The way Canadians invest and save for retirement is due for a tune-up according to Debbie Ammeter, vp advanced financial planning for Investors Group.

Ammeter said that at least three proposals are worthy of consideration: excluding RRSPs and RRIFs from the calculation of Guaranteed Income Supplement (GIS) clawbacks; implementation of a tax pre-paid savings plan; and, increasing in the age at which Canadians must convert their RRSP to a RRIF.

“Investors Group research recently revealed that 56% of working Canadians felt they would not have enough money to live on if they retired completely,” Ammeter said. “Two-thirds of that group say their household income is under $60,000 a year — it is clear that enhancements to the current programs for saving for retirement are needed in the near future.”

The tax pre-paid savings plan is one way to help lower income Canadians put money away for their retirement, Ammeter says. Under the plan, proposed by various groups in the recent past, Canadians would be able to contribute to a retirement savings plan like an RRSP but without the accompanying tax deferral benefit. However, the contributed funds and all investment growth realized could, under certain conditions, be withdrawn tax free.

Ammeter also pointed to the clawback of the GIS as a disincentive for lower income Canadians trying to save for retirement. She said she agrees strongly with recent proposals that RRSPs and RRIF income should not be included in the calculation of any clawbacks of government pension amounts.

Ammeter also said that the RRSP conversion age should be increased by between three to five years in recognition of the emerging retirement trends.

“With Baby Boomers clearly planning more active and innovative retirements, it is also time to reconsider the age limit at which an individual is forced to convert and RRSP to an annuity or RRIF,” Ammeter said. “Canadians are living longer and a significant part of the Baby Boom generation has indicated they will likely do some form of paid work after they retire. Forcing RRSP conversion at age 69 certainly seems to be out of step with the new retirement reality.”

“Federal budget time is the appropriate time to make important changes that will help Canadians build the retirement they are dreaming of,” she said. “I know the Investment Funds Institute of Canada have been urging the government to make these kinds of changes and I think they are very much on the right track.”