Click to access Feelings_Not_Mutual.pdf

A new study by David Macdonald for the Canadian Centre for Policy Alternatives looks at how the high costs of mutual funds in RRSPs compared to the low cost of defined benefit pension plans could make retirement later for many. Here is part of the excecutive summary.

Executive Summary
The primary vehicles Canadians have for managing their savings are pen-
sion plans and mutual funds, and in 2014 each held over $1 trillion in assets.
Over the past two decades, policy-makers have promoted Registered Retire-
ment Savings Plans (RRSPs) as the best option, with much of those personal
savings going into mutual funds. Traditional pension funds are in decline.
They covered 43% of workers in 1977 but now cover only 27%.

In 2014, weighted pension plan fees were 0.38% of assets while compar-
able mutual fund fees were 2.1%. In both cases, investors do not pay those
fees directly, nor do they have a choice in the matter. The fees are withdrawn
from their fund returns without the investor ever seeing the exact amount.
If the higher fees on mutual funds (2.1%) seem small, we must remem-
ber that compound interest can work against an investor as easily as it helps
them. Over a lifetime of contributions, the average mutual fund investor
will have to work until age 72 to accumulate the same amount as the pen-
sion plan holder had by age 65 due to this seemingly small fee difference.

The second critique of expanding the Tax-Free Savings Account is from the Parliamentary Budget Office and is simply called: The Tax-Free Savings Account

Click to access TFSA_2015_EN.pdf

Here is part of the executive summary.

Executive summary

The Tax-Free Savings Account (TFSA) program
was started in 2009. It benefits TFSA
contributors by exempting TFSA investment
income from federal and provincial income tax
and transfer calculations. Under current rules,
the TFSA contribution room accumulates
annually for individuals aged 18 and over, so
PBO projects that contribution room will grow
from $1 trillion in 2015 to $9 trillion in 2080.1
Increases in TFSA contribution room will grow
the size of the exempt tax base over time. This
growth will not only increase the fiscal impact
of the TFSA program as a share of federal and
provincial budgets, but alter the distribution of
benefits toward higher income and wealth
households.

How will the TFSA affect government’s
bottom line?

In 2015, PBO projects the fiscal impact of the
TFSA to be $1.3 billion or 0.06 per cent of
Gross Domestic Product (GDP). Two-thirds of
this cost is borne by the federal government,
$860 million, while the remaining third
($430 million) affects provinces (Figure A-1).

By 2080 the TFSA fiscal costs project to
increase ten-fold, reaching 0.57 per cent of
GDP (Figure A-2). This growth effect is unlike
most program expenditures, which generally
grow along with GDP and are subject to
periodic parliamentary review. The TFSA, like
all tax expenditures is not subject to regular
review.

Who benefits?

PBO estimates that the TFSA program is
regressive, overall. Benefits skew to higher
income, higher wealth and older households.
Low-income households’ benefits range from
half to one-fourth the median between 2015
and 2080………

There are 2 new studies on the consequences of doubling the Tax Free Savings Account

The first is from the Broadbent Institute. Double Trouble: The Case Against Expanding the Tax Free Savings Account. Here is the Executive summary.

Click to access tfsa_report-en.pdf

EXECUTIVE SUMMARY
The Conservative Party of Canada’s proposal to double contribution limits for
Tax-Free Savings Accounts (TFSA) has received inadequate critical scrutiny to
date. This gap may stem from the notion that little revenues will be lost and the
perception that most taxpayers would benefit. Both beliefs are erroneous.
This study finds that no case—on either economic or equity grounds—can be
found for unconditional doubling of TFSA contribution limits. Over the long
run, doubling TFSA limits would cost governments additional billions in annual
tax revenues, put most of the lost taxes into the pockets of the already well-to-
do, and reduce the overall progressivity of federal and provincial tax systems.
The great majority of Canadians would enjoy no significant benefits. In fact, they
would bear the burdens of an expanded TFSA by enduring the reduced public
services or bearing the increased taxes needed to offset the lost revenues.

