|
x
|
ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
FOR
THE FISCAL YEAR ENDED DECEMBER 31,
2006
|
|
p
|
TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
FOR
THE TRANSITION PERIOD FROM _______________ TO
_______________
|
|
Page(s)
|
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
3
|
|
FINANCIAL
STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2006
AND 2005:
|
|
|
Statements
of Net Assets Available for Benefits
|
4
|
|
Statements
of Changes in Net Assets Available for Benefits
|
5
|
|
Notes
to Financial Statements
|
6-11
|
|
SUPPLEMENTAL
SCHEDULE AS OF DECEMBER 31, 2006:
|
|
|
Form
5500, Schedule H, Part IV, Line 4i - Schedule of Assets (Held at
End of
Year)
|
12
|
|
SIGNATURES
|
13
|
|
INDEX
TO EXHIBITS
|
14
|
|
2006
|
2005
|
||
|
ASSETS:
|
|||
|
Participant-directed
investments, at fair value:
|
|||
|
Mutual
funds
|
$ 154,163,242
|
$ 120,700,166
|
|
|
Vanguard
Retirement Savings Trust III
|
50,803,693
|
51,156,328
|
|
|
Sun
Life Financial Inc. Stock Fund
|
6,788,663
|
5,941,287
|
|
|
Participant
loans
|
3,033,937
|
2,931,184
|
|
|
Cash
|
297,379
|
283,264
|
|
|
Total
investments
|
215,086,914
|
181,012,229
|
|
|
Contributions
receivable
|
249,824
|
292,900
|
|
|
NET
ASSETS AVAILABLE FOR BENEFITS AT FAIR VALUE
|
215,336,738
|
181,305,129
|
|
|
Adjustment
from fair value to contract value for stable value fund
|
488,866
|
674,630
|
|
|
NET
ASSETS AVAILABLE FOR BENEFITS
|
$ 215,825,604
|
$ 181,979,759
|
|
|
See
notes to financial statements.
|
|
2006
|
2005
|
||
|
ADDITIONS:
|
|||
|
Investment
activity:
|
|||
|
Net
appreciation in fair value of investments
|
$ 9,001,959
|
$ 3,111,390
|
|
|
Interest
|
2,405,007
|
2,007,814
|
|
|
Dividends
|
7,345,079
|
4,686,884
|
|
|
Total
investment activity
|
18,752,045
|
9,806,088
|
|
|
Contributions:
|
|||
|
Employer
|
16,636,625
|
4,801,336
|
|
|
Participants
|
16,313,621
|
13,660,181
|
|
|
Participant
rollovers
|
2,245,345
|
833,795
|
|
|
Total
contributions
|
35,195,591
|
19,295,312
|
|
|
|
|||
|
Total
additions
|
53,947,636
|
29,101,400
|
|
|
DEDUCTIONS:
|
|||
|
Benefits
paid to participants
|
19,952,855
|
14,042,715
|
|
|
Purchase
of annuity contract
|
148,936
|
0
|
|
|
Total
deductions
|
20,101,791
|
14,042,715
|
|
|
NET
INCREASE
|
33,845,845
|
15,058,685
|
|
|
NET
ASSETS AVAILABLE FOR BENEFITS:
|
|||
|
Beginning
of year
|
181,979,759
|
166,921,074
|
|
|
End
of year
|
$ 215,825,604
|
$
181,979,759
|
|
|
See
notes to financial statements.
|
|
1.
|
DESCRIPTION
OF THE PLAN
|
|
The
following brief description of the Sun Life Assurance Company of
Canada
(U.S.) United States Employees' Sun Advantage Savings and Investment
Plan
(the "Plan") is provided for general information purposes
only. Participants should refer to the Plan document for more
complete description of the Plan's provisions.
|
|
|
General
- The Plan was originally established on April 1, 1986 by Sun Life
Assurance Company of Canada (the "Corporation") for the benefit of
its
U.S. employees and the U.S. employees of its subsidiaries that elected
to
become participating employers under the Plan. The purpose of
the Plan is to permit eligible employees of the Corporation and
participating employers to defer and receive employer-matching
contributions in order to provide funds for employees in the event
of
death, disability, unemployment and retirement. Any employee,
21 years or older, is eligible to become a participant in the Plan
as soon
as administratively feasible after his or her first day of
employment. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974
("ERISA").
|
|
|
Effective
January 1, 2002, the Corporation transferred sponsorship of the United
States Employees' Sun Advantage Savings and Investment Plan to its
then
wholly-owned subsidiary Sun Life Assurance Company of Canada (U.S.)
