Call to action to replace Sun Life Milestone Target Date Funds – Suggested for Removal designation and upcoming closure
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).
Action is required
Sun Life has put Milestone Target Date Funds under Suggested for Removal (most severe) category in the Watch List and will close the Funds next year, on December 1, 2027.
If your plan offers another TDF series, you may consider removing Milestone Funds from your plan and transferring the money to the alternative TDF series before December 2027.
If your plan(s) only offer Milestone Funds within Target Date, you may consider choosing another TDF series as the Milestone Funds’ replacement, then transferring the money to the replacement TDFs before December 2027.
If you wish to take any of the two actions above, you need to make this selection and inform Sun Life of your decision before February 26, 2027. Otherwise, Sun Life will close the Milestone funds on December 1, 2027 and move the assets to the SLF Granite target date funds automatically.
Sun Life Group Retirement Services (“GRS”) regularly reviews the Core investment platform in response to Client interest and evolving fund offerings in the market.
GRS Investment Solutions team has put Sun Life Milestone Target Date Segregated Funds (“Milestone Funds”) under the Suggested for Removal category (most severe category) on the Watch List. We made the decision due to the following considerations:
- Significant decline in assets (from $1.7 billion in 2017 to $419 million as of June 2026).
- Relatively lower historical returns and long-term return outlook compared to traditional Target Date Funds (“TDFs”).
In addition, Sun Life will close the Milestone Funds on December 1, 2027. We’ll continue to conduct governance activities on the Funds up until closure. We’ll provide more information about the closure in early or mid-2027.
We’ll provide the following support for you and your members for the transition from Milestone Funds to replacement TDFs:
- GRS Investment Solutions Executives (ISEs), your consultant or group plan advisor, support to provide recommendations for replacement appropriate for your plan(s).
- A sample of the member communication that includes a rationale for the change and the features and benefits of the replacement TDF is available here.
- Members also have access to Sun Life’s 360 Plan Advice, where they have access to one-to-one support through licensed financial services consultants that are dedicated to workplace savings plans, at no additional cost.
Rationale for closure
The Milestone Funds offer the unique Guaranteed Maturity Value (GMV) feature. To offer the GMV, the Milestone Funds must hold a lower allocation to equities and a higher allocation to bonds compared to the traditional Target Date Funds (TDFs) without the GMV.
A plan member must hold a Milestone fund until maturity in order to receive the GMV and are likely to earn a lower rate of return compared to traditional TDFs. This is due to the high allocations to bonds in in the Milestone Funds. As long as equities outperform bonds over the term to maturity, the Milestone Funds will not provide better member outcomes relative to traditional Target Date funds.
Sun Life launched the Milestone funds in 2005, when only a few Target Date options existed in Canada. Since then, many more Target Date options have become available. In addition, the market environment has changed. When the Milestone Funds were launched, interest rates were higher, so their expected long-term returns were greater. The low-interest rate environment over the past 10-15 years has adversely affected the Milestone Funds’ long-term return outlook. While interest rates have increased over the past few years, this won’t be of immediate benefit to the Milestone Funds and has been detrimental to performance in the short term.
Here’s a risk/return comparison of the various Target Date Funds on the platform.
Annualized Risk/Return - 5 Yrs Ending Jun 30, 2026
What does the Milestone Funds’ closure mean?
By closing Milestone Funds, Sun Life is accelerating the maturity of the Funds to 2027.
Sun Life may declare an Accelerated Maturity Date (AMD) if we determine it is in the best interests of plan sponsors and members to accelerate the Maturity Date of the fund.
In 2024, we wrote a Call to Action communication to plan sponsors and consultants to review and consider replacing the Funds with more traditional TDFs to ensure better member outcomes. Since the Call to Action, Milestone Funds’ assets continue to decline and we have determined that it is in the best interests of plan sponsors and members to accelerate the Maturity Date of the fund.
Accelerated Maturity Value (AMV)
Calculation of the AMV is the greater of:
- the Net Present Value (NPV) of the Guaranteed Maturity Value (GMV) of the Units (actuarial determination using the Prevailing Discount Rate), or
- the NAV (Market Value) per Unit on the Accelerated Maturity Date
If the NAV is greater than the NPV of the GMV, then the GMV has no value. As of July 2026, the NAV exceeded accelerated GMV in all cases. Thus, the Milestone Funds are fully covered.
Sun Life 2040 Milestone® Fund
What happens if you do nothing?
If we don’t receive any instruction from you by February 26, 2027 and your plan only offers Milestone Funds, we will move the money from Milestone TDFs to our default replacement options below on the closing date:
Closing funds |
|
|---|---|
Milestone 2030 |
Sun Life Guaranteed Daily Interest Account (“GDIA”) |
Milestone 2035 – 2060 |
Granite Target Date with the same maturity year (2035 – 2060) |
Your plan(s) may not currently offer the Granite Target Date Funds in the lineup. In that case, we’ll add the Granite Target Date Funds to your fund lineup in September 2027. The investment management fees for the replacement funds will be the same, or lower, than those for the closing funds.
If we don’t receive any instruction from you by February 26, 2027 and your plan offers another TDF series, we will move the money from Milestone TDFs to the other TDF series in your plan on the closing date:
Closing funds |
|
|---|---|
Milestone 2030 |
Sun Life Guaranteed Daily Interest Account (“GDIA”) |
Milestone 2035 – 2060 |
Alternative TDFs in your plan with the same maturity year (2035 – 2060) |
How will this impact your members?
On the closing date, we’ll automatically transfer any money remaining in – and any future contributions directed to – the Milestone Funds to the replacement options. When the change happens, your members will see a sale of the Milestone Funds and the purchase of the replacement options in their account(s). These transactions may result in a taxable capital gain or loss for your members invested in a Non-Registered plan.
We’ll send an email to members who hold the Milestone Funds at least 30 days before the closing date.
Plan members can also move their money to any other funds offered in the plan. They can do so at any time before the transfer automatically takes place.
Sun Life will provide the applicable tax slip(s) in early 2028. The tax slip(s) will reflect all income from your members’ Non-Registered investments.
For more information on how capital gains can occur in segregated funds within Non-Registered plans, please read the article here. Members can find their ACB on Plan Member Services website mysunlife.ca and selecting Check on Account > Balances.
Questions?
Please contact your Sun Life Group Retirement Services Representative.