The Investment Funds Institute of Canada is lobbying the Department of Finance to double RRSP contribution limits. IFIC has submitted a letter for consideration in the course of the Finance Departments pre-budget consultations.

The organization proposes that the current contribution limit be raised from 18% of $75,000 or earned income ($13,500) to 36% of $75,000 of earned income ($27,000), and then indexed accordingly. Increasing this limit would allow Canadians at all income levels to make increased contributions to their RRSPs, says IFIC, as well as bring Canada closer to the contribution limits in countries that are competing with Canada for skilled talent.

“Many Canadians have had to rely on self-directed ways to plan for their retirement,” says Tom Hockin, IFICÕs president and CEO. “Our aim is to ensure that there is an appropriate range of retirement savings options to help Canadians achieve a reasonable standard of living in retirement.”

IFIC also says it supports an effort to increase pension flexibility, as proposed by the conservative think tank, the C.D. Howe Institute. The alternative savings scheme, known as the Tax Prepaid Savings Plan does not give investors an RRSP-like upfront tax deduction. However, investment income grows tax free and, upon withdrawal at the age of 69, there are no tax consequences. IFIC says it supports this proposal because the TPSP complements the RRSP, enabling Canadians to choose the retirement savings scheme that best suits their financial situation.

“Raising RRSP limits and introducing TPSPs is essentially a matter of providing Canadian workers with more flexibility in planning for their retirement. It is a challenge worth pursuing as it can contribute quietly but materially to the quality of life for all Canadians,” says Hockin.