In a joint pre-budget submission, Advocis and the Conference for Advanced Life Underwriting urged the federal government to make a strong commitment to debt reduction, to increase RRSP contribution limits, and to continue working at improving the current system of policyholder taxation for privately purchased life and health insurance products.

In their September 16, presentation to the House of Commons Finance Committee in Ottawa, Advocis and CALU recommended that the federal government commit to a strategy to reduce the actual amount of debt over the next decade, with any unused portion of the Contingency Reserve and any interest savings resulting from the reduction of the fixed rate portion of the federal debt allocated to debt reduction.

The groups recommended that for any given year, at least 25% and preferably 50% of the surplus should be allocated to debt reduction. “We need to reduce debt today so that funds will be available to meet the resulting future increased health care costs,” said Advocis president Steve Howard. .

Advocis and CALU continue to recommend that the annual RRSP contribution limit should increase to $27,000 and that the registered pension plan defined benefit be increased to $3,000 per year of service. They are also recommending that the age at which RRSPs must be annuitized, or converted to registered retirement income funds, should be raised to 71 from 69 and that consideration be given to raising this age to 73, given the increased life expectancies of Canadians.

“Our members have told us that, given the current low interest rate environment, it takes longer for their clients to accumulate capital,” said Howard. “Allowing an additional two to four years to accumulate capital may make the difference between a financially secure retirement or the need to rely on government programs for some lower income seniors.”

Finally, the two associations are recommending that the government continue to improve the system of insurance policyholder taxation to encourage Canadians to be self-reliant and to protect themselves from financial risks associated with death, disability, illness, and retirement. The submission notes that the existing tax regime was established 20 years ago and it simply did not contemplate the product developments that have occurred since then.

“We’re pleased to be part of this very necessary process of improving the current system,” said Howard. “Our goal is to work with the Department of Finance to ensure that the new regulations continue to meet the needs of all Canadians.”

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