Mr. Speaker, I want to thank my colleague from the riding of Oakville for sharing his time with me today. I am very honoured to stand to speak to Bill C-59.
I have made an attempt to speak to all of the budget bills that have come before us, whether at the time the policy is introduced or during the implementation bills. There are normally two. One is in the spring, after the budget has been presented in the House, to implement what is in the budget, and other measures. There is also, normally, an implementation bill in the fall, which I know will not happen this year because we will be out on the hustings, asking people to support us.
It is my pleasure to be here, particularly this year. Over the last number of years, I have been advocating with our finance minister and finance officials for changes to the RRIFs in terms of the minimum withdrawal. I did not come up with that on my own. I want to thank the over 40 individuals who came to my office over the last year or so to talk about the issue of the level of required withdrawals they had to make from their RRIFs. This is not an organized lobby. They are individuals and their families affected by the existing rules.
I also want to thank the member for West Vancouver—Sunshine Coast—Sea to Sky Country, who heard the same thing. We were very active with our colleagues on this side of the House on this issue, encouraging them to speak to the finance minister and financial officials about the possibility of looking at the withdrawal rate on RRIFs.
I was very excited to see that in this budget we have actually moved on it. Under the current system, the minimum withdrawal is 7.38%, and that will go down to 5.28%. Why is that important? Why did those 40 people come to see me, and what does it mean to them?
We have a couple of programs for retirement savings. We have the RRSP and RPP to encourage individuals to save for their retirement. Part of that encouragement is to give them tax relief for the amount of money they put away for their retirement.
A few years ago, the program required people to move that money from an RRSP, or the other savings program, into a registered retirement income fund. I believe the age for that was 68 or 69, but we moved it to 71, knowing that people had some more time and did not need the money that early. The fact is that people are living much longer than when this program was introduced decades ago. People need their retirement money to last longer. They need to be able to stretch it out to meet the needs they will have if they make into their 90s. Many of my constituents are making it into their 90s.
In my riding alone, the senior cohort is not only growing, it is actually the majority. That is over 55; it is not everyone over 71, However, that cohort is growing and moving forward and we need to be there now, making the changes now, so they can take advantage of it.
There is an excellent chart in the budget, which I would like to read into the record. Regarding the changes that we would make to RRIFs, or registered retirement income funds, let us look at the difference that it would make to an individual. Let us make the assumption, as the budget does, that it is $100,000. An 2% inflation rate is built into that, and the return on investment in their income fund is at 5%. Some will do better, some will do a little worse, but this is our chart.
At age 71, one would have $100,000. At age 80, under the existing rules, one would have $64,000 left, but under the new rules of this budget implementation legislation, it would be $77,000, a difference of 20%. This is a significant difference that those individuals could hold on to for the retirement funds that they need for basic living. Under the current rules, at age 85, it would be $47,000, which would go to $62,000. Many of my constituents are living into their nineties these days. At age 90, under the current rules, it would be $30,000. Under the new rules, it would be $44,000, and so on and so forth. It caps at $20,000 at 94 years of age.
This is important because people are getting older in all ridings in the country, not just mine. We expect individuals to save for their retirement. The other option is to look to governments to support everything, but it cannot afford it. The government will not have the tax base to support the growing bubble of retirees who are coming with the baby boom. We have tools for saving, whether that be the tax-free savings account, as previously mentioned, or the registered retirement savings plan, which encourage people to save for their retirement so they will have less reliance on government to support them.
However, what was happening in my riding, because of the minimum, at 7.38%; because of good planning, good strategy and my constituents working hard, understanding their future and saving money; they were being required to take money out, reducing the cash flow that they would need in the years to come.
In the past, we would think that someone 71 years old would have another decade and a half left here. However, people are living longer. Last year I lost a grandmother at 97 years old. I have a grandmother still with me who is 97 years old. I have had two grandfathers aged 89. I have known four great-grandparents. People are living longer, but I will let members know that it does not mean that I will be in this seat for another 40 years.