KEY FINDINGS
First, the existing TFSA already reduces the progressivity of federal and
provincial tax systems, and doubling the limits would exacerbate this bias in
future years. This study finds:
• When the existing TFSA scheme matures in 40 or 50 years, the cost to
the federal government is projected at up to $15.5 billion annually. This
represents a sharp increase from $65 million in its 2009 inaugural year,
growing to a $410 million cost in 2013.
• Provincial governments will also suffer revenue losses from the tax-free
nature of TFSA balances, growing to as much as $9 billion annually when
the system matures, figures that would similarly be inflated by a doubling
of the TFSA limits.
• Commitment by the federal government never to consider TFSAs in
the income tests for the Guaranteed Income Supplement and the Old
Age Security benefits will expose the program to growing numbers of
dependants and mounting costs in future decades. By 2050, annual
program costs could rise by $4 billion to several times that figure. econd, this study dispels the notion that doubling the TFSA contribution
limit would be of broad benefit to the taxpaying public and would boost the
economy’s performance. It finds that:
• The current combined contribution limits for RRSPs and TFSAs allow
ample room for the lifetime saving requirements of all workers earning up
to at least $200,000 annually. With the current $5,500 limit, one could
accumulate between $690,000 and $4 million depending on the rate of
return; an individual with the doubled limit or a couple with the current limit
could accumulate twice that amount, or between $1.4 million and $8 million.
• Usage of the current TFSA provision already displays a skew favouring
individuals at higher incomes, and this bias would be accentuated and
accelerated by a doubling of the contribution limits.
• The long-run benefit from doubling TFSA limits would go overwhelmingly
to the wealthy; current retirees and older workers would gain over a
transitional period but could be served without unconditional doubling of
the limits for everyone.
• Much of the increased contributions to TFSAs would come from the
transfer of taxable savings into accounts or the diversion of savings that
would otherwise go into RRSPs.
• Given the weak and broken linkages between household saving and
domestic business investment, doubled TFSA limits offer little prospect
for improved economic performance.
In short, the proposal to double TFSA contribution limits shares and even
surpasses many of the deficiencies exhibited by the government’s Family Tax
Cut scheme for income splitting: significant and growing loss of revenues,
differentially favourable benefits for high-income households, and reducing
the tax system’s progressivity. But unlike the family income-splitting scheme,
doubled TFSA limits will visit all of these afflictions upon defenceless provincial
treasuries.

http://www.ctvnews.ca/canada/coroner-says-quebec-seniors-home-that-caught-fire-was-not-up-to-code-1.2232511

MONTREAL — A Quebec coroner says all certified seniors’ homes in the province, old and new, should be equipped with automatic sprinkler systems to avoid tragedies like the one that killed 32 people a little over a year ago.

Cyrille Delage said in his final report into the fire at the L’Isle Verte, Que., home that while sprinklers “don’t solve all the problems,” they can at least slow the progression of the flames.

Fire swept quickly through the home in the early morning hours of Jan. 23, 2014.

A Quebec seniors home where a fire killed 32 people was not up to code, says a coroner’s report released Thursday morning. Emergency workers resume the search for victims at a fatal seniors residence fire, in L’Isle-Verte, Que., Sunday, Jan. 26, 2014. (Ryan Remiorz / THE CANADIAN PRESS)

Fire crews respond to the seniors home fire in L’Isle-Verte, Quebec, approximately 230 kilometres northeast of Quebec City, on Jan. 23, 2014. A coroner’s report into the blaze is set to be released.(Francois Drouin)

The residence housed 52 elderly people, including many who couldn’t move around without the use of a walker or wheelchair.

The wing of the Residence du Havre that burned to the ground was not equipped with automatic sprinklers and that’s where many of those with disabilities were housed.

That was one of several issues uncovered by Delage in his report, made public Thursday.

Delage said the building wasn’t up to code.

He added firefighters did not have an evacuation plan for the seniors’ residence and they arrived late to the scene.

Moreover, he said several volunteer firefighters — including the fire chief — were not adequately trained because they were subject to a “grandfather” clause that exempted them from new training requirements.

“We will say in polite terms that during this (fire) intervention, the lack of training and preparation were very evident,” Delage said in his report.

Delage said the evidence presented to him indicates “for now” that the fire was accidental, but it will be up to the Crown to decide if anyone should be charged criminally.

