November 21, 2008 TORONTO, ON: CARP supports Finance Minister Jim Flaherty’s direction to financial institutions to ensure that retirees do not have to sell their investments in order to meet the mandated withdrawals from their Registered Retirement Income funds [RRIFs]. However, CARP’s central message is still that these mandated RRIF withdrawals should be suspended or eliminated to provide some immediate relief to retirees, mostly seniors, who are hardest hit by the current market chaos.
CARP has received numerous emails, letters and especially phone calls, from across the country, supporting CARP’s call for at least a two year moratorium on the mandated RRIF withdrawals. None have mentioned that their financial institutions have refused to facilitate their withdrawals with in-kind transfers. CARP telephoned the Finance Minister’s Press Secretary to ascertain the extent of the problem.
“If this is happening, if institutions are refusing in-kind transfers, as the Finance Minister suggests, then it is one more assault on people already battered by the market crash and the institutions should stop it right away. But our position remains that retirees should not be required to make these RRIF withdrawals in the first place,” said Susan Eng, Vice President, Advocacy of CARP.
Current tax rules require people to withdraw fixed amounts from their RRIFs after reaching age 71 and many must sell their stocks to fund the tax payable on such withdrawals if they do not have other cash, even if they do not have to sell the stocks in order to make the withdrawals.
The situation is made worse by the precipitous drop in stock values and the fact that the amount to be withdrawn is calculated on January 1. So, not only are the savings depleted by the mandatory withdrawals, but with the reduced value, many more units must be withdrawn to meet the minimum withdrawal requirements and the retirement savings would be depleted at alarming rates. This compounds the anxiety that is already being felt as retirees watch their savings disappear before their eyes.
CARP has been inundated with calls from its members across the country who are looking for government action and see a moratorium on the mandated withdrawals as a measure of immediate relief.
CARP is a national, non-partisan, non-profit organization committed to advocating for a New Vision of Aging for Canada, social change that will bring financial security, equitable access to health care and freedom from discrimination. CARP seeks to ensure that the marketplace serves the needs and expectations of our generation and provides value-added benefits, products and services to our members. Through our network of chapters across Canada, CARP is dedicated to building a sense of community and shared values among our members in support of CARP’s mission.
For further information, please contact:
Pam Maher 416.363.2277 x. 235 Communications coordinator
Anne Gravel 416.363.2277 x. 230 Researcher, Policy Development
Susan Eng Vice President Advocacy CARP, A New Vision of Aging for Canada or visit our website: www.carp.ca