| |
|
|
Recommendations
Please note that this summary of the recommendations should be read in the context of the reasoning presented in the body of the report. For an indication of the appropriate section of the report, please see the page number at the end of the recommendation.
| Recommendation 1 |
The federal government retain the annual registered retirement savings plan contribution limit of 18 per cent of earned income, to a maximum dollar amount – currently $22,000 – that is indexed to growth in the average wage. Moreover, the existing ability to carry forward unused registered retirement savings plan contribution room should continue.
As well, the government should take actions to encourage multi-employer pension plans, including registered retirement savings plan arrangements. Such arrangements should facilitate employer contributions on an employee's behalf. Employer contributions should be locked in for retirement purposes until the employee retires. (page 23)
|
| Recommendation 2 |
The federal government make the necessary legislative amendments to ensure that, while remaining taxable, withdrawals from registered retirement savings plans have no impact on eligibility for, or the amount of, federal income-tested benefits and tax credits. (page 26)
|
| Recommendation 3 |
The federal government amend the Income Tax Act to permit contributions to registered retirement savings plans to be made until age 75, at which time contributions and accumulated returns should be used to purchase annuities or converted to registered retirement income funds. The increase from age 71 to age 75 should be phased in over an eight-year period.
Moreover, the government should annually review the current schedule of minimum withdrawal rates from registered retirement income funds in order to ensure that it is appropriate, and should immediately make any changes that are needed.
(page 30)
|
| Recommendation 4 |
The federal government amend the Income Tax Act to establish, in addition to the existing annual contribution room, an amount for lifetime contributions to a Tax-Free Savings Account. The amount of the lifetime contribution room, which should be increased annually in accordance with changes in the Consumer Price Index, should initially be $100,000.
Moreover, the existing ability to carry forward unused annual Tax-Free Savings Account contribution room should continue. (page 42)
|
| Recommendation 5 |
The federal government, with the provinces and territories as well as relevant stakeholder groups, develop financial education materials that are appropriate for a range of ages and situations as well as available in various formats. These materials should be widely distributed to Canadians.
Moreover, the government should expand the mandate of, and provide appropriate resources to, the Financial Consumer Agency of Canada in order to enable it to monitor and undertake an oversight and public education role in respect of: a) the conduct of investment advisers and managers; b) any real or perceived conflicts of interest by investment advisers and managers; c) the fees charged by those in the investment industry; and d) the relationship between fees and investment performance.
The annual report of the Financial Consumer Agency of Canada should include information on, and relevant findings and recommendations about, the issues noted above. (page 53)
|
| Recommendation 6 |
The federal government work with the provinces and territories to establish a Canada-wide voluntary plan to encourage adequate retirement saving by Canadians and to enable them to benefit from the lower fees and shared risk that may result from membership in a group.
In developing this plan, the following design principles should be respected:
- the inclusion in the plan of a limited number of professionally managed retirement funds that vary in their investment objectives and consequently their fee structures and the investment vehicles they hold;
- a commitment to clarity, simplicity, efficiency, cost-effectiveness and low fees;
- the establishment of a set of criteria, including the proposed fee structure and a commitment to avoidance of real and perceived conflicts of interest, for the selection of fund managers;
- the development of a competitive process for the selection of fund managers;
- auto-enrolment of all individuals aged 18 years or older in the plan, with the possibility of opting out;
- the ability to have contributions to the fund(s) of the individual's choice eligible for consideration as registered retirement savings plan and Tax-Free Savings Account contributions, consistent with the limits to those vehicles as they may exist from time to time;
- the ability of employers to make contributions to the fund(s) of their employee's choice, with these contributions locked in until the employee's retirement;
- a minimum notification period to be met by contributors before they are able to make withdrawals from their fund(s); and
- impartial and professional guidance about which fund is preferable for contributors of varying ages, levels of income, savings goals and other characteristics. (page 58)
|
|
|
