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Bring the pension majority in from the cold

From Friday's Globe and Mail

Better opportunities to rebuild retirement wealth will cheer millions of Canadians ...Read the full article

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  1. Mark Dip from Ottawa, Canada writes: One benefit of a single, national securities regulator to ordinary Canadians would likely be the elimination of the restrictions currently placed on the transfer of “Locked-In RRSPs”, which prevents their use to buy back pension years. Currently, a locked-in RRSP for a citizen is governed by the provincial legislation for where the person was employed. As such, these RRSPs can be combined only with other locked-in RRSPs – as long as both plans are governed by the same provincial legislation. The problem arises for Canadian Federal Public Servants in that the Canadian Federal Superannuation Plan is governed by federal legislation. As such, a Canadian Federal Public Servant cannot use their private sector, provincially-regulated locked-in RRSP to buy back pension years, even if they haven’t moved when they switched jobs. Comparably, a private sector employee can’t use their locked-in RRSP from another province to buy back pension if they have moved to start a new job. In my case, there will be nothing left in my locked-in RRSP by the time I retire because TD Bank charges me $100 per year for account fees. I get to watch it die a slow death before I’ll ever get to use it. A great annuity for the bank – but not for me. A single, national securities regulator could enable legislation that would make federally legislated pension plans compatible with any provincial locked-in RRSP for the purposes of pension buy-back. Given the desire to drop provincial trade barriers, all the inter-provincial restrictions on rationalization/transfer of locked-in RRSPs could also be dropped. The benefit of these changes includes: It would also better-enable employees to achieve a more secure retirement if they can bring their locked-in pensions with them. It would also foster better labour mobility between provinces.
  2. Mark Dip from Canada writes: As a diplomatic spouse, I can say that we have already been living a pension nightmare for decades. As a surviving spouse, we are only entitled to half of a government pension. That is because the Superannuation rules were designed for domestic public servants and pre-suppose that we would have our own pension, RRSP and CPP benefits. Sadly, that is seldom the case with us because DFAIT offers us no meaningful help with overseas employment. That prevents any retirement savings, with a crippled career continuing after repatriation to Canada. If a spouse does work overseas, CRA still collects its now missing Canadian EI and CPP T4 deductions at tax filing time. However, these social benefit premiums go unrecorded, having not been collected via Canadian pay checks. Likewise, foreign income is also ineligible toward CPP and RRSPs, once again preventing spousal pension savings upon retirement. “Abandonment” seems to be the traditional way in which Canada says “thank you” to us for our overseas service.

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