The Canadian Life and Health Insurance Association is calling on the federal government to provide Canadians with access to more-secure retirement income.
In its submission to the 2021 federal budget, the CLHIA recommended that Canadians in and approaching retirement have access to flexible annuity options within registered pensions, registered retirement savings plans, registered retirement income funds and tax-free savings accounts.
This would include permitting stand-alone variable payment life annuities to pool participants from all registered retirement plans instead of only large defined contribution plans, as proposed in the 2019 budget. The association also recommended the government waive liquidity requirements in Canada’s TFSA rules to allow Canadians to use these accounts to supplement retirement savings.
The CLHIA said the changes are necessary to provide Canadians with increased financial security as the continued shift away from defined benefit plans places a growing onus on individuals to make sure they have sustainable retirement income. “Annuities are the best way to guarantee income for life, since they provide predictable income and longevity risk is transferred to insurers. . . . In addition, 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. Consumers should be permitted to waive this liquidity requirement, at least at older ages.”