Protection from "clawback", tax pre-paid savings plan,
increase in RRSP conversion age limit worthy of consideration
WINNIPEG, March 16 /CNW/ - The way Canadians invest and save for
retirement is due for a tune-up according to Debbie Ammeter, Vice-President of
Advanced Financial Planning for Investors Group.
Ammeter said that at least three proposals are worthy of consideration:
- excluding Registered Retirement Savings Plans and Registered
Retirement Income Funds from the calculation of Guaranteed Income
Supplement (GIS) clawbacks;
- implementation of a tax pre-paid savings plan; and,
- increasing in the age at which Canadians must convert their RRSP to a
"Investors Group research recently revealed that 56 per cent of working
Canadians felt they would not have enough money to live on if they retired
completely," Ammeter said. "Two-thirds of that group say their household
income is under $60,000 a year - it is clear that enhancements to the current
programs for saving for retirement are needed in the near future."
The tax pre-paid savings plan is one way to help lower income Canadians
put money away for their retirement, Ammeter says. Under the plan, proposed by
various groups in the recent past, Canadians would be able to contribute to a
retirement savings plan like an RRSP but without the accompanying tax deferral
benefit. However, the contributed funds and all investment growth realized
could, under certain conditions, be withdrawn tax free.
Ammeter also pointed to the clawback of the GIS as a disincentive for
lower income Canadians trying to save for retirement. She said she agrees
strongly with recent proposals that RRSPs and RRIF income should not be
included in the calculation of any clawbacks of government pension amounts.
The Investors Group Vice-President also said that the RRSP conversion age
should be increased by between 3 to 5 years in recognition of the emerging
"With Baby Boomers clearly planning more active and innovative
retirements, it is also time to reconsider the age limit at which an
individual is forced to convert and RRSP to an annuity or RRIF," Ammeter said.
"Canadians are living longer and a significant part of the Baby Boom
generation has indicated they will likely do some form of paid work after they
retire. Forcing RRSP conversion at age 69 certainly seems to be out of step
with the new retirement reality."
"Federal budget time is the appropriate time to make important changes
that will help Canadians build the retirement they are dreaming of," she said.
"I know the Investment Funds Institute of Canada have been urging the
government to make these kinds of changes and I think they are very much on
the right track."
Investors Group, founded in 1926, is a national leader in delivering
personalized financial solutions to Canadians through a network of over 3900
Consultants located throughout Canada. In addition to an exclusive family of
mutual funds and other investment vehicles, Investors Group offers a wide
range of insurance, securities, mortgage and banking services. Investors Group
is a member of the IGM Financial Inc. (TSX: IGM) group of companies. IGM
Financial is one of Canada's premier financial services companies with $121
billion in total assets under management.
For further information:
For further information: Ron Arnst, Investors Group, (204) 956-3364,
firstname.lastname@example.org; Laura Vallis, Environics Communications, (416)