The Investment Industry Association of Canada is calling on the federal government to make improvements to tax-assisted retirement savings programs, modernize the country’s employment insurance system and introduce a benefit training program.
In its written submission for the House of Commons standing committee on finance’s pre-budget consultations, the IIAC suggested the 2020 federal budget include increased scope for Canadians to accumulate savings in tax-assisted retirement programs, to meet the needs of aging individuals as they live longer but also for future out-of-pocket health-care costs.
“With Canadians living longer lives and investment returns expected to remain relatively low, there is a significant risk that Canadians run short of adequate savings for their retirement,” it said. “Without sufficient private-sourced resources, the funding problem will ultimately fall to the state.”
The IIAC recommended the government increase the allowable annual contribution to registered retirement savings plans and extend the deductibility of payroll taxes for contributions to group RRSPs, which would assist younger Canadians in saving for retirement. For self-employed Canadians, it noted they’d benefit from a larger annual RRSP contribution amount.
“The government should also increase the eligible age to make RRSP contributions beyond age 71, enabling older Canadians that work past normal retirement age, and other seniors, to supplement their private retirement savings.”
The letter also suggested the government modernize Canada’s employment insurance system, noting the pandemic exposed some long-standing issues. “Had it not been for the Canada Emergency Response Benefit, millions of Canadians would have been left without financial assistance during the pandemic because they did not have access to EI.
“Canada’s EI needs to be reformed and modernized to make the system more inclusive — one that accommodates self-employed and other nonstandard workers (e.g., temporary and part-time workers, gig workers) that are becoming more prevalent. A more inclusive system could help bridge incomes and support the recovery.”
In addition, the IIAC’s letter recommended the government introduce policy reforms, such as retraining programs to increase the resilience across Canada’s workforce. “Three million Canadians lost their jobs as the COVID-19 pandemic shuttered entire industries. While more than half of the jobs have come back, the labour market recovery will likely be uneven and protracted.”
It noted the Canada training benefit, which was announced in the 2019 budget 2019 can be tweaked to fit the current situation. “A strong upskilling and reskilling program would ensure Canadians remain connected to the labour force, especially displaced workers in sectors facing dismal post-pandemic recovery prospects.”