Segregated Funds

Segregated Funds provide a safe way to invest with guarantees on your capitol

Ontario’s budget highlights pension benefits, ongoing support for employers and employees

Ontario’s budget highlights pension benefits, ongoing support for employers and employees

Read: What do pension benefits guarantee fund changes mean for plan sponsors?

The budget stated while the fund is currently in a strong financial position, the number of plans covered is decreasing as defined benefit plans continue to close. “At the same time, conversions to the jointly-sponsored pension plan model, while providing benefits such as shared governance and efficiencies, also decrease the number of covered plans. The declining number of plans paying into the [pension benefits guarantee fund] further concentrates risk among fewer employers.”

In other news, in light of ongoing economic hardship caused by the coronavirus pandemic, the Ontario government is providing a second round of small-business support payments to eligible recipients in the form of grants ranging between $10,000 and $20,000, while expanding eligibility for these businesses to receive up to $1,000 for the purchase of personal protective equipment. But, unions representing education staffers criticized the budget for not spending on adequate in-school safety measures, noting health impacts on employees during the pandemic including hospitalizations from the virus.

Read: Ontario’s 2020 budget highlights employer health tax, pension reviews

The province is also extending the wage enhancement for more than 147,000 personal-support services workers until June 30, 2021, and will continue to review the extension, the budget stated. It’s also proposing a 20 per cent top‐up to the 2021 tax credit for child-care access and relief from expenses, increasing support from $1,250 to $1,500, on average.

And in response to the pandemic’s uneven economic impact, the province is dedicating $117.3 million in targeted employment and training supports to assist women, racialized individuals, First Nations peoples, youth and people with disabilities.

Meanwhile, NDP Leader Andrea Horwath and CUPE Ontario President Fred Hahn called out the absence of a paid sick-day policy to protect employees as the province faces down a third wave. The federal government currently offers paid sick leave via its Canada Recovery Sickness Benefit program, but critics argue the process of applying and waiting for payments creates unnecessary barriers for employees to navigate during the ongoing coronavirus pandemic. In 2019, the provincial government eliminated a paid two-day entitlement and replaced it with three new unpaid leaves of absence, available to any Ontario employee regardless of the size of employer.

Read: Calls for Ontario to reinstate paid sick leave intensify amid lockdown

Read the full article at

Segregated Funds

Investments with guarantees - Segregated Funds

Updated August, 2021

Segregated funds were initially developed by the insurance industry to compete against mutual funds. Today, many mutual fund companies are in partnership with insurance companies to offer segregated funds to investors. Segregated funds offer some unique benefits not available to mutual funds sold by banks and other financial institutions.


The major benefits of Segregated Funds


  1. They offer a guarantee of principal upon maturity of the fund or upon the death of the investor. Thus, there is a 100 percent guarantee on the investment at maturity or death (this may differ for some funds), minus any withdrawals and management fees - even if the market value of the investment has declined. Most segregated funds have a maturity of 10 years after you initial investment.


  1. They offer creditor protection. If you go bankrupt, creditors cannot access your segregated fund.


  1. They avoid estate probate fees upon the death of the investor.


  1. They have a "freeze option" allowing investors to lock in investment gains and thereby increase their investment guarantee. This can be powerful strategy during volatile capital markets.


Seg FundsOther benefits of Segregated Funds


  1. They issue a T3 tax slip each year-end, which reports all gains or losses from purchases and redemption that were made by the investor. This makes calculating your taxes very easy.


  1. They can serve as an "in trust account," which is useful if you wish to give money to minor children, but with some strings attached.


  1. They allocate their annual distributions on the basis of how long an investor has invested in the fund during the year, not on the basis of the number of units outstanding. With mutual funds, an investor can invest in November and immediately incur a large tax bill when a capital gain distribution is declared at year-end.

There has been a lot of marketing and publicity surrounding segregated funds and how much value should be placed on their guarantee of principle protection. With major market downturns like 2008 that can wipe out your retirement savings instantly, having a principle guarantees on your investments looks pretty attractive. With stock market cycles and volatility, the odds of losing money after ten years are extremely high. If you decide you need a guarantee, it can cost as much as 1/2 percent per year in additional fees.

If you would like more information on protecting your retirement savings, please contact me.