Mr. Speaker, I am pleased to join the debate in support of the private member's bill put forward by my colleague from Edmonton West. This legislation would amend for tax purposes how retirement savings plans and RRIFs are treated.
I should mention my colleague's great work as the former president of Vancouver Island's largest hospital foundation. This foundation is responsible for six hospitals. My colleague speaks from great experience with respect to what seniors need and their care and the type of retirement savings they should have.
RRSPs and the RRIF program presently mandate that a mandatory percentage be withdrawn when one reaches the age of 71. Over time that percentage will keep going up to something close to 20%. It is easy to see how people who have done the right thing for a good part of their lives, which is put money aside, are then put into a situation where they might be forced by government edict to take more out of their retirement savings than they would like to take out and wind up depending on the government for financing through OAS and GIS, or are fully dependent on the government to provide home care or seniors care' and they themselves have no means of providing for all of the extra expenses that arise in old age.
There is a Yiddish proverb that you can't have more in the bowl than you have in the pot. The pot is the savings that a person puts aside for their future. How one decides to fill that pot and what it is filled with is entirely up to the individual. Right now the government has a mandate to control that bowl and to control how individuals reach into that bowl and what those savings are used for. That is wrong. The government should not be able to force people to take more money out of their pot than they would like to take out. That is simply wrong and it should not be happening, especially now considering longevity and lifespan are far in excess of what was expected when RRSP programs were first introduced.
The mandatory withdrawals were developed in a different time, a time when people had shorter lifespan and a time when public finances were not as bad as they are today. We see that with the Liberal government's $30-billion deficit and almost $113 to $120 billion of spending over the next four or five years. The government has absolutely no plan to return to a balanced budget in the future. It is simply not in the government's DNA to do that. The government is going to keep these rules in place in order to tax away people's savings. People aged 80 or 90 will be expected to pay for the Liberal government's failure to control its budget.
Mandatory withdrawals add to a person's taxable income after things like GIS and OAS are taken into account. Everybody knows that when we go into a bank or talk to a financial adviser, OAS and GIS are taken into account when plans are being made for our future. These are decisions people in their 20s, 30s, and 40s are making for 30 to 50 years down the line. All government programs are taken into account.
Seniors are concerned about the prospect of draining their financial resources before their death. Most people do not enjoy thinking about that prospect. People want to have the financial resources they need in order to have a comfortable life in the future, especially if they are saving for themselves. People choose to save for themselves and their spouse and kids. Many want to have enough financial resources to be able to pass some on to the next generation, a lifetime's worth of work, a lifetime's worth of accomplishments. This intergenerational transfer of wealth is very much family related. Families plan for themselves and for their future. I am planning for the future for all three of my kids, Maximillian, Jolie, and Enoch. I plan for their future by planning for myself, so I will not end up being a burden on them.
Today it is far better for Canadians to manage their own finances and savings in retirement in order to be able to reach into that pot of savings and decide how much they want to withdraw from it.
The current rules would empty out a RRIF by the time an individual reaches the age of 92. This would place many Canadians in a precarious position in their golden years.
CARP supports this legislation. It is calling for an end to all mandatory minimum RRIF withdrawals, and that is the right thing to do. With longer lifespan we should be enabling and empowering people to be able to withdraw from their RRSPs and their RRIFs in a way that is best suited for their financial situation. We should not be mandating through government edict when they can and how much they can withdraw from their accounts.
Most people aged 70, 80, and 90 have a much better sense of how they want to plan for their lifespan. People's health starts to really go down in their golden years and that is when things like home care and assisted living facilities need to be thought about.
Some people are fortunate enough to be able to assist their kids or their grandkids with some minor expenses.
However, that is also when they are thinking about potentially selling off real estate, about downsizing, about moving into different areas, perhaps taking that one final vacation with their spouse while their health is still solid enough to be able to travel. What we have with mandatory RRIF withdrawals is the uncertainty it builds into a person's planning for those last 20 to 30 years of life.
Because of low interest rates and increased longevity, RRIF mandatory withdrawals have an immense impact as shown by a CARP analysis that showed the vast gap between those who were saving in 1992 and withdrawing and those who were saving in 2014 and withdrawing.
We know that financial security is key in this proposal in Bill C-301 and that is what the member for Edmonton West is trying to achieve. It is to empower seniors in their golden years to have financial security and control over their own finances so they can plan better for their future.
In 2015, the previous Conservative government reduced the mandatory withdrawal rates for seniors holding a RRIF and while this was a step in the right direction, organizations like CARP and the C.D. Howe Institute have recommended removing the requirement entirely.
I would like to mention one thing from the CARP report on this called “A New Vision of Aging for Canada”, where it said, “The vast majority of CARP members (78%) say that offering retirees complete control over their RRIFs is a more important goal than government recouping deferred taxes through mandatory withdrawals.”
The government backbenchers say we should think of the public treasury and the taxes we will be losing. Well, think about the seniors. The seniors should be placed first. They do not live in order for government to make a living. Members of Parliament live to ensure that Canadians have a living and that they are placed first before the government. We have it the wrong way. The government has to think about the public treasury and the taxes deferred are potentially never recouped, but I am thinking about seniors first. We are here for them and not the other way around.
Some might say that this deferred income so taxes should apply. Taxes in fact do apply. If people have money left over in a RRIF upon death, it will be taxed in their estate. It does get recouped. The money does get clawed back, so to speak, by the government at some point.
The real impact is on low-income seniors who could have saved a little in an RRSP that converts into a RRIF. Those are the people who could really use this extra funding for long-term care, home care, and other unforeseen expenses in their golden years.
We heard the member for Laurentides—Labelle talk about how seniors could pass on their RRSPs and RRIFs tax-free to the next generation and the government would not be able to recoup its finances, but the government is already taxing the estate upon their death. The government is there all the time recouping its money at some point.
The point is that we should not be placing the public treasury first, we should be placing seniors first. In the end, who saves for whom? Why do we not allow Canadians to have every single tool available to save for themselves? Given that consistency, given that certainty that in their golden years past 65 or whenever they choose to retire, they will be able to save and withdraw from that Yiddish pot with their bowl as much as they think is necessary to plan for their retirement.
Canadians should be the ones placed first to manage their retirement and how they save and where they spend. It is absolutely essential to start saving as soon as possible. That is where we should be starting. People should be thinking about the future, but if they know that government is going to tax it away, then they will not take advantage of RRIFs as much as they should.
We heard that 87% of CARP members are RRIF holders and 61% hold half or more of their retirement savings in a RRIF account. Some 54% are worried about having enough retirement savings, 25% do not expect their savings to last their whole lifetime, and 17% say they have enough savings to last a lifetime. That is an infinitesimally small number.
The right thing to do is to approve the bill, send it to committee, to the next stage and ensure that Canadian seniors have that certainty so they can save and plan for their future the way they want to. They should be able to withdraw from that Yiddish pot at the rate that they want to. They should be in control of the bowl, not the government.