The federal government should ease access to annuities for investors who have RRSPs and TSFAs, cut taxes on financial services institutions and step up efforts to combat climate change, says the Canadian Life and Health Insurance Association Inc. (CLHIA) in its submission to the House of Commons Standing Committee on Finance on the next federal budget.
Specifically, CLHIA recommends that the government enable more flexible annuity options within registered pensions, RRSPs, RRIFs and TFSAs. The association also calls on the government to reduce or eliminate the capital tax on financial services institutions; and to make investments designed to mitigate the effects of climate change along with the insurance industry.
The ongoing shift to defined-contribution (DC) pension plans, RRSPs, RRIFs, PRPPs and TFSAs from defined-benefit (DB) pension plans places “undue onus on individuals to make sure they have sustainable retirement income. … New measures are needed to help Canadians attain guaranteed retirement income security,” the CLHIA’s submission states.
In particular, the CLHIA is calling for several changes in its submission designed to make it easier for investors to utilize annuities: “These options would allow individuals within tax-advantaged savings and retirement plans to ‘lock in’ guaranteed income streams at opportune times while adding no cost to the tax system, as those savings are already exempt from tax reporting until actually paid out of such plans. Tax costs associated with deferring payout are a reasonable trade-off for enhanced income security.”
In addition, the CLHIA argues in the submission that it’s time for the federal government to eliminate, or reduce, the capital tax on Canadian financial institutions. “Such clear government action would send an unequivocal message that capital accumulation by financial institutions to protect consumers is encouraged and supported,” the submission states.
Finally, the CLHIA’s submission notes that the investment industry supports government action to combat climate change, including measures to reduce greenhouse gas emissions and air pollution, and to protect land and water.