Closure of the BlackRock LifePath® Index 2020 Fund and Maturity of the BlackRock LifePath® Index 2025 Fund

Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the funds listed below, which are established as segregated funds in accordance with the Insurance Companies Act (Canada).

BlackRock Asset Management Canada Limited (BlackRock) has announced the upcoming closure of the BlackRock LifePath® Index 2020 Segregated Fund (LifePath® 2020 Fund) and the maturity of the BlackRock LifePath® Index 2025 Segregated Fund (LifePath® 2025 Fund).

Closure of the LifePath® 2020 Fund

As we communicated in October 2019, Sun Life will close and merge the LifePath® 2020 Fund into the BlackRock LifePath® Index Retirement Segregated Fund (LifePath® Retirement Fund) on December 4, 2024.

How will this affect your members?

On December 4, 2024, we’ll close the LifePath® 2020 Fund and transfer any money in the Fund to the LifePath® Retirement Fund.

When the changes happen, plan members will see a sale of the LifePath® 2020 Fund and the purchase of the LifePath® Retirement Fund in their accounts. This change won’t result in a taxable capital gain or loss for plan members if their money is invested in a registered plan.

Plan members with money in a non-registered plan will likely experience a capital gain or loss when we transfer the money to the replacement fund. The members must report capital gains in the year the transfer occurs. We’ve provided more information about how capital gains/losses are generated and their impact here. We recommend that your members talk with a tax professional for advice specific to their situation and taxable investments.

Maturity of the LifePath® 2025 Fund

What happens when LifePath® 2025 Fund reaches its year of maturity?

In general, when a LifePath® Fund reaches the year identified in its name, it will have reached its most conservative investment mix. This investment mix seeks to provide income and moderate long-term growth of capital for investors beginning to withdraw their money. At some point, BlackRock will automatically merge the maturing LifePath® fund into the LifePath® Retirement Fund.

The LifePath® 2025 Fund’s asset mix will stop evolving and will become identical to the LifePath® Retirement Fund in or around December 2024.

On November 20, 2024, plan sponsors who don’t already offer the BlackRock LifePath® Index Target Date series will no longer be able to add the LifePath® 2025 Fund to their line-ups. In addition, Sun Life will set up an automatic process to ensure that members invested in the LifePath® 2025 Fund will have their future contributions directed to the LifePath® Retirement Fund. After November 20, 2024, no member contributions will go into the LifePath® 2025 Fund.

 

The LifePath® 2025 Fund will close and merge into the LifePath® Retirement Fund in or around December 2029. This longer time period between the target date fund maturity and closure/merger into Retirement fund is consistent with the process for the LifePath® 2020 Fund.

Why does BlackRock wait up to 5 years between the maturity of the LifePath® 2025 Fund and its merger into the LifePath® Retirement Fund?

BlackRock opted to give plan members with money in the LifePath® 2025 Fund more flexibility/time for tax planning purposes. It’s particularly important for investors who hold the fund in a non-registered plans as the merger of a maturing target date fund into the Retirement fund currently constitutes a taxable event in Canada.

Summary of timeline of LifePath® 2025 Fund maturity

We’ll be closing the LifePath® 2025 Fund to new members on November 20, 2024. At that time:

• The LifePath® 2025 Fund will no longer be available for addition to plan sponsor lineups.
• The LifePath® 2025 Fund will no longer be available as a default fund.
• The LifePath® 2025 Fund will no longer receive new money (i.e. contributions or transfers-in).
• We’ll redirect Plan member contribution instructions for the LifePath® 2025 Fund to the LifePath® Retirement Fund.

Plan members can keep their money in the LifePath® 2025 Fund until December 2029, when it will merge into the LifePath® Retirement Fund. Alternatively, plan members can move their money in the LifePath® 2025 Fund to the LifePath® Retirement Fund (or any other LifePath® fund that fits their needs) any time before December 2029.

How will this affect you and your plan members?

You or your plan members don’t need to take any action at this time.

Plan members with money in the LifePath® 2025 Fund in a non-registered plan need to consider the tax impact the fund merger may have on their particular situation.

Closer to the merger date, we’ll provide you and your plan members with further information.

About the BlackRock LifePath® Index Target Date fund series

The BlackRock LifePath® Index Target Date funds series use a fund-of-funds approach to create a balanced asset mix. This means the LifePath® Funds invest in other funds, rather than directly in stocks or bonds. BlackRock doesn’t tactically manage the asset mix. BlackRock invests assets in passive, index-replication funds, providing exposure to various asset classes.

The series is available with target maturity dates in 5-year intervals (Retirement, 2025, 2030, 2035, 2040, 2045, 2050, 2055, 2060 and 2065). Members select the target date fund that most closely aligns with the year when they wish to retire. Each fund gets more conservative as it moves closer to its maturity date. At maturity, each fund moves into the Retirement fund.

About the BlackRock LifePath® Index Retirement Fund

The LifePath® Retirement Fund targets people currently near or in retirement. As such, it is seeking income and moderate long-term growth of capital. It holds a blend of investments that investors may find appropriate for retirement years. It invests approximately 40% of its assets in stocks and around 60% in bonds.

The LifePath® Retirement Fund is the most conservative fund in the LifePath® series of target date funds. It’s also the only LifePath® Fund that maintains a near-consistent investment mix over time.

Questions?

Please contact your Sun Life Group Retirement Services representative.