(the
"Company" or "Plan Sponsor").
|
|
|
On
January 1, 2006 the Plan was amended and restated to establish a
Retirement Investment Account (“RIA”) for the participants of the Plan,
including certain participants of the United States Employees' Retirement
Income Plan ("Defined Benefit Plan") whose benefits under the Defined
Benefit Plan were frozen as of December 31, 2005. The
participants of the Plan will now have future additional employer
contributions made to the Plan as discussed below.
|
|
|
Contributions
- Once an employee becomes eligible to participate in the Plan, he
or she
may elect to become a participant by entering into a salary reduction
agreement. The agreement provides that the participant agrees
to accept a reduction in compensation in an amount equal to 1% to
60% of
his or her compensation. During 2002, the Plan adopted Age 50
Catch Up Contributions as a result of the Economic Growth and Tax
Relief
Reconciliation Act of 2001. Contributions are subject to
certain Internal Revenue Code ("IRC") limitations. Participants also
may
contribute amounts representing distributions from other qualified
defined
benefit or defined contribution plan.
|
|
|
Participating
employers contribute an amount equal to 50% of the first six percent
of
compensation that a participant contributes to the 401(k)
Plan.
|
|
|
The
Company also contributes to the RIA a percentage of participant’s eligible
compensation as determined per the following chart based on the sum
of the
participant’s age and service on January 1 of the applicable plan
year–
|
|
Age
Plus Service
|
Company
Contribution
|
|
Less
than 40
|
3%
|
|
At
least 40 but less than 55
|
5%
|
|
At
least 55
|
7%
|
|
For
RIA participants who are at least age 40 on January 1, 2006 and whose
age
plus service on January 1, 2006 equals or exceeds 45, the Company
also
contributes to the RIA from January 1, 2006 through December 31,
2015, a
percentage of the participant’s eligible compensation as determined per
the following chart based on the participant’s age and service on January
1, 2006 –
|
|
Service
|
||
|
Age
|
Less
than 5 years
|
5
or more years
|
|
At
least 40 but less than 43
|
3.0%
|
5.0%
|
|
At
least 43 but less than 45
|
3.5%
|
5.5%
|
|
At
least 45
|
4.5%
|
6.5%
|
|
For
RIA participants who did not become participants in the Defined Benefit
Plan before January 1, 2006, the company made a one-time RIA contribution
in January 2006 based on the applicable percentage from the first
chart
above as of January 1, 2006 and their eligible compensation paid
during
the period beginning on their hire date and ending on December 31,
2005.
|
|
|
Participant
Accounts - Individual accounts are maintained for each Plan
participant. Each participant's account is credited with the
participant's contribution, the participating employer's matching
contribution, and allocations of Plan earnings, and charged with
an
allocation of Plan losses and investment related
expenses. Allocations are based on participant earnings or
account balances, as defined in the Plan document. The benefit
to which a participant is entitled is the benefit that can be provided
from the participant's vested account.
|
|
|
Investments
- Participants direct the investment of their contributions
into various investment options offered by the
Plan. Participant selections of one or more of the investment
options must be in multiples of 1%. Participating employer matching
contributions are invested in accordance with participant investment
allocations. The Plan currently offers several mutual funds,
the Sun Life Financial Inc. Stock Fund (a party-in-interest), and
a stable
value fund as investment options for participants.
