Manulife IncomePlus funds (and the like) , and how it affects OAS, GIS?

hello,

my parents who are in their 60s are considering incomeplus (and the like, big insurance companies has their own). they heard that it is an efficient way to get fixed income and also get the maximum OAS/GIS compared to had they invested in Life annuities.

i'm not too experienced in this, does anyone have some insight?

after going through their site, http://www.manulifegifselect.ca/incomeplus/
they actually don't explain how it is tax efficient.

i had to dig a little deeper.
i believe the gist of it is, if you hold them in a rrsp account no matter what your withdrawals out of your rrsp will be taxable income.
however in a non registered account similar to series T mutual funds, you can elect to have it withdraw a certain percent every year as Return of capital which is tax deferred. it would be like giving you your own money back, there's no tax on that. however once the principle amount dries up the rest would be taxable.
if it's taxable it may affect oas, gis.

my first time hearing about this product and it looks interesting.
it's not too clear about how the fees and mer affect payout but i'm sure those will eat at your return.

because i'm meticulous with these things (heritage funds haha inside joke)
the mer on some of their funds are quite high... as well if you pick the riskier funds there's a higher fee.
Fund Fee Rates range from 0.35% to 0.85%, depending on the risk level of the Fund.
it's likely that if you select the option to receive return of capital that will increase MER.

conclusion
probably something to look in to.
the most attractive thing is the guaranteed 5% for life if you choose the payout at 65. it's unclear if fees are still charged.
definitely not for me but for someone seeking guaranteed income and planning to live past 85, it could be worth a look.

compared with life annuities same thing if it's in a rrsp, it'll be completely taxable
if it's in a non registered account only the interest portion will be taxable.
the interest would increase your income which could potentially reduce gis and oas payments.