the decision and act by
the end of the year in which
you turn 71, all of the money
in your RRSP will be con-
sidered income for that year
and taxed accordingly.
$ $ $
One aspect of annuities
which has not been too
thoroughly explained to the
public to my knowledge, is
what are known as escalating
or indexed annuities. The
main feature of these an-
nuities 1s that the income they
pay you increases each year,
the object being to defend
you against inflation. They
are available on a life, joint
and last-survivor, or term-
certain basis, the same as
conventional annuities
Three choices apparently
are available: payments
which increase four percent
each year, payments based on
a formula which ts tied to the
consumer price index (CPI),
or payments which will rise
accordingly to the rate of
return on specified assets
What is available in tact,

however, i explained to us
by Jim Rogers, of James
Ropers & Co Ltd. insurance
brokers

Gsenerally, escalating and
indexcd pensions, which have
been available since 197K) are
not proving popular
The teason appears to be
sumply that, Ike RRIBS. the
pay out in the early years is
quite low The simple plan

very

which incteases payments by
percent

four @ YCar IS MOS

COST LESS

AT COLONY

BUY WITH CONFIDENCE

if you FIND ALrvt siren
FOR LESS wel ti ERY

THE OW FE HE NC ag

LONY

HOME FURNISHINGS

Warehouse/Showroom

OPEN TO THE PUBLIC
(2 blkha behind the Avalon)
at 1075 Roosevelt Cres oN Van

300 530 JGO-8738

common.
Does an annuity which tn-
tandem with the

creases in

CPI interest you? Forget it!
With their noses close to the
Canadian economic winds,
the insurance companies
won't touch them . they are

Guaranteed Investment Certificates
from the Bank of British Columbia

NOT available (one assess-
ment of them from the in-
surance companies point of
view 1s “‘suicidal.’”)

Furthermore, only) one
yhoice is available if your
fairey is taken by an annuity
which pays out according to
the rate of return on specified
assets. Only Sun Life
Assurance Co. has ventured
into this area. They will issue
a plan based on Treasury
Bills -- MINUS two percent.

$ $ $

Jim Rogers has some other
very pertinent observations.
In bnef: Annuity rates m
have already peaked for etfis
year. They were 13.60% at
July 25, 1984. They are now
of the order of 12.50%.

There is a possibility, he
believes, that the substantial
increases in contributions to
RRSPs which were proposed
by the federal Liberal govern-
ment beginning in 1985, may
be ‘‘pulled back’’ by the
Conservative administration

(as the full impact of the
deficit ‘‘sinks in.’’)
Rogers, however, is op-

uumistic that down the road
Canadians will be given more

options more ways to
“cash in’’ -- ther RRSP
savings.

Which leads to the conclu-
sion that, unless the need 1s
urgent, don’t rush into an an-
nuity. Remember -- the deci-
sion to do so is irrevocable.

Mortgage Corporation

This ts an investment in the West that’s puaranteed
to work hard for you Certificates are available in
various terms upto tive years Your options mc laude

NEWS photo Stuart Davis
THE MARINE Drive business community continues to grow with a number of projects
nearing completion. A neighborhood mall featuring a major grocery outlet and a P.J.
Burger and Sons outlet are among those that will join the existing businesses.

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