CARP urges “hands off” strategy so seniors can gain better control of their savings and their lives

December 16, 2008

CARP urges “hands off” strategy so seniors can gain better control of their savings and their lives

CARP’s Detailed Pre Budget Consultation Submission to Finance Minister

TORONTO, ON: In an open letter to all Finance Ministers in advance of their meeting tomorrow, CARP enclosed its pre Budget Consultation Brief which offers a comprehensive strategy to relieve the deleterious effects the current economic and market crisis is having on older Canadians. The brief focuses on getting government out of their way so they can control their own lives and investments. CARP sent an open letter to all Finance Ministers enclosing the Brief.

People planning to retire have seen their retirement portfolios devastated. And those who have already reached retirement have taken a severe financial hit, with little chance to recoup the losses.

“These are people who have spent their lives contributing to the economy; we have a responsibility to contribute to their well-being when they most need it,” says Susan Eng, CARP’s Vice President of Advocacy.

In a poll of CARP members, over 2,400 people responded in one day as to their priorities. As the attached summary shows, CARP members chose infrastructure spending and investment in workers over the other priorities suggested by the federal Minister of Finance in his online consultation website. In addition, they overwhelmingly support the priorities in CARP’s Brief.

“These recommendations are not meant to be hand outs,” says Eng. “They’re meant to encourage governments to take their hands off and stop preventing older Canadians from:

managing their retirement incomes the way they want to,

having to retire when they can and want to work.

being recognized and supported for the $5 billion a year they provide in home care

The highlights of CARP’s brief include:

Eliminate Mandatory RRIF Withdrawals – suspend or eliminate the requirement to withdraw fixed amounts of Registered Retirement Income funds [RRIFs]. The 25% reduction in mandated withdrawals proposed in the November 27, 2008 Economic Statement was a step in the right direction but in the current economic climate, a full moratorium is needed to let owners of RRIF’s decide for themselves when they want to access fund and provide immediate relief for those already hard hit. The US House of Representatives recently passed the “Worker, Retiree, and Employer Act of 2008,” which provides for a one-year moratorium on required minimum distributions for 2009.

Unlock LIF’s – Permit full unlocking of Life Income Funds, allowing people to access their savings as they need them. This would eliminate the costs and bureaucracy of granting people access to their own money. Such a move would not cost the government and could, in fact, generate tax revenues as people begin spending this money.

Pension Reform and Summit – Follow the recommendations of the Ontario Expert Commission on Pensions and undertake pension reform that rebalances the rights and powers of the employers and the plan members. This includes contingency funding, bankruptcy protection and a governance role for plan members. Follow through with a Pension Summit to coordinate national pension reform efforts and ensure that knowledgeable representatives of retirees are included. It is not only time to pay attention to something that will affect all of us but it is also time for those most affected to have a seat at the table.