The Canadian Association of Retired Persons (CARP) has been calling on the government to waive mandatory RRIF withdrawals for years.
Once Canadians turn 71, they must convert their RRSPs to RRIFs and begin making mandatory withdrawals at a set rate. CARP believes seniors deserve to be in control of their retirement savings and has advocated for eliminating mandatory RRIF withdrawals entirely.
More than 3 in 4 CARP members support this change.
Recently, industry groups Investment Industry Association of Canada (IIAC) and Conference for Advanced Life Underwriting (CALU) requested that the age of mandatory minimum withdrawals begin at 75.
The industry groups and CARP all made requests for change to the current RRIF mandatory minimum withdrawals in submissions to the Department of Finance 2025 Pre-budget Consultation. You can read about budget submissions and read CARP’s full submission here.
Why Change Mandatory RRIF Withdrawal Rules?
When individuals are forced to draw down on their savings, they risk outliving their funds. This problem is compounded by lower rates of return, declines in personal savings rates, and reduced access to workplace pension plans. Many depend on their RRIF to provide sustained income throughout their later years.
After ongoing pressure from CARP, minimum withdrawals were relaxed in the 2015 federal budget to recognize that we’re living longer and rates of return on investments are lower than they were. In March 2020, the federal government reduced the minimum withdrawal rate by 25% for the year as a one-time response to COVID-19 in response to CARP’s vocal campaign. In 2021 they reverted back to pre-pandemic levels.
Reducing or abolishing the mandatory minimums would allow Canadians to manage longevity risk at relatively little cost to the government, IIAC notes.
“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.
In 2023, the Department of Finance provided 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 looked at 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.”
Bill VanGorder, Advocacy and Education Officer at CARP reflects, “We already know the mandatory RRIF withdrawals do not relate to financial realities of ageing Canadians. Now we need action. Key reforms are needed to provide Canadians with a secure and robust means of saving for retirement and ensuring their financial stability. We are pleased that other groups are highlighting this as an issue that needs addressing. As always, the message to the government will be heard more clearly when shared by more groups and voiced by more constituents.”