|
|
|
Vesting
- Participants are vested immediately in their contributions plus
actual
earnings thereon. Vesting in the participating employer's
contribution portion of their accounts is based on years of continuous
service. A participant vests at the rate of 20 percent per year
of credited service and is 100 percent vested after five years of
credited
service. A participant is fully vested in his or her share of the
participating employer contributions upon retirement at normal retirement
age or older, disability, or death, regardless of the length of
service.
|
|
Participant
Loans - A participant may borrow up to 50% of his or her
vested account balance with a minimum loan balance of $1,000 and
a maximum
loan balance of $50,000. Repayment is effected through payroll
deductions over a period of one to five years for non-mortgage loans
and
over a period of one to 15 years for mortgage loans. Loan
repayments are credited against investments, as allocated in the
participant's account. The loans are secured by the balance in
the participant's account and bear interest at local prevailing rates
at
the time funds are borrowed. At December 31, 2006 interest rates
range
from 4% to 9.5%. Maturity dates are through August 15,
2021.
|
|
|
Payment
of Benefits - The Plan provides for normal retirement
benefits to be paid to participants who have reached the age of
65. If the participant's service with the participating
employer terminates, other than by reason of retirement, the participant
may elect to receive his or her distribution following his or her
termination of employment. Distributions will be made in
installments or in a lump sum, except if the participant's account
balance
is $5,000 or less, in which case payment will only be made in a lump
sum.
|
|
|
Forfeitures
- In the event that a participant terminates service prior to completing
five years with the participating employer, the nonvested portion
of his
or her account will be forfeited. At December 31, 2006 and 2005
forfeited nonvested accounts totaled $1,069,269 and $1,591,380,
respectively. These accounts will be used to reduce future
participating employer matching contributions. Employer
contributions were reduced by $3,279,046 and $0 from forfeited nonvested
accounts for the years ended December 31, 2006 and 2005,
respectively.
|
|
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
|
Basis
of Accounting - The financial statements of the Plan are
prepared in accordance with accounting principles generally accepted
in
the United States of America.
|
|
|
Use
of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires the Plan Administrator to make estimates
and
assumptions that affect the reported amounts of net assets available
for
benefits and changes therein. Actual results could differ from
those estimates.
|
|
|
Risks
and Uncertainties - The Plan invests in various investment
instruments, including mutual funds, collective trusts, and
stocks. Investment securities in general, are exposed to
various risks, such as interest rate, credit, and market
risk. Due to the level of risk associated with certain
investments, it is reasonably possible that changes in the values
of
investments will occur in the near term and that such changes could
materially affect the amounts reported in the financial
statements.
|
|
Investment
Valuation and Income Recognition - The Plan's investments
are stated at fair value. Shares of mutual funds are valued at quoted
market prices which represent the net asset value of shares held
by the
Plan at year end. Common stock is valued at quoted market
prices. Common collective trust funds are stated at fair value
as determined by the issuer of the common collective trust funds
based on
the fair market value of the underlying investments. Common collective
trusts with underlying investments in investment contracts are valued
at
fair market value of the underlying investments and then adjusted
by the
issuer to contract value. Participant loans are stated at the
outstanding loan balances.
|
|
|
The
Vanguard Retirement Savings Trust III is a stable value
fund. The fund may invest in fixed interest insurance
investment contracts, money market funds, corporate and government
bonds,
mortgage-backed securities, bond funds, and other fixed income
securities. Participants may ordinarily direct the withdrawal
or transfer of all or a portion of their investment at contract
value. Contract value represents contributions made to the
fund, plus earnings, less participant withdrawals.
|
|
|
Purchases
and sales of securities are recorded on the trade-date
basis. Interest income is recorded on the accrual
basis. Dividends are recorded on the ex-dividend
date.
|
|
|
Management
fees and operating expenses charged to the Plan for investments in
mutual
funds are deducted from income earned on a daily basis and are not
separately reflected. Consequently, management fees and
operating expenses are reflected as a reduction of investment return
for
such investments.
