The Investment Funds Institute of Canada is calling on the federal government to improve Canadians’ incentive to save for retirement.

IFIC sent a letter to the House of Commons Standing Committee on Finance on Aug. 14 recommending the committee contemplate ways to improve incentives for retirement savings, and the tax treatment of those savings.

It calls on the committee to recommend that the government:

• allow pension income-splitting for registered retirement plans where holders are less than 65 years of age (as it is for pensions);

• reduce RRIF minimum withdrawals to reflect longer lifespans;

• eliminate the dividend gross-up from the ‘net income’ calculation for computing income-tested benefits for OAS and GIS;

• preserve the dividend tax credit when eligible dividends are paid to registered plans;

• allow $5,000 of net capital losses to be applied against all sources of income starting in 2009; and

• address what it calls “the unfair excise tax treatment” of group and individual RRSP savings.

“We are at a crossroads where many more people will be retiring and living in retirement than ever before. If we don’t choose a path that helps people provide more for their own retirement, they may have to rely more on government programs and future generations of taxpayers,” said IFIC president and CEO, Joanne De Laurentiis. “Canada has done a good job of balancing government, employer and personal responsibility for retirement savings and, as Canada’s demographics change, we’d like to see this fine balance preserved.”

IE