Bill Robson: RRSP age limit needs to be raised amid COVID-19 crisis
C.D. Howe Institute chief executive officer Bill Robson said the Canadian government should be taking a look at the “outdated” retirement savings rules for RRIF withdrawals and RRSP contributions as the COVID-19 pandemic continues to spread across the country.
“The rules are outdated. I would get rid of the mandatory RRIF withdrawals completely if it were up to me,” Robson said in an interview with BNN Bloomberg on Tuesday.
“You’d sure simplify retirement and the tax system if you just let people take out whatever.”
Robson highlighted the fact that the government’s cost of borrowing is low at the moment, so it wouldn’t cost the feds much to further defer the tax that would be collected in the withdrawals.
“The government’s immortal; but, of course people, are not … the timing of this really matters for them,” Robson said.
Robson also flagged the government should revaluate the cut-off age for Canadians to contribute to their RRSPs or their defined contribution plans.
He said the rule is already out of date since it doesn’t take into consideration Canadians that might have only started saving later in life due to their own personal situations.
“When you think of the situation of people who were only able to start retirement saving quite late in life, maybe they were immigrants and it took a while for them to have the wherewithal to do it, to give people a couple more years in which they could put some money in and not be obliged to stop especially with the market down the way that it is now, why not do that?” Robson said.
“It needs doing anyway and now would be a great time to provide that little bit of extra relief for the people affected. It would be a big deal.”