cheerful middle aged woman embracing disabled senior mother outdoors

Governments should enhance access to annuities, says insurance industry trade group the Canadian Life and Health Insurance Association Inc. (CLHIA) in a new report.

The CLHIA published a paper that argues in favour of new measures to facilitate the development of products that provide stable, long-term retirement income.

The report noted that the latest federal budget included measures to allow the use of annuity products — advanced life deferred annuities (ALDAs) and variable payment life annuities (VPLAs) — in certain retirement plans.

“These initiatives are an important first step, but without further reforms these options are likely to fall short of expectations,” it said.

In particular, the CLHIA is calling on the government to enable the use of annuities within tax-free savings accounts (TFSAs).

“Canadians should be permitted to elect to use their TFSAs to supplement retirement income savings via life annuities in the same tax-effective manner as for individuals who simply draw-down TFSA balances as a source of retirement funding,” it said.

And it called on governments to revise tax rules to allow VPLAs to pool participants from various registered plans.

Under current rules, it said that VPLAs will only be commercially viable for plans with at least 20,000 active members.

“We therefore recommend that the federal government expand on the proposed measure so that free-standing VPLAs are permitted to pool participants from all registered plans used to save for retirement,” it said.

Additionally, the report noted that provincial governments should introduce changes to their own legislation to conform with federal requirements.