Group Tax Free Savings Account (TFSA) for Telesat

Agenda

Background and Telesat HR policy

Your TFSA

Choosing your investments

Support

Next Steps

Telesat TFSA Background and Framework

BCE ESP ended November 1, 2007

Telesat elected to replace BCE ESP with a Group TFSA

BCE ESP participants who were contributing at the time that benefit ceased are eligible

Plan is non-contributory; optional contributions permitted

Telesat TFSA Background and Framework

Telesat contributions:

Equal to contribution level in BCE ESP at time benefit ended

Subject to achievement of EBITDA for previous year and active employment status at time Telesat contribution made to Group TFSA

Calculated based on period of active employment during previous calendar year

Taxable income reported on T4

TFSAs

"After" tax dollars

Contribution limit of $5,000 per year

Carried forward indefinitely

Tax-free growth

Contributions are not tax deductible

Withdrawals are tax-free

Annual Contribution Limit

All Canadians 18 or older get $5,000 annual TFSA contribution limit

Annual limit not tied to income

Annual limit increases based on inflation rate

Indexing is constantly applied to initial $5,000

Attribution rules on earned income do not apply

Contribution LimitsContribution Room Example/Carry Forward

Year

2009 Maximum contribution limitYour contributionCarry forward to 2010

$5,000- 3,000$2,000

2010 Maximum contribution limitCarry forward from 2009Your contributionCarry forward to 2011

$5,000+ 2,000- 4,000$3,000

2011 Maximum contribution limitCarry forward from 2010Your contributionCarry forward to 2012

$5,0003,000- 4,000$4,000

$7,000

$8,000

Re-Contribution Example

Year

2010 Account balance

Withdrawal

New account balance

$10,000

- 8,000

$2,000

2011 Account balance

Maximum contribution made

Re-contribution from 2010 made

New account balance

$2,000

5,000

8,000

$15,000

$13,000

TFSA vs. RRSP

TFSA RRSP

Contributions

"After" tax dollars Not tax deductible Don't need

employment earnings

"Before" tax dollars

Tax deductible Contributions

based on employment earnings

Earnings Exempt from tax Exempt from tax

Withdrawals Not considered income - exempt from tax

Don't reduce government benefits

Can re-contribute

Considered income – taxable

Reduce government benefits

Contribution room is lost

TFSA vs. RRSP

TFSA RRSP

Collateral for a loan

Can assign Cannot assign

Maximum age

Can contribute after age 71

Cannot contribute after age 71

Must be collapsed at age 71

At death Transfer to any beneficiary tax-free

Can transfer to spouse tax-free

Tax deducted if beneficiary is other than spouse

TFSA vs. RRSP Constant Marginal Tax Rate

TFSA vs RRSP constant tax rateTFSA: $5,000 annual contributionRRSP: $8,100 annual contribution

0 $

25 000 $

50 000 $

75 000 $

100 000 $

125 000 $

150 000 $

175 000 $

200 000 $

225 000 $

250 000 $

275 000 $

300 000 $

RRSP TFSA RRSP TFSA RRSP TFSA RRSP TFSA

5 years 10 years 15 years 20 years

Number of years

Acc

um

ula

ted

am

ou

nt

Tax payable

After tax net amount

no difference!

Contributions

You

OptionalUp to your limit

Transfers-in fromother plans

Your employer

Equivalent to employer contribution under BCE

ESP at time of termination of benefit

Not subject to employee contribution to Group

TFSA

Take Advantage of Your Plan

Employer contributions (not subject to employee contribution)

Convenient

No sales charges

Lower fees Admin fee – $5 a month Investment fees – 0.12% to 0.85%

Transfers-in from other plans permitted

Fees

1 2 3 4

Annual contribution $2,500 2,500 $5,000 $5,000

Annual rate of return 6% 7% 6% 7%

Account balance at retirement (age 65)

With $5 monthly fee $113,612 $126,793

$211,894 $236,856

With 0.65% mgmt fee $107,433 $118,704

$198,424 $219,553

$ Difference with $5 fee

+$6,179 + $8,089

+ $13,470

+ $17,303

% Difference with $5 fee

+ 5.8% + 6.8% + 6.8% + 7.9%

Assumptions Age at hire – 45 Initial balance – 0

Annual contribution - $5,000 Annual inflation – 2% Salary increase – 2.0%

Choosing Your Investments

Understanding Investing

Retu

rn

Risk

Money market

Fixed income

Equity

Balanced

Choosing Your Investments

Retu

rn

Risk

Retirement H

orizon

Age 35

Age 45

Age 55

Age 65

Choosing Your Investments

Determineyour

investor profile

Chooseyour

investments

Fill in thequestionnaire

Choosing Your Investments

Select your own combination of funds

Various investment options including 6 multi-management funds

Requires more investment knowledge and regular monitoring

Retu

rn

Risk

Fixed income

Equity

20/80

35/65

50/50

65/35

80/20

100

Multi-Management Funds

Fund Information – www.dfs.ca

Choosing Your Investments

Select a lifecycle path

Three lifecycle paths available

Based on your age and risk tolerance

Asset mix automatically changes, reducing risk over time

Select your own combination of funds

Various investment options including 6 multi-management funds

Requires more investment knowledge and regular monitoring

Determine Your Lifecycle Path

SecureModerate

SecurePath

Balanced Balanced Path

GrowthEnergetic

SpeculativeGrowth Path

Investor Profile Lifecycle Path

Select a Lifecycle Path

Your investor profile

Your age

Your path towards achievement of personal

financial objectives

Secure Path

As you age, the asset allocation of the path becomes more conservative

Support

Customer Care Centre

Human touch services

Specialized agents

Transactional services

Changes to your plan

Assistance on choice of investments

Participant Website

Array of tools to help you plan your future financial security

www.dfs.ca/participant

Simple and complete transactional services

Information on your account

Changes to your plan

On Target Retirement Planning Tool

Your Statement

Account summary

Asset allocation

Investment directions

Personalized rate of return

Available online

Your Next Steps

Read through your Setting Sail for the Future kit

Determine your investor profile, consult your financial advisor as appropriate and make your investment choices

Ask questions

Complete the enrolment form

Send the form to Telesat Human Resources by November 1st 2010.

Thank you!