The Securities and Investment Management Association is calling for sweeping reforms to Canada’s retirement-savings system, saying outdated policies and affordability challenges are leaving many Canadians unable to plan for their futures.
In a new report released Wednesday, the association said inflation, high housing costs and rising household debt are eroding the ability of Canadians to set aside money for retirement, while government policy has failed to keep pace with longer lifespans and shifting pension realities.
“Our plan lays out achievable, evidence-based strategies that will boost retirement security, enhance flexibility, reduce pressure on public programs, and support long-term economic growth,” said Andy Mitchell, SIMA’s president and CEO, in a statement. “Canada needs to modernize its policies to close the gaps in the system so that more Canadians can take advantage of voluntary private savings options.”
The association’s report, Canada’s Retirement Puzzle: Why Private Savings Must be at the Centre of Reform, outlines a three-pronged strategy centred on modernizing rules, levelling the playing field for savers, and making saving the default option in workplace plans.
Key recommendations include raising the age at which Canadians must convert RRSPs to RRIFs from 71 to 73, eliminating mandatory withdrawals for accounts worth less than $200,000, and removing GST and HST from investment fund management fees.
SIMA is also calling for greater access to financial advice, automatic workplace RRSP enrolment, and the integration of savings education into national financial literacy programs and school curricula.
Canada’s retirement income framework is based on a mix of public pensions, workplace plans, registered savings programs and personal investments. But the association noted private savings now make up nearly half of seniors’ income, making reforms urgent.
“Without action, the gap between what Canadians need for retirement and what they can realistically save will only widen,” SIMA warned.