In a submission ahead of the 2008 federal budget, the Investment Funds Institute of Canada is calling on the federal government to help middle- and low-income Canadians address the issue of retirement security by encouraging savings both inside and outside RRSPs.

In its submission to the House of Commons Standing Committee on Finance, IFIC also suggests that the committee may want to consider recommending to government that a special task force be set up to examine retirement issues and identify solutions.

“It is essential for the Government of Canada to ensure that the ‘baby boomers’ have sufficient savings so as not become a burden on the state when they retire and thereby impair the growth of the Canadian economy,” IFIC president & CEO, Joanne De Laurentiis, said in the submission.

Recommendations made by IFIC include:

  • keeping the promise to eliminate (defer) capital gains tax;
  • implement a Tax Pre-Paid Savings Plan in which contributions would not be tax deductible, nor would withdrawals be taxed;
  • adjust the GIS clawback mechanism to provide reasonable marginal tax rates; exclude income from RRSPs and RRIFs from the GIS clawback;
  • increase the maximum annual RRSP contribution limits to $32,000 by 2010;
  • allow the preferred tax treatment of capital gains and dividends within an RRSP; and
  • allow income from a RRIF to be eligible for the pension income tax credit and pension splitting below the age of 65.