The Association of Canadian Pension Management is calling on the federal government and capital accumulation plan sponsors to support members’ financial wellness by focusing on decumulation.
In a new white paper, the ACPM proposed the creation of a “retirement dashboard” that informs retirees of their available sources of retirement income — including government retirement benefits, employer-sponsored retirement programs and individual savings — and the estimated aggregate income from these sources.
It also recommended Canadian pension regulators provide industry guidance that directs CAP sponsors to assist plan members with decumulation through the use of modelling tools and best practices, as well as allowing members to establish retirement income investment plans for each portion of their retirement income stream. It also suggested that regulators develop guidelines to clarify how CAP sponsors and administrators can manage duties associated with offering group decumulation options.
In addition, the ACPM called for the unlocking, where such provisions exist, of variable benefit payments. Where applicable pension legislation doesn’t allow a one-time 50 per cent unlocking of defined contribution pension plan accounts, the white paper suggested that members be allowed to withdraw an annual bridge income amount equal to the annual maximum Canada and Quebec Pension Plan benefit, plus the maximum old-age security benefit, until age 70.
It also recommended that pension income splitting be permitted on retirement income received prior to age 65 from DC plans and all DC annuity payments, life income funds, registered retirement income funds, variable benefit payments and variable payment life annuities.
And the ACPM argued for changes to legislation governing pooled registered pension plans, including eliminating the requirement for employer participation and reducing administrative burden and costs, while allowing for the possibility of decumulation-only PRPPs.
“Creating current and future generations of financially secure and independent retirees is an important Canadian policy objective,” said the ACPM in a press release. “ACPM believes fulfilling the calls to action presented here will significantly assist in achieving that objective and looks forward to working with all interested stakeholders to advance these recommendations to continue to build and improve the Canadian retirement income system.”