The Portfolio Management Association of Canada (PMAC) today called for immediate synchronization of federal and provincial pension reform.
The industry association advocates transparency in taxes and is asking for the removal of geographic limits inhibiting retirement and pension investing.
“What we’re calling for is synchronization between the federal and provincial efforts to reform pension,” said Katie Walmsley, president of PMAC, an association of 140 portfolio management companies that represent a significant portion of the $2.4-trillion Canadian investment management sector. “I think we need to get back to basic principles of the fact that retirement savings are supposed to be sheltered.”
Walmsley also called into question the rationale behind the introduction of HST. “It is supposed to be a consumption tax, but I’d argue that there has been no consumption.”
“The HST is a prime example of how a consumption tax is at odds with wealth accumulation and retirement savings,” she said. “It hinders and negates the purpose of saving, particularly when an investor seeks external advice to diversify holdings to optimize investment returns.”
She urged federal and provincial governments to look more broadly at policies that are working at cross-purposes with Canadians trying to build their retirement savings.
“Canadians need some help, and they need some encouragement and support, so they’re calling on the federal and provincial governments to synchronize their efforts, look at some basic issues in tax policy that are hindering Canadians’ ability to save for retirement.”
“In light of the looming demographic reality of an aging population, and the economic events in the last decade that have detrimentally impacted the funding status of many pension plans and the asset base of retirement savings generally, it is incumbent upon government to ensure that new government policies do not diminish or curtail future saving,” said Walmsley.
Retirement savings options such as pensions and RRSPs—despite being principally tax sheltered—are being inadvertently affected by policies in the Income Tax Act, she added.
“Several provincial governments want input on how to handle the huge need for retirement savings, but many of the Acts—including the Pension Benefits Standards Act and the Income Tax Act—are the domain of federal jurisdiction.” She said understanding the complexities of the issue is imperative to a resolution.
“We understand there are a lot of departments, parties and stakeholders that have a vested interest in this issue and we are simply—and strongly—advocating for the left hand to know what the right hand is doing.”
In addition to PMAC’s primary mandate to advocate for high standards of practice within portfolio management firms, it is also actively involved in encouraging constructive regulatory policies in the interests of the underlying investors and their savings. This includes highlighting tax policies that work at odds with wealth accumulation, whether for pension plan participants, private clients, foundations or endowments.