The Investment Funds Institute of Canada is petitioning provincial treasurers and Ottawa to give Canadians flexibility when saving for their retirement.

IFIC’s proposal applies to locked-in retirement income funds and life income funds. It would give Canadians the opportunity to choose whether to use the principal amount of their retirement account from the year ending in 2001, or to use the average year-end balance for the last three, four or five-years.

LRIFs and LIFs limit the amount a Canadian can withdraw from their principal each year for their retirement. The proposed regime would apply only to retired Canadians over the age of 69.

According to IFIC, the latter, fairer option to use an average is in-line with what actuaries use for pension funding, and the regime would impose a maximum rule based on average achieved, as is the case with all LRIFs or LIFs.

In a speech this week to the Independent Financial Brokers of Canada, IFIC president and CEO Hockin spoke on the necessity of the proposed regime.

“Due to the capricious nature of our market right now, we’re aiming to help retired Canadians achieve flexibility in their retirement years. This is an important measure to ensure that they can meet their financial obligations in the year ahead,” said Hockin.

Hockin argued that not providing either of these options could significantly affect incomes for 2002 and mean that financial resources could fall short of entrenched obligations for expenditure such as rent or medicine, since principal may have decreased substantially during the last year and a half due to market volatility.

“The market is cyclical and retired Canadians deserve to have access to their principal or a fairer average on which to base their LIF or LRIF. This is a challenge worth pursuing as it can contribute quietly but materially, to the quality of life for retired Canadians.”