Federal tax rules are preventing Canadians without defined-benefit pension plans from saving enough for retirement, according to a C.D. Howe Institute report released this morning.
Legal for Life: Why Canadians Need a Lifetime Retirement Saving Limit contends that workers relying on RRSPs cannot accumulate even half the retirement wealth of career members of defined-benefit pension plans.
“The thesis is, essentially, the system is unfair,” said James Pierlot, co-author of the report and principal and lawyer with Pierlot Pension Law.
“You have this public sector and private sector divide where you have public sector workers retiring with very, very good pensions and private sector workers not.”
Pierlot’s report proposes changing a system that restricts RRSP contributions based on annual and income-based limits.
“What I’m proposing is, let’s get rid of those limits entirely so anybody at anytime can put as much as they want into an RRSP or a pension plan and they can deduct any amount they want in any year until they hit an accumulation of $2 million.”
Pierlot previously co-authored legislation, the Retirement Income Bill of Rights, which would have forced changes to tax laws to address the imbalance between Canadians with defined-benefit pension plans and those that lack them. That legislation, he said, made it through second reading last year before the May election.
“It was supported by all parties except the Conservative Party – which seems surprising since it’s very private sector-friendly.”
He said the federal government doesn’t appear to be paying attention to the topic.
Jenny Wagler
@JennyWagler_BIV