TORONTO, Feb. 11 /CNW/ - Ottawa has an opportunity in the 2010 Federal Budget to improve retirement saving prospects for many Canadians, says William Robson, President and CEO of the C.D. Howe Institute. In a paper released today, "Cutting Through Pension Complexity: Easy Steps Forward for the 2010 Federal Budget," Robson outlines straightforward, no-regrets ways Ottawa can facilitate more saving and make cost-effective risk-pooling available to the majority of Canadians in defined-contribution (DC) plans and registered retirement savings plans (RRSPs).
Robson argues that pension reform in Canada is both over preoccupied with the defects of existing arrangements and at risk of bogging down with the complexity of root-and-branch reforms. Near-term changes to the Income Tax Act, he argues, could break the log-jam. Among them:
- More tax deferral room for DC/RRSP savers. Benchmarking to the
federal Public Service Plan would raise the RRSP contribution limit
from 18 percent to 34 percent of earned income; a proportional
increase in the maximum dollar amount would be from $22,000 to
- A later age than 71 at which people lose access to tax-deferred
saving and must start decumulating.
Further changes to the Income Tax Act would (i) make retirement-related services more readily available to employees of small organizations and to the self-employed, and (ii) allow Life Income Fund-style payments from inside DC plans. Such changes would foster a more robust third-pillar retirement saving system, concludes Robson.
For the study click here. http://www.cdhowe.org/pdf/backgrounder_126.pdf
SOURCE C.D. Howe Institute
For further information: For further information: William B.P. Robson, President and CEO, C.D. Howe Institute, (416) 865-1904