Industry association calls on government to support private plans, expand TFSA and RRSP rules to allow annuities
The Canadian Life and Health Insurance Industry Association (CLHIA) is calling on Canada’s federal government to help protect Canadians’ health and wealth through access to medicines and enabling wider use of annuities.
In its 2021 Federal Budget Submission, the CLHIA called for Ottawa to work with the industry in providing all Canadians, regardless of where they live, with access to affordable prescription drugs. It maintained that there are three key elements that must be embodied in any reform to Canada’s prescription medication system:
- Protecting and enhancing existing benefit plans, which the CLHIA noted has “shown resilience” through COVID-19 as 98.5% of 26 million Canadians with extended health benefits in March 2020 still had coverage by end of December;
- Providing drug coverage for all, with federal, provincial, and territorial governments working together with private insurers to develop a standard list of medicines that all Canadians can access; and
- Ensuring affordability for consumers and taxpayers, particularly with an urgent request for the government to implement proposed reforms to the Patented Medicine Prices Review Board (PMPRB) without further delay.
“The Canadian life and health insurance industry strongly supports the federal [PMPRB] reforms which have been delayed several times due to COVID-19,” the CLHIA said, noting that the implementation date has been deferred until July. “We encourage the federal government to implement the proposed changes to the PMPRB July 1, 2021 with no further delays.”
The association praised the federal government’s strategy to increase access to high-cost drugs for rare diseases, with $500 million in federal funding being committed to that concern in Budget 2019. But it added that the government should develop a more far-reaching strategy that covers all catastrophic drug costs, including biologics, gene therapies, and other specialty drugs.
“Further meaningful reductions in prescription drug prices and improved access for all Canadians can be achieved today by working within our current system,” the CLHIA said.
The association also encouraged Ottawa to help Canadians get guaranteed retirement income security. Aside from putting off collecting their Old Age Security and CPP/QPP benefits, it said the ability to include life annuities that start at advanced ages within registered plans would enable Canadian investors to better manage their assets.
While it praised changes introduced in Budget 2019 to facilitate the use of Advanced Life Deferred Annuities (ADLAs) and Variable Payment Life Annuities (VPLAs) in certain pension plans, CLHIA noted that VPLAs will only be available to members of large defined-contribution pension plans under the proposed amendments.
“We believe that standalone VPLAs should be permitted to pool participants from all registered retirement plans to provide the broadest possible access for Canadians,” the CLHIA said.
The association also called for the government to relax liquidity requirements prohibiting life annuities from being held in TFSAs. As growing TFSA balances point to their increasing utility in retirement, the CLHIA argued that consumers, at least at older ages, should be allowed to waive the liquidity requirement.
“Canadians are using TFSAs to supplement retirement savings,” the association said. “These individuals should have the flexibility to secure their retirement through a guaranteed lifetime income from that plan.”
