Federal budget to benefit seniors, including relaxation of RRIF rules

Below is an article published in the Globe and Mail on April 17, 2015. Click here to read the article and more similar content.

Tuesday’s federal budget will include a package of measures aimed at Canadian seniors, including a relaxation of the existing rules that force seniors to withdraw minimum amounts from their registered retirement savings.

The Globe has learned that the Conservative budget will have a significant focus on addressing the concerns of seniors, a segment of the population that tends to be more politically engaged and is more likely to turn out at the ballot box in the October federal election.

The budget is expected to address concerns that the current formula requiring seniors to withdraw minimum amounts from the Registered Retirement Income Funds is too rigid.

Existing rules require Canadians to convert their Registered Retirement Savings Plans into a Registered Retirement Income Fund by age 71 at the latest.

At that point, Canadians can no longer contribute money to the RRIF but they can continue to invest the money in the same way as an RRSP.

However there are rules that require a minimum annual withdrawal based on either an individual’s age or the age of their spouse.

The seniors advocacy group CARP is supportive of both the increase in TFSA limits and changes to the RRIF rules.

“For our members, it matters, especially if they lost big in 2008,” said Susan Eng, vice-president of advocacy for CARP.

Ms. Eng said her organization’s preference would be to get rid of the RRIF rules altogether, but a softening of the withdrawal rates would be an improvement over the status quo.

At a time of growing concern over voter turnout, older Canadians are consistently more likely than younger Canadians to cast a ballot.

For the 2011 election, only 39 per cent of voters aged 18 to 24 turned out to vote.

In contrast, 72 per cent of Canadians aged 55 to 64 turned out and 75 per cent of voters aged 65 to 74 cast ballots. Voter turnout among those aged 75 and older was lower, at 60 per cent.