Canada’s retirement puzzle: Why private savings must be at the centre of reform

Raise the RRSP-to-RRIF conversion age

Currently, Canadians must convert their Registered Retirement Savings Plan (RRSP) into a Registered Retirement Income Fund (RRIF) in the year they turn 71 and begin withdrawing funds at 72. This rule was introduced when lifespans and working patterns were shorter and does not reflect the realities of today.
Raising the conversion age to 73 would:

• Provide two more years of tax-deferred growth.
• Better align Canada with countries like the U.S. (whose conversion age is 73 and will be rising to 75), Australia, and the U.K., which offer greater flexibility as to when retirement savings must be drawn down.
• Reflect the reality that many Canadians are working later in life or deferring retirement.

Introduce flexible RRIF withdrawals for modest balances

Canadians with RRIF holdings under $200,000 should have the option to opt out of mandatory withdrawals. This would:

• Prevent unnecessary taxation and OAS/GIS clawbacks for middle-income retirees.
• Help retirees avoid selling investments during market downturns just to meet minimum withdrawal rules.
• Maintain tax fairness—RRIFs with larger balances would still be subject to withdrawal requirements to avoid indefinite tax deferral.

Raising the conversion age to 73 would:

• Provide two more years of tax-deferred growth.
• Better align Canada with countries like the U.S. (whose conversion age is 73 and will be rising to 75), Australia, and the U.K., which offer greater flexibility as to when retirement savings must be drawn down.
• Reflect the reality that many Canadians are working later in life or deferring retirement.

Eliminate GST/HST on investment fund management fees

Canadians who invest in mutual funds or ETFs currently pay sales tax on the management fees (a blended rate of about 11%). This doesn’t apply to individual stock or bond holdings, which are more common among high-net-worth investors.

Removing the tax would:
End an unfair penalty on the most accessible and diversified investment products – products that middle-income Canadians rely on most.

• Improve long-term net returns for millions of savers.
• Align Canada with global peers like the EU, Australia, and New Zealand, which exempt fund management fees from value-added tax (VAT).

Reduce regulatory friction

Many regulations are well-intended, but their cumulative burden can stifle innovation and reduce access.

Reforms should:

• Require market-failure analysis before introducing new rules.
• Shift toward principles-based regulation that preserves investor protection while supporting flexibility and innovation.
• Ensure, through impact assessments, that new rules do not conflict with broader goals like capital formation, financial inclusion, and savings adequacy.
• Harmonize fees nationally to reduce costs for industry and investors.
• Be preceded by a rigorous cost-benefit analysis.

Expand access to financial advice

Financial advice is associated with 2x to 4x higher wealth accumulation. As more investors turn to digital and self-directed channels, public policy must evolve to ensure these investors are not left behind.

Policymakers should:

• Support personalized hybrid advice models (human + digital) that meet investors where they are.
• Modernize guidance to clarify what forms of guidance and advice are permissible, including for self-directed investors.
• Encourage the development of scalable advice platforms for middle-income savers.

Enable automatic enrollment, deductions, and escalation of contributions in workplace group RRSPs (and DC plans)

Canada’s voluntary retirement savings system leaves too many people behind. International evidence shows that auto-enrollment significantly increases participation and savings rates.

Key steps:

• Amend federal and provincial legislation to permit “opt-out” enrollment in group RRSPs and
  DC plans.
• Implement educational initiatives – in participation with the industry – to help employees understand the benefits and mechanics of automatic savings features to dispel misconceptions and build confidence in participation.”

Integrate private savings into the national financial literacy agenda

“Despite their importance, RRSPs, TFSAs, and other private savings tools are often underrepresented in financial education programs.

To address this:

• Further integrate the role of investing in school curricula and adult learning programs alongside CPP and OAS – to build financial capability and highlight the connection between early saving habits and retirement savings options.
• Create tailored content for low-income households, newcomers, gig workers, and Canada’s youth.
• Clarify the role of private savings in managing tax, estate, and benefit outcomes.

People in workplaces that offer no defined benefit plan (over 60% of workers) who rely on RRSPs, TFSAs, and group plans for retirement.

People with registered balances of $200,000 or less gain greater flexibility with fewer withdrawal policies.

Prevent unnecessary taxation and OAS/GIS clawbacks for middle-income retirees.

Support personalized hybrid advice models (human + digital) that meet investors where they are.

Encourage innovation that blends the strengths of human advice with digital technology.

With more Canadians supported through their earning years, our economy will remain strong as future generations age.