|
|
|
Adoption
of New Accounting Guidance - The financial statements
reflect the retroactive adoption of Financial Accounting Standards
Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of
Fully Benefit-Responsive Contracts Held by Certain Investment Companies
Subject to the AICPA Investment Company Guide and Defined-Contribution
Health and Welfare and Pension Plans (the “FSP”). As
required by the FSP, the statements of net assets available for
benefits presents investment contracts at fair value with an
adjustment shown separately to adjust fully benefit-responsive contracts
from fair value to contract value. The statements of changes in net
assets available for benefits are presented on a contract value basis
and
were not affected by the adoption of the FSP. The adoption of the FSP
did not impact the amount of net assets available for benefits at
December 31, 2006 or 2005.
|
|
|
Payment
of Benefits - Benefit payments to participants are recorded
upon distribution.
|
|
|
Administrative
Expenses - Administrative expenses of the Plan are paid by
the Plan Sponsor.
|
|
|
Excess
Contributions Payable - The Plan is required to return
contributions received during the Plan year in excess of IRC
limits.
|
|
|
3.
|
PLAN
ADMINISTRATOR AND TRUSTEE
|
|
The
U.S. Benefit Plans Committee (the "Committee") is the named Plan
Administrator of the Plan. At December 31, 2006, the Committee
consisted of six members: Janet V. Whitehouse, Keith Gubbay,
Robert J. De Clercq, John T. Donnelly, Teresa A. Vellante Ham and
Michael
E. Shunney. State Street Bank and Trust Company is the named
Trustee of the Sun Life Assurance Company of Canada (U.S.) United
States
Employees' Sun Advantage Savings and Investment Trust.
|
|
|
4.
|
FEDERAL
INCOME TAX STATUS
|
|
The
Plan obtained its latest determination letter dated October 29, 2002,
in
which the Internal Revenue Service stated that the Plan and related
trust
as then designed were in compliance with the applicable regulations
of the
IRC. The Plan has been amended since receiving the
determination letter. However,
|
|
the
Committee believes that the Plan is currently designed and being
operated
in compliance with the applicable requirements of the
IRC. Therefore, no provision for income taxes has been included
in the Plan's financial
statements.
|
|
5.
|
PLAN
TERMINATION
|
|
Although
it has not expressed any intention to do so, the Company has the
right
under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions set forth in
ERISA. In the event that the Plan is terminated, participants
would become 100 percent vested in their
accounts.
|
|
6.
|
INVESTMENTS
|
|
The
Plan's investments that represented 5% or more of the Plan's net
assets
available for benefits as of December 31 were as
follows:
|
|
|
2006
|
2005
|
|
Mutual
funds:
|
||
|
MFS
Growth Opportunities Fund
|
$
12,355,104
|
$
14,395,652
|
|
MFS
Total Return Fund
|
16,401,768
|
16,475,123
|
|
Fidelity
Blue Chip Growth Fund
|
18,693,228
|
20,062,455
|
|
JP
Morgan Capital Growth Fund
|
13,688,431
|
13,482,996
|
|
Vanguard
500 Index Fund Admiral Shares
|
22,418,109
|
11,024,019
|
|
Fidelity
Advisor Diversified International Fund
|
11,982,673
|
|
|
Collective
trust:
|
||
|
Vanguard
Retirement Savings Trust III
|
50,803,693
|
51,156,328
|
|
During
2006 and 2005, the Plan's investments (including gains and losses
on
investments bought and sold, as well as held, during the year) appreciated
in value by $9,001,959 and $3,111,390, respectively, as
follows:
|
|
Fund
Name
|
Investment
Type
|
2006
|
2005
|
||
|
Vanguard
Retirement Savings Trust III
|
Stable
Value
|
$ 25,953
|
$ 3,487
|
||
|
Vanguard
Total Bond Market Index Admiral Shares
|
Fixed
Income
|
9,076
|
(44,676)
|
||
|
MFS
Government Securities Fund
|
Fixed
Income
|
(42,086)
|
(96,649)
|
||
|
MFS
High Income Fund
|
Fixed
Income
|
139,351
|
(293,476)
|
||
|
MFS
Total Return Fund
|
Balanced
|
843,580
|
(645,632)
|
||
|
T.
