The Canadian Life and Health Insurance Association is calling on the federal government to permit standalone variable payment life annuities to pool participants from all registered retirement plans.
In its 2022 federal budget submission, the CLHIA said VPLAs, as enacted, will only be available to members of very large defined contribution pension plans, excluding Canadians who work for smaller employers or save for their retirement through group registered retirement savings plans or tax-free savings accounts.
Read: CAPSA developing multi-jurisdictional VPLA framework for DC pension plans
“While the government also enabled VPLAs within the pooled registered pension plans, this by itself will not allow Canadians to access VPLAs more broadly, as the accumulation levels in these plans don’t have the necessary scale,” said the CLHIA.
The submission also requested the waiving of liquidity requirements in TFSA rules to allow Canadians to use these accounts to supplement retirement savings. “As balances in TFSAs grow, they’ll become an increasingly useful source of retirement income, but the liquidity requirement of the TFSA rules prevents holding life annuities within TFSAs. . . . These individuals should have the flexibility to secure their retirement through a guaranteed lifetime income from that plan.”
In addition, the CLHIA recommended measures to increase Canadians’ access to prescription medications. These include the joint development — by the federal, provincial and territorial governments — of a standard list of medicines that all Canadians can access; reducing prescription drug prices through federal reforms, including those proposed by the Patented Medicine Prices Review Board; and ensuring any industry reforms protect the continued viability of benefits plans.
Read: CLHIA calling for flexible annuity options, changes to TFSA rules
“While a strategy for high-cost drugs for rare diseases is an important first step, it’s critical that the government develop a strategy which deals with all catastrophic drug costs, including biologics, gene therapies and other specialty drugs used to treat health conditions and [we] encourage the government to make funding available to all Canadians regardless of whether they access medicines through a public or private plan,” said the submission.