Budget expected to favour older Canadians

Ottawa could adjust rules around retirement funds

OTTAWA— The Conservative government is expected to court the support of older Canadians in next week’s federal budget with measures aimed at demonstrating that they’re making seniors a priority.

A number of long-sought changes are believed to be in play, including changes to the rules that require retirees to start withdrawing cash from their registered income funds by a certain age, The Canadian Press has learned.

Groups have been calling on Ottawa to tweak or eliminate the rigid rules around registered retirement income funds, or RRIFs, in part because Canadians now live much longer than they did when the program was instituted in 1992.

Under the law, people must draw down minimum amounts from their RRIFs annually by the age of 71. The minimum payments increase incrementally until they hit 20 per cent when the person reaches 94.

The goal of the rules is twofold: deliver a dependable source of income to retirees and ensure the government starts recouping revenue on tax-deferred savings from RRSPs.

Today’s retirees, however, are hit- ting that age and realizing the rules limit their ability to manage their retirement nest egg, said Susan Eng, the vice-president of advocacy for CARP, a prominent seniors group that has been lobbying the government to eliminate the rules altogether.

The rules force people to withdraw money out of their tax-deferred savings plans — and pay taxes on it — when they might be better off con- tinuing to invest those funds for later needs, Eng said.

Changing the rules would not cost the government, she added.

“The tax man is going to get those taxes eventually, it’s just that maybe not as fast as the tax man wants it,” Eng said.