CARP calls for two year moratorium on mandated RRIF withdrawals

For immediate release
October 29, 2008

CARP CALLS FOR TWO YEAR MORATORIUM ON MANDATED RRIF WITHDRAWALS

TORONTO, ON: In a letter released today, CARP is calling on Finance Minister James Flaherty to place a two-year moratorium on mandated withdrawals from Registered Retirement Income funds [RRIFs] so that people are not forced to sell their stocks into this severely depressed market.

Current tax rules require people to withdraw fixed amounts from their RRIFs after reaching age 71 and many must sell their stocks to fund the tax payable on such withdrawals.

The situation is made worse by the precipitous drop in stock values and the fact that the amount to be withdrawn is calculated on January 1. So, not only are the savings depleted by the mandatory withdrawals, but with the reduced value, many more units must be withdrawn to meet the minimum withdrawal requirements and the retirement savings would be depleted at alarming rates. This compounds the anxiety that is already being felt as retirees watch their savings disappear before their eyes.

CARP has been inundated with calls from its members across the country who are looking for government action and see a moratorium on the mandated withdrawals as a measure of immediate relief.

“The politicians have been wringing their hands about what they can do to deal with the economic tsumani hitting all of us but here’s something they can do right away to give us some sense that they are sensitive to the issues that are confronting so many of us saying good bye to our retirement dreams”, said Dan Braniff, Founder, Common Front for Retirement Security, [CFRS] and Chair of the Georgian Bay Chapter of CARP.

The Air Canada Pionairs Pension Committee has started an email campaign encouraging its 6,000 members to demand that the issue of retirement security be a priority agenda item at the upcoming First Ministers meeting and has already received numerous responses in the first 24 hours, at least 129 of which demand the elimination of the mandatory RRIF withdrawals.

“The time for action now and our members are ready to make it clear that they expect immediate relief when their saving have fallen below what they need for their retirement” said Duane Frerichs, Spokesman for the Air Canada Pionairs

CARP has been on the record as calling for complete elimination of the mandatory RRIF withdrawal provisions because it forces people to draw down their tax deferred savings unnecessarily according to a rigid schedule rather than respecting their individual circumstances.

“CARP is prepared to endorse a two year moratorium as an immediate first step to deal with the current crisis faced by so many retirees across the country. It would at least take salt out of the wounds”, said Susan Eng, Vice President, Advocacy of CARP.

“Besides, the government would reap more taxes later if the market recovers and retirees have more assets to draw down and pay tax on”, added Eng.

CARP is a national, non-partisan, non-profit organization committed to advocating for a New Vision of Aging for Canada, social change that will bring financial security, equitable access to health care and freedom from discrimination. CARP seeks to ensure that the marketplace serves the needs and expectations of our generation and provides value-added benefits, products and services to our members. Through our network of chapters across Canada, CARP is dedicated to building a sense of community and shared values among our members in support of CARP’s mission.

For further information, please contact:

Pam Maher 416.363.2277 x. 235
Communications coordinator

Anne Gravel 416.363.2277 x. 230
Researcher, Policy Development

for
Susan Eng
Vice President Advocacy
CARP, A New Vision of Aging for Canada

Dan Braniff, Founder, Common Front for Retirement Security, [CFRS]
and Chair of the Georgian Bay Chapter of CARP.
519-363-2552

Duane Frerichs, Spokesman for the Air Canada Pionairs
905-877-5809
or visit our website: www.carp.ca