The Canadian Life and Health Insurance Association (CLHIA), an insurance industry lobby group, is calling on the federal government to bolster Canadians’ retirement readiness by enabling greater access to annuities, among other recommendations for the upcoming federal budget.
In a submission to federal finance minister, Bill Morneau, the CLHIA says the government should enhance the flexibility for both pension plan members and users of tax-assisted savings vehicles (RRSPs, TFSAs, and RRIFs) to buy into annuities.
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In its submission, the CLHIA argues that the impact of expanding the Canada Pension Plan won’t be felt for decades. “For many Canadian retirees,” it states, “there is an increasing need to convert some or all of the savings accumulated in their defined contribution pensions, RRSPs, RRIFs, [pooled retirement pension plans], and TFSAs into guaranteed lifetime income streams.”
To that end, the CLHIA calls on the government to tweak its rules to facilitate greater access to annuities: “We recommend the government review alternatives to allow Canadians to avoid undue risks from longevity and low investment yields and choose secure, guaranteed, lifetime incomes through the purchase of life annuities on a gradual basis, increase consumer flexibility for a range of guaranteed income options, and enhance the flexibility of TFSAs for retirees.”
Alongside its recommendations on the retirement savings system, the CLHIA is also calling on the government to reduce, or eliminate, the capital tax on financial institutions; to ensure that Canada remains competitive through both international trade deals and by ensuring that the tax regime is globally-competitive; it expresses support for government action to mitigate climate change; and, it calls for reform to prescription drug coverage.