Thank you, Mr. Chair and committee members, for today's opportunity.
I'm Terry Zive and I appear before you today as a member of the CALU board of directors and the chair of CALU's government relations committee.
CALU and our sister organization Advocis represent approximately 11,000 insurance and financial advisers, who in turn provide financial advice to millions of Canadians. We're pleased to have this opportunity to comment on elements of the 2015 budget now contained in Bill C-59 that will assist Canadians as they retire and enter their ever-extending senior years. We would also like to comment on an additional proposal that CALU included as part of its pre-budget 2015 submission, which we hope will be given consideration during the 2016 budget process. It's never too early to start.
Demographically, we can all agree it is readily apparent that the boomer generation has had, and will continue to have, a significant socio-economic impact in Canada. Notably, the first boomers turned 65 years of age in 2011, and over the next 20 years, this group will expand the number of Canadians over the age of 65 to 23% of the population. As Canadians retire and age, two of their greatest concerns are receiving quality health care and the probability of outliving their personal savings. It is therefore critically important that all levels of government focus on encouraging Canadians to be more financially self-sufficient during their retirement years, and in doing so reduce their reliance on public programs and institutional support.
CALU is therefore very supportive of the reduction in the RRIF minimum factors announced in budget 2015 and now included in Bill C-59. These modifications, the first since the early 1990s, will help Canadians retain more of their savings and protect them from longevity risk. While CALU applauds the government for its action, we also strongly recommend the implementation of a regular review process of the payout factors, say every five years, to ensure that this important investment vehicle continues to provide the necessary financial support to aging Canadians when they need it most.
With a significant portion of the Canadian population moving into their retirement years, advancing age will drive the corresponding need for increased long-term care services. Last fall, the C.D. Howe Institute released a report that estimates that the total cost of long-term care will more than double to $140 billion over the next 20 years, leaving all of us to ask who will bear this additional cost.
The C.D. Howe report concluded that the provinces will need to shift more of the cost to those who can afford to pay. This will be an additional financial burden in retirement for which most Canadians are not currently planning. While we recognize and support the introduction of several long-term care initiatives in the 2015 budget, including the home accessibility tax credit and extending compassionate care benefits, we believe the looming funding crisis must be addressed with greater urgency.
CALU believes that long-term care insurance can play an important role in helping address this funding gap. Long-term care insurance provides a cash allowance to individuals who are unable to manage the activities of daily living. Greater ownership of this type of insurance coverage is critical to helping manage private costs associated with long-term care services. CALU therefore urges the federal government to continue to take a leadership position in preparing Canadians for what lies ahead. This can be achieved by: first of all, educating Canadians about their financial obligations relating to long-term care services; second, by working with the provinces to develop a more unified approach to determine who qualifies for subsidized access; and finally, by enacting the tax rules that will encourage more Canadians to own individual long-term care insurance.
Mr. Chair and committee members, I thank you for your time and attention. I'd be pleased to respond to any questions you might have.