SIMA calls for greater financial flexibility for seniors

TORONTO, April 4, 2025 /CNW/ - The Securities and Investment Management Association (SIMA) welcomes the recent public-policy discussion about retirement savings strategies that would provide seniors with more financial flexibility as they age. More Canadians are working into their later 60s and 70s, highlighting the need to modernize policies. At the same time, updating retirement savings rules is essential to help seniors manage their savings to better match longer lifespans.

SIMA supports the proposal to raise the age (from 71 to 73) at which Canadians must convert their registered retirement savings plan (RRSP) into a registered retirement income fund (RRIF) to give seniors more time to grow their savings. Additionally, SIMA proposes another related policy change: eliminating mandatory withdrawals for those with $200,000 or less in their RRIFs to provide seniors with much-needed flexibility.

"Canada's retirement savings policies are outdated and do not address today's financial realities," said Andy Mitchell, President and CEO, SIMA. "In this challenging economic environment, the federal government should offer seniors more financial flexibility so they can maximize their saving potential. Inflation, tariffs, and rising healthcare costs are making life increasingly expensive for all Canadians, especially seniors. In addition to the proposal to increase the RRSP conversion age, eliminating mandatory withdrawals for those with RRIFs under $200,000 would provide seniors with an opportunity to better manage market risk and protect their nest eggs to meet long-term needs." 

Why more flexibility is needed
Current rules require mandatory withdrawals from an investor's RRIF the year following the opening of their account, even if not required for living expenses. These forced withdrawals expose savings to unnecessary taxation, potentially accelerating the depletion of retirement funds.

Allowing flexibility for RRIF holders with balances of $200,000 or less means that seniors could:

• make withdrawals based on long-term financial needs,
• better manage market volatility and avoid selling investments during financial downturns, and
• ensure savings last longer to increase financial security and resilience in retirement.

Given that approximately 75 per cent of RRIF holders have balances of $200,000 or less, this reform would provide meaningful relief and flexibility for seniors.

"Canadians should not be forced to withdraw their savings at a pace that does not reflect their needs or market conditions," said Mitchell. "We urge all federal parties to consider this practical, targeted reform as well as the proposed increase in RRSP conversion age."

About SIMA
The Securities and Investment Management Association empowers Canada's investment industry. The association, formerly the Investment Funds Institute of Canada (IFIC), is now the leading voice for the securities and investment management industry, which oversees approximately $4 trillion in assets for over 20 million investors and the Canadian capital markets. Our members—including investment fund managers, investment and mutual fund dealers, capital markets participants, and professional service providers—are committed to creating a resilient, innovative investment sector that fuels long-term economic growth and creates opportunities for all Canadians.

SOURCE Securities and Investment Management Association

For more information: Christine Harminc, Senior Manager, Communications and Public Affairs, [email protected], 416-309-2313