Organization formerly IFIC wants to see reform of RRSP rules
Canada’s Securities and Investment Management Association (SIMA, formerly IFIC) is calling for reform of retirement savings policy to more closely align with modern living.
The association wants older Canadians to have more flexibility in the way they manage their savings including changes to the mandatory age limit for converting their RRSP to an RRIF or another income-generating option, which is currently 71. A proposal to raise this to 73 is proposed by the Conservatives if they win the election.
But SIMA wants policymakers to go further than raising the age limit, by removing the requirement for retirees to make withdrawals from their RRIFs if they have $200,000 or less saved (approximately 75% of RRIF holders), to provide better mitigation of market risk and protect savings for their long-term needs.
“Canada’s retirement savings policies are outdated and do not address today’s financial realities,” said Andy Mitchell, president and CEO, SIMA.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.”
SIMA says that those forced to take money out of their savings annually when they are not needed for living expenses means exposing them to unnecessary taxation which potentially depletes their retirement savings. Changing this could improve their financial resilience and security.
“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.”
There have been several reports over the past decade that highlight how the changing lifestyles of the aging population requires a rethink of how long-established retirement-related policies can be adapted to reflect increased life expectancy, the increasingly common delay in older Canadians giving up work, and a rising number of one person households.
