While there’s more work to be done, election campaign promises made by Canada’s major federal political parties that address retirement challenges are a step in the right direction, says John McLaren, a group benefits and retirement consultant with Jones DesLauriers.
Earlier this month, Conservative Party of Canada leader Pierre Pollievre pledged to allow working seniors to earn up to $34,000 tax free, up from the current limit of $23,000. He has also pledged to maintain the starting age for Canada Pension Plan, old age security and guaranteed income supplement benefits at age 65, while allowing seniors to maintain registered retirement savings plans until age 73, up from age 71.
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An increase in tax-free employment income during retirement addresses the challenges of a lack of savings, while allowing seniors to maintain RRSPs longer could help mitigate longevity risk, says McLaren.
“We’re dealing with a lot of people working longer because they haven’t saved enough money to retire in the lifestyle [they want]. . . . Statistically, people are living longer in Canada and while retirement age is a tough [issue] to tackle, decumulation is part of it— if people are living longer, why are we forcing them to decumulate earlier?”
Meanwhile, the federal Liberal Party has pledged to maintain the starting age for OAS and GIS benefits at age 65, while increasing the GIS for single seniors and pledging to work with the provinces to enhance the CPP.
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“Any measures that offset and supplement those hard-working people or people who are on the lower quartile of the socio-economic spectrum is positive.”
While none of the major political parties’ platforms includes legislation to help younger workers to save more for retirement, automatic features such as auto-enrolment and auto-escalation could have a larger impact than any of the measures put forth by the parties.
“[These features are available] in the U.S. and it’s frustrating because [Canadian] employers want them it, but there are these barriers in the Employment Standards Act for something that’s very logical. If you have auto-enrolment, statistics show most people do not opt out and that’s a concrete way to address the problem.”