Rafferty – Pension File First Pillar of System
THUNDER BAY – POLITICS – This week I’d like to provide some information about the work I’ve been doing on the pension file, and an update on our economy that was presented by the Bank of Canada.
Prior to the Easter Break I tabled the second of a series of pension motions which are meant to address many of the issues and challenges that threaten the retirement security of Canadians. You may recall that I tabled the first motion a few weeks back to restore the retirement age to 65 from 67 years. That first motion addressed what many refer to as the ‘First Pillar’ of Canada’s pension and retirement system, namely universal public pensions like the Old Age Security (OAS), Canada Pension Plan (CPP), and Guaranteed Income Supplement (GIS). My goal is to propose ways to strengthen all three pillars – universal public pensions, private workplace pension plans, and private individual savings accounts – and this week’s motion addresses a key problem with the third pillar.
As suggested above, the third pillar predominantly refers to Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs), and my new motion calls upon the federal government to update the mandatory withdrawal schedule for RRIF account holders. When one contributes to an RRSP they deposit money into a savings account throughout their life and the money is ‘locked in’ until their retirement. At that time, the RRSP transforms into a RRIF and at age 71 the holder of the account must begin making mandatory annual withdrawals based upon a schedule that was established all the way back in 1992.
The problem with the RRIF withdrawal schedule (if you can call it that) is that people are living longer and if the schedule is followed then it is very likely that an account holder will run out savings by age 92. At that point, the person who had saved diligently throughout their life will see their quality of life decline at a delicate time through no fault of their own. My motion (M-595) calls upon the federal government to address this specific problem, and the wording is as follows;
“That, in the opinion of the House, the government should review the Registered Retirement Income Fund mandatory minimum withdrawal thresholds and amend them to ensure they do not unduly force seniors to exhaust their savings too quickly.”
I don’t believe that anyone who has saved for their own retirement should be forced to spend all of their savings before they want to or before they need to, so I am very hopeful the government will steal this idea and make the necessary changes to the RRIF schedule as soon as possible.
On a more downbeat note the Governor of the Bank of Canada provided his monthly review of Canada’s economy, and the news was terrible. In its report, the Bank downgraded its outlook for economic growth in the first quarter of 2015 – from the previous estimate of 1.9% down to 0% growth in the first three months of 2015. According to the report, indebted consumers are staying home in droves as retail sales declined by 1.8% in January and 1.4% in February. Manufacturing sales have also plummeted as sales were down 3.0% in January and another 1.7% in February.
Each day it is more and more obvious that our oil industry was the only sector keeping the Canadian economy afloat. The Harper Conservatives have said for years that low taxes and decreased government spending would lead to economic growth and prosperity. It hasn’t and instead is leading our economy into the ditch even as the US economy rebounds sharply under President Obama’s leadership. It’s clearly time for a change.
That’s it for this week, but next week will be a busy one as we will finally see our 2015-16 federal budget presentation. I am hopeful that we will see some new ideas and policies from this tired government to finally get the economy back on track, but if we don’t then New Democrats are prepared to present you with a plan of our own for the next four years in very short order.
John Rafferty MP
Thunder Bay Rainy River