Hand putting Coins in glass jar with retro alarm clock for time to money saving for retirement
pinkomelet

The Securities and Investment Management Association (SIMA) is calling on federal parties to consider reforms to Canada’s retirement savings framework, saying it needs to be updated to reflect the current economic realities seniors are facing.

The industry organization (formerly the Investment Funds Institute of Canada) said it supports a Conservative policy proposal to raise the age at which Canadians must convert their registered retirement savings plan (RRSP) into a registered retirement income fund (RRIF) from 71 to 73. It’s calling on the other federal parties to consider the change. A federal election has been set for April 28.

SIMA is also urging the parties to consider eliminating mandatory withdrawals for those with $200,000 or less in their RRIFs, which it noted is roughly 75% of all RRIF account holders.

“We’re calling for these targeted reforms because Canada’s retirement savings framework has not really kept pace with today’s demographic and economic realities,” said Ian Bragg, vice-president of research and statistics with SIMA, in an interview Friday.

“Seniors are living longer, working later and facing higher living costs, yet current RRIF rules require them to convert their RRSPs by age 71, regardless of financial need or market conditions. And it’s a rigid system that really undermines long-term financial security for middle-income retirees.”

Currently, RRSPs must be converted to RRIFs at age 71, and minimum withdrawals must start in the year after a RRIF is opened.

Asked whether delaying the retirement savings withdrawal deadline by two years is sufficient, Bragg said it would be a “meaningful and pragmatic step” that aligns with seniors living longer and delaying retirement. He also said that RRIFs are meant to be tools for retirement income, not estate planning.

“While some advocates would suggest going further or eliminating mandatory withdrawals entirely, SIMA supports a balanced approach that improves flexibility without creating opportunities for Canadians to indefinitely defer taxes,” Bragg said.

Regarding SIMA’s proposal to exempt those with $200,000 or less in their RRIF accounts from mandatory withdrawals, Bragg said this is a “targeted but equitable” reform that focuses on middle-income retirees.

“It provides flexibility to the majority of RRIF holders, and it does avoid unintended benefits to high-net-worth individuals where deferral could be used more as estate planning and avoidance of any tax paying, and it limits the fiscal cost as large RRIFs are where the greatest tax deferral risks lie,” Bragg said.

SIMA has shared its recommendations with representatives of the major federal parties, and while Bragg said he couldn’t speak to the details of the conversations, “we believe there’s interest in the proposals,” he said.

Conservative Leader Pierre Poilievre recently announced proposals to support seniors, including delaying the deadline for withdrawing from RRSPs by two years. He also committed to keeping the retirement age at 65 for Old Age Security (OAS), Guaranteed Income Supplement (GIS) and Canada Pension Plan (CPP) benefits and pledged to allow working seniors to earn up to $34,000 tax free.

“Our seniors should not have to work. But they should not be punished when they choose to,” Poilievre said in a statement. “We should reward rather than punish work.”

The Liberal Party of Canada has made several retirement policy proposals too. This includes increasing the GIS for single seniors, working with the provinces to enhance the CPP, introducing a more flexible and accessible Employment Insurance Compassionate Care Benefit, and making new investment in affordable housing and seniors’ facilities.

Meanwhile, the NDP has proposed to boost supports for vulnerable Canadians, by doubling the Canada Disability Benefit and increasing GIS benefits to support seniors, among other pledges.

This is not the first time industry organizations have called for reforms to Canada’s retirement savings framework.

In September, the Conference for Advanced Life Underwriting (CALU) and the Investment Industry Association of Canada (IIAC) called on the federal government to reduce or eliminate the RRIF mandatory minimum withdrawal requirements to help prevent Canadians from outliving their savings.

At the time, in a submission to the Department of Finance’s 2025 pre-budget consultation, IIAC said, “Canadians should not have to deplete their savings prematurely — they should have the freedom and flexibility to manage their savings according to their individual circumstances and in the most tax-efficient manner.”

The exemption for mandatory withdrawals is especially relevant today given the heightened market volatility, Bragg said.

“It makes premature RRIF withdrawals even riskier,” he said. “The government actually acknowledged these issues through temporary RRIF relief in 2008, the financial crisis, and in 2020, the [Covid-19] market crash.”