Industry organizations are calling on the federal government to reduce or eliminate the RRIF mandatory minimum withdrawal requirements to help prevent Canadians from outliving their savings.
Both the Conference for Advanced Life Underwriting (CALU) and the Investment Industry Association of Canada (IIAC) are asking Ottawa to raise the age at which RRSPs must be converted to RRIFs, and at which RRIF mandatory minimum withdrawals begin, to 75. Currently, RRSPs must be converted to RRIFs at age 71, and mandatory minimum withdrawals begin the year after a RRIF is opened.
The recommendations were included in the groups’ submissions to the Department of Finance’s 2025 pre-budget consultation, which closed last month.
Forcing retirees to withdraw money from their tax-deferred retirement accounts in their early retirement years, when they may not need the funds, could leave them vulnerable in their later years.
“You may not be travelling as much [in later retirement], but health-care expenses become a paramount item that needs to be funded,” said Kevin Wark, tax advisor with CALU, in an interview.
In its submission, 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.”
CALU recommended the government reduce the minimum payment formula, allowing RRIF holders to keep more money in their plans, and establish a regular process for reviewing the factors used to calculate RRIF minimums.
The group also recommended allowing RRIF holders to exclude up to $170,000, indexed, from the application of the RRIF minimum payment formula until the retiree reaches age 85.
This change would align the RRIF minimum rules with those of the advanced life deferred annuity (ALDA), which allows Canadians to transfer 25%, up to a maximum of $170,000, from a registered account to an ALDA, the payments from which can be delayed until age 85.
CALU also recommended that unused RRSP contribution room be indexed annually.
The effects of inflation have left younger Canadians with less disposable income to make RRSP contributions, Wark said. Indexing unused RRSP contribution room would allow them to “potentially pick up more of their tax-deferred retirement savings” later in life as their financial circumstances change.
For its part, IIAC said the RRIF rules that compelled individuals to make mandatory minimum withdrawals did not reflect Canadians’ longer life expectancies and had become outdated.
Reducing or abolishing the mandatory minimums would allow Canadians to manage longevity risk at relatively little cost to the government, the group said.
“Eliminating the annual minimum withdrawals entirely would simply delay the government’s receipt of tax revenue — since RRIF withdrawals are considered taxable income — to either when the RRIF holder voluntarily takes out savings, or when the individual dies,” IIAC said.
CALU and IIAC are not the only groups to ask Ottawa to consider changes to the RRIF mandatory minimum withdrawal regime.
In its 2025 pre-budget submission, the Canadian Association of Retired Persons (CARP) recommended the government eliminate the mandatory RRIF minimum as part of a host of recommendations meant to address financial security.
“Key reforms are needed to provide Canadians with a secure and robust means of saving for retirement and ensuring their financial stability,” CARP said.
In an April 2023 report, William Robson and Alexandre Laurin of the C.D. Howe Institute argued that “ages at which [RRSP] saving must stop and [RRIF] withdrawals must start and accelerate should be higher.”
In addition, the government should consider eliminating mandatory withdrawals.
“Government impatience for revenue should not force holders of RRIFs and similar tax-deferred vehicles to deplete their nest eggs prematurely,” the report’s authors said.
Last year the Department of Finance tabled a report on RRIFs to the House of Commons in response to a motion passed by the chamber in 2022 asking it to study whether the mandatory minimum withdrawal rates continue to meet Canadians’ retirement income needs.
The report examined the age at which RRSPs must be converted to RRIFs, and whether the assumptions underlying the minimum withdrawal rates — an age expectancy of 100, 3% annual real return on an investment portfolio and 2% inflation — were still appropriate.
The report didn’t offer recommendations, but stated that “seniors deserve a dignified retirement free from worry.”
The government did not address RRIF minimums in either the 2023 fall economic statement or the 2024 federal budget.
However, as announced in this year’s budget, the government did launch a consultation about simplifying and modernizing the definition of “qualified investments,” which are those allowed in RRSPs, RRIFs and other registered plans.
As part of that consultation, the government asked stakeholders to consider whether updated rules should favour Canada-based investments and whether crypto-backed assets should continue to be considered qualified investments.
The consultation ended July 15.