The Portfolio Management Association of Canada (PMAC) is calling on the federal government to include several key changes in the 2016 federal budget that the industry group argues will strengthen Canada’s pension and retirement regime.
“PMAC supports retirement savings and pension reform solutions that are national in application, targeted in scope and are aimed at strengthening our retirement income system, particularly where there are gaps that need to be addressed,” PMAC said in a letter to Finance Minister Bill Morneau as part of the government’s consultation process in the lead up to the 2016 federal budget.
In particular, PMAC is asking the federal Liberals to encourage the Ontario government to delay the implementation of the Ontario Retirement Pension Plan (ORPP) for at least a year. PMAC argues that the ORPP won’t adequately address the province’s retirement savings issues, and its introduction would also undermine the federal government’s own efforts to make changes to the Canada Pension Plan (CPP) program in concert with the provinces.
“If Ontario moves forward with ORPP implementation in 2017, we believe it is highly unlikely the Ontario government will support nor see the need to discuss any enhancements to CPP,” PMAC argues. “With a Jan. 1, 2017 implementation date for large Ontario employers, this does not allow the Federal government and provinces sufficient time to properly evaluate the options and implications for changes to CPP.”
Other recommendations include:
> Treating CPP contributions as tax deductions vs tax credits. “[This] would align the treatment of contributions with RRSPs and pension plans and would result in increased income which could be allocated to retirement savings or provide economic stimulus through consumer spending.”
> Increasing RRSP contribution limits by 20% to $30,000 from $24,930, “thereby allowing Canadians the opportunity to set aside more savings towards their retirement and earn sufficient returns.”
> Providing tax incentives to encourage pooled registered pension plans, including introducing a supplemental matching annual employer/employee retirement savings grant that would work similarly to the registered education savings plan’s grant structure.
> Offering incentives to Canadians to obtain professional investment advisory services and tax incentives to employers to encourage them to improve benefit levels and retirement plans.
> Eliminating the GST/HST on fees for managing retirement savings and pensions.
In addition to the possible retirement changes, PMAC also encouraged the federal government to continue to work with the provinces on establishing the co-operative capital markets regulator.
“PMAC has long advocated for a single common regulator and has consistently stated that the existing fragmented system is out of step with global standards and does not serve Canadian investors well,” the group argued.
Editor’s Note: For more insight on the upcoming federal budget see the Mid-February 2016 issue of Investment Executive.