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CALU AppearS at House Finance Committee – Thursday, May 28, 2015

CALU appeared before the House of Commons Standing Committee on Finance (FINA) to participate in the Committee`s study concerning Bill C-59, An Act to implement certain provisions of the budget tabled in Parliament on April 21, 2015 and other measures.

On Thursday, May 28, 2015 in the time slot between 8:45 a.m.-10:15 a.m. EST, CALU Board member and Chair of the Government Relations Committee, Terry Zive (TO) represented CALU. He was accompanied by CALU Board Chair, Roger Thorpe (TO). The appearance took the format of delivering five minute introductory remarks, followed by the opportunity to respond to questions from Committee members. Click here for a copy of Terry’s speaker notes. Click here for CALU’s written submission based on the Association's 2015 pre-budget submission. 

CALU Pleased Federal Budget Takes Steps to
Update RRIF Minimums

RRIF minimum formula unchanged since 1992

On April 21, 2015, CALU announced its pleasure with today’s federal budget, which included steps to update the minimum withdrawal rules of Registered Retirement Income Funds (RRIFs). The RRIF minimum formula hasn’t been updated since 1992.

“The RRIF minimum withdrawal rules haven’t kept up with changes in life expectancy and interest rates,” said CALU Board member Clay Gillespie. “At a time when so many Canadians are deeply worried about outliving their personal savings, it’s reassuring to know the government is taking positive action to help seniors make their retirement savings last longer.” 

When the RRIF rules were created in the early 1990s, interest-paying investments were in the range of 6% to 8%, and the life expectancy from birth was in the mid-70s for men and 80 for women. Today, a five-year Government of Canada bond yields
1.5 per cent and people will live to an average 80 for males and 84 for females.

While Gillespie acknowledged that lower RRIF minimums might affect the government’s cash flow in the short term, the long-term impact would probably be revenue-neutral, and seniors would be less likely to run out of savings and turn to government assistance.

“Reviewing the RRIF withdrawal rules makes sense, both for the government and for seniors,” added Gillespie. “We are very encouraged by today’s announcement.”

CALU 2015 Pre-budget submission update

In recent months, CALU participated in the House of Commons Finance Committee (Finance Committee) 2015 pre-budget consultation process and made two recommendations:

  1. that the Federal government provide a tax incentive for the purchase of long term care insurance; and
  2. that the RRIF minimum formula be adjusted to account for lower interest rates and increased longevity.  

The House of Commons Finance Committee has now issued its final report as part of the 2015 pre-budget consultation process. We are pleased to announce that in the main report CALU is mentioned as a witness on two separate occasions and the above-noted two recommendations have been incorporated into one recommendation at the conclusion of the report (see item #11 on page 72 of the report). Click here to view the key highlights.

CALU is extremely pleased that the House Finance Committee has endorsed its recommendations to the Finance Minister and are hopeful that one or both recommendations will be reflected in the final 2015 federal budget.

See below for a copy of our pre-budget submission and accompanying information.

Our thanks to CALU board member Clay Gillespie who appeared as a witness before the Finance Committee to provide an overview of CLAU’s two recommendations and respond to questions by Committee members, as well as the members of the LTC Working Group and the RRIF Minimum Working Group for supporting the development of CALU’s submissions. 

CALU 2015 Pre-budget Submission

On June 6, 2014, the House of Commons Standing Committee on Finance launched its pre-budget consultation process, and invited Canadians to participate. Select individuals and organizations will be invited to appear as witnesses before the Committee and a report on the 2014 consultations will be tabled in the House of Commons prior to the December 2014 parliamentary adjournment. Suggestions made by Canadians and the pre-budget report compiled by the Committee will be considered by the Minister of Finance in the development of the 2015 federal budget.

As part of that process, CALU has made a submission to the House Finance Committee recommending that the current RRIF minimum formula be modified, and that a timetable be established to review the payout formula on a more regular basis, and that this new formula be extended to current RRIF holders. CALU is also recommending that a federal tax incentive be implemented to encourage Canadians to become more self-sufficient with respect to their long-term health care needs through the purchase of long term care insurance. We are also requesting to appear before the Committee to provide more details on our recommendations.

To view a copy of the CALU 2015 Pre-budget Submission please click here.

We have also included other background information and reports that have either been prepared by CALU or reviewed as part of the development of our submission.

RRIF Minimums

CALU  Resources

Industry Resources

Long Term Care

CALU Resources

Industry Resources