TORONTO, Jan. 29 /CNW/ - The 2009 Federal Budget includes measures that
require businesses and individuals to address important changes related to
personal tax reductions, employment insurance, labour force initiatives,
federally-regulated pension plans and other actions that affect tax-assisted
savings, according to Towers Perrin, a global professional services firm.
These measures include:
Personal Tax Reductions
- Employers will need to update their payroll systems to reflect new
source-deduction rates as a result of changes to personal income tax
- For two years, the regular period for collecting EI unemployment
benefits will increase by five weeks. This extension does not apply
to other EI benefits, such as maternity or parental benefits.
Labour Force Initiatives
- Funding for the Targeted Initiative for Older Workers, which provides
assistance to older workers to find work in small communities, will
increase by $60 million. The scope of the program also will be
expanded to include cities with populations of up to 250,000.
- The government proposes to spend $50 million to support a common
approach to recognition of foreign credentials to improve the
integration of immigrants into the workforce.
Federally-Regulated Pension Plans
- Increased Solvency Smoothing Asset Values: Under current federal
rules for solvency valuations, plans are permitted to smooth asset
fluctuations over five years when determining cash contribution
requirements, provided the smoothed asset value does not exceed 110%
of market value. The budget proposes to increase the limit, thereby
reducing required cash contributions for many federally-regulated
pension plan sponsors. To the extent the cash contributions are
reduced, the assets of the plan sponsor would be subject to a
statutory lien in the event of bankruptcy.
Other Measures Affecting Tax-Assisted Savings
- Deposit Insurance for Tax-Free Savings Accounts (TFSAs): The budget
proposes to designate TFSAs as a separate category of deposits
guaranteed by the Canadian Deposit Insurance Corporation (CDIC) in
the event of a default of a member financial institution. The CDIC
has a cap of $100,000 per depositor, per institution, but the cap
applies separately to deposits held in each category recognized by
the CDIC (i.e., savings accounts, registered retirement savings plans
(RRSPs), registered retirement income funds (RRIFs), and now TFSAs).
About Towers Perrin
Towers Perrin is a global professional services firm that helps
organizations improve performance through effective people, risk and financial
management. The firm provides innovative solutions in the areas of human
capital strategy, program design and management, and in the areas of risk and
capital management, insurance and reinsurance intermediary services, and
actuarial consulting. More information is available at www.towersperrin.com.
For further information:
For further information: about implications of these and other human
resource-related measures, or to speak with Towers Perrin, please contact:
Andrea Anders, Ketchum on behalf of Towers Perrin, email@example.com,