Rowe Price Equity Income Fund
|
Equity
|
712,711
|
(95,367)
|
||
|
Vanguard
500 Index Fund Admiral Shares
|
Equity
|
2,331,919
|
352,406
|
||
|
Selected
American Shares, Inc.
|
Equity
|
437,806
|
99,830
|
||
|
Massachusetts
Investors Trust
|
Equity
|
0
|
385,544
|
||
|
Fidelity
Blue Chip Growth Fund
|
Equity
|
494,743
|
681,980
|
||
|
MFS
Growth Opportunities Fund
|
Equity
|
748,589
|
99,912
|
||
|
T.
Rowe Price Mid-Cap Value Fund
|
Equity
|
418,123
|
57,035
|
||
|
JP
Morgan Capital Growth Fund
|
Equity
|
312,735
|
190,387
|
||
|
Fidelity
Low-Priced Stock Fund
|
Equity
|
487,847
|
84,002
|
||
|
Fidelity
Small Cap Stock Fund
|
Equity
|
45,393
|
34,703
|
||
|
Fidelity
Advisor Diversified International Fund
|
International
Equity
|
472,408
|
332,807
|
||
|
T.
Rowe Price International Stock Fund
|
International
Equity
|
1,225,586
|
1,058,505
|
||
|
Sun
Life Financial Inc. Stock Fund
|
Common
Stock
|
338,225
|
906,592
|
||
|
Total
|
$ 9,001,959
|
$
3,111,390
|
|
7.
|
EXEMPT
PARTY-IN-INTEREST
|
|
An
affiliate of the Plan Sponsor manages several mutual fund investment
options within the Plan. These investments include MFS Growth
Opportunities Fund, MFS High Income Fund, MFS Government Securities
Fund
and MFS Total Return Fund, each of which is an investment company
registered under the Investment Company Act of 1940. Investment
advisory
fees are paid from the funds to the affiliate.
|
|
|
At
December 31, 2006 and 2005, the Plan held 160,299 and 148,051 shares,
respectively, of common stock of Sun Life Financial Inc., an affiliate
of
the Plan Sponsor, with cost bases of $5,163,273 and $4,322,297,
respectively. During the years ended December 31, 2006 and
2005, the Plan recorded dividend income from such securities of
$117,616
and $78,478, respectively. These transactions qualified as
permitted party-in-interest transactions.
|
|
|
8.
|
RECONCILIATION
OF FINANCIAL STATEMENTS TO FORM 5500
|
|
The
following is a reconciliation of total investments per the financial
statements to the Form 5500 as of December 31, 2006 and
2005.
|
|
2006
|
2005
|
|||
|
Investments,
at fair value, per the financial statements
|
$ 215,086,914
|
$ 181,012,229
|
||
|
Adjustment
from fair value to contract value for stable
|
||||
|
value
fund
|
488,866
|
674,630
|
||
|
Total
investments per Form 5500
|
$ 215,575,780
|
$ 181,686,859
|
|
9.
|
SUBSEQUENT
EVENT
|
|
On
May 31, 2007 Sun Life Financial Inc. announced the completion
of its
acquisition of Genworth Financial, Inc.’s (“Genworth”) U.S. Employee
Benefits Group. Sun Life Financial Inc.’s U.S. group business, combined
with Genworth’s Employee Benefits Group, became Sun Life Financial
Employee Benefits Group, offering customers group life, disability,
dental
and stop-loss insurance. The employees of Genworth’s U.S. Employee
Benefits Group became employees of the Plan Sponsor and participants
in
the Plan with credit for their prior service in the Genworth
retirement
plan.
|
|
|
SUN
LIFE ASSURANCE COMPANY OF CANADA (U.S.)
