Federal tax rules are preventing many Canadians—especially those in the private sector—from saving enough for retirement, according to a report released by the C.D. Howe Institute and co-authored by James Pierlot, a member of Benefits Canada’s online expert panel.

The report, Legal for Life: Why Canadians Need a Lifetime Retirement Saving Limit, says that workers relying on RRSPs cannot accumulate even half the retirement wealth of members of DB plans.

“Solving this ‘have’ and ‘have-not’ divide in the pension outlook for Canadians is becoming urgent,” says Pierlot.

The study examined contribution and benefit limits in “tax-assisted” DB plans, DC plans and RRSPs, and found that while members of DB plans can accumulate retirement savings worth as much as 60% of their total career incomes, tax rules are preventing RRSP and DC plan members from saving enough.

To remedy the issue, the authors propose that Canada’s annual, income-based tax limits on retirement saving be discarded and replaced with a uniform, inflation-indexed lifetime accumulation limit.

James Pierlot will cover this topic in more detail in an upcoming blog post.

Copyright © 2017 Transcontinental Media G.P. Originally published on benefitscanada.com

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