|
|||||
|
UNITED
STATES EMPLOYEES' SUN ADVANTAGE
|
|||||
|
SAVINGS
AND INVESTMENT PLAN
|
|||||
|
FORM
5500, SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS (HELD AT
END OF
YEAR)
|
|||||
|
DECEMBER
31, 2006
|
|||||
|
(a)
|
(b)
Identity of Issue,
|
(c)
Description of Investment,
|
(d) Cost**
|
(e)
Current
|
|
|
Borrower,
Lessor
|
Including
Collateral, Rate
|
Value
|
|||
|
or
Similar Party
|
of
Interest, Maturity Date,
|
||||
|
Par
or Maturity Value
|
|||||
|
Vanguard
|
Retirement
Savings Trust III -
|
||||
|
51,292,559 shares
|
$
50,803,693
|
||||
|
Mutual
funds:
|
|||||
|
*
|
Massachusetts
Financial Services
|
MFS Growth Opportunities Fund -
|
|||
|
1,307,418.421
shares
|
12,355,104
|
||||
|
MFS High Income Fund -
|
|||||
|
1,398,115.385 shares
|
5,452,635
|
||||
|
MFS Government Securities Fund -
|
|||||
|
407,592.693
shares
|
3,843,599
|
||||
|
MFS Total Return Fund -
|
|||||
|
1,013,706.314 shares
|
16,401,768
|
||||
|
Fidelity
Investments
|
Fidelity Blue Chip Growth Fund -
|
||||
|
421,873.791
shares
|
18,693,228
|
||||
|
Fidelity Low-Priced Stock Fund -
|
|||||
|
174,556.120 shares
|
7,600,173
|
||||
|
Fidelity
Small Cap Value Fund -
|
|||||
|
288,445.622
shares
|
5,483,351
|
||||
|
Fidelity
Advisor Diversified International -
|
|||||
|
518,505.961
shares
|
11,982,673
|
||||
|
Vanguard
|
Vanguard 500 Index Fund
Admiral Shares -
|
||||
|
171,667.739 shares
|
22,418,109
|
||||
|
Vanguard Total Market Bond Index Fund
Admiral Shares -
|
|||||
|
667,287.645 shares
|
6,666,203
|
||||
|
JP
Morgan
|
JP Morgan Capital Growth Fund -
|
||||
|
341,783.552 shares
|
13,688,431
|
||||
|
T.
Rowe Price
|
International Stock Fund -
|
||||
|
625,069.383 shares
|
10,519,918
|
||||
|
Equity Income Fund -
|
|||||
|
230,203.938 shares
|
6,802,527
|
||||
|
Mid-Cap
Value Fund -
|
|||||
|
327,875.898
shares
|
8,334,603
|
||||
|
Selected
American Shares
|
Selected
American Shares -
|
||||
|
85,126.361
shares
|
3,920,920
|
||||
|
Total
mutual funds
|
154,163,242
|
||||
|
*
|
Sun
Life Financial
|
Sun
Life Financial Inc. Stock Fund -
|
|||
|
160,299
shares
|
6,788,663
|
||||
|
*
|
Plan
participants
|
Loans
to participants, secured by underlying
|
|||
|
participant
account balances, interest rates
|
|||||
|
from
4.00% to 9.50%, maturity dates through 2021
|
3,033,937
|
||||
|
Cash
- State Street Research Short Term
Investment Fund - 297,379 shares |
297,379 |
||||
|
Total
investments at fair value
|
215,086,914
|
||||
|
Adjustment
from fair value to contract value for stable value fund
|
488,866
|
||||
|
TOTAL
INVESTMENTS PER FORM 5500
|
$
215,575,780
|
||||
|
UNITED
STATES EMPLOYEES' SUN ADVANTAGE
|
|
|
SAVINGS
AND INVESTMENT PLAN
|
|
|
(Name of Plan)
|
|
|
By:
/s/ Janet V. Whitehouse
|
|
|
Janet
V. Whitehouse
|
|
|
Chairperson,
U.S. Benefit Plans Committee
|
|
|
Exhibit
Number
|
Description
|
|
23
|
Consent
of Independent Registered Public Accounting
Firm
|