The blaze started just after midnight on Jan. 23 on a particularly freezing, windy night, which hampered firefighters’ work.

The only staffer working that night was Bruno Belanger, who testified during the coroner’s inquiry that he had not been trained on the building’s emergency evacuation procedures.

Instead of helping the elderly occupants out of the home, Belanger said he went to wake up the co-owner Irene Plante.

Neither Plante nor Belanger were able to help evacuate the building because the smoke had become too thick.

The coroner’s inquiry also heard from a woman who took a video of the tragedy as she happened to be in the area travelling with her family.

The audio that accompanied the video was placed under a publication ban out of respect for the victims’ families because some of the elderly trapped in the building could be heard begging for help.

Delage called for a review of emergency procedures at seniors’ residences across the province.

“We have to better the security rules in seniors homes in order to avoid similar tragedies like the one that occurred at the Residence du Havre,” he said.

Delage said smoke detectors in seniors’ homes need to be loud and visible by both employees and the people who live there.

That wasn’t the case at Residence du Havre, where the smoke detectors were not located in each room and were not connected to a central alarm system that alerts the local 911 call centre.

Aside from recommending mandatory sprinkler systems, Delage said provincial authorities should encourage rural and urban cities and towns to centralize fire services and to regularly review fire-fighting procedures and have co-ordinated planning.

Quebec Premier Philippe Couillard said Thursday in Quebec City that his government will review the report.

“There are actions that will be announced very soon,” he said. “There are clearly things that need to be done.”

Public Security Minister Lise Theriault said the government has already taken steps to address some of the problems outlined in the report, having announced over $19 million for training for volunteer and part-time firefighters.

The coroner had strong words for some owners of seniors’ residences and politicians across the province whom he said might be angry his recommendations will cost money, as retrofitting older homes with sprinklers can be quite costly.

“Let them (be angry) up until the moment that another disaster like this one happens again,” he said. “They’ll have to explain to their constituents why they did nothing.”

http://ofl.ca/index.php/orpp-submission/

Summary

Every Ontarian deserves security and dignity in retirement and yet by every measure most workers face the prospect of an uncertain future. Despite public demand, provincial support and sustained lobbying from Canada’s labour movement, the Harper government has repeatedly rejected the call for an expanded Canada Pension Plan (CPP).

The result is a desperate situation where two out of every three Canadians without a workplace pension may expect to languish on sub-poverty CPP benefits when they should be enjoying their golden years. The average Ontario retiree receives a meager $6,800 a year from the CPP.

Yet, dwindling personal savings and ballooning household debt paint a bleak retirement future for Ontarians living in a province that has shed nearly 300,000 manufacturing jobs since 2000, and where half a million people (one in ten workers) toil for minimum wage. With the number of seniors expected to double by 2036, it is fair to say that the lack of retirement security is the crisis of our times.
This is why the OFL stands firmly behind the Ontario Retirement Pension Plan, but Ontario workers are counting on the government to get it right.

The OFL membership believes that mandatory universality is key to the success of expanded retirement security. Universal programs are time-tested in Canada—the Canada Pension Plan, Medicare, and Employment Insurance all function well and are relatively politically resilient, precisely because they are designed as universal programs.

This submission is designed to provide a road map for just such a plan. The recommendations contained in this submission are supported by unionized workers across the province because they would expand pension benefits to every worker and ensure that no one retires into poverty.

Click here to download the full submission:

Below is a summary of recommendations:

Recommendation 1:

Ensure that the ORPP is modeled on the CPP such that it could be folded into a future CPP expansion.

Recommendation 2:

Language specifying plan funding should reflect the secure nature of the benefit being promised.

Recommendation 3:

Design the ORPP to have universal coverage and include any employees who could benefit from the ORPP.

Recommendation 4:

Work closely with other provinces to ensure that ORPP accrued pensions can be carried with workers that leave the province.

Recommendation 5:

The Ontario government should consider providing targeted refundable tax credits on ORPP contributions in order to offset a greater share of low-income earners’ contributions to the ORPP.

Recommendation 6:

Investigate a reduction in the maximum allowable Registered Retirement Savings Plan contribution and allocate the savings to providing tax assistance for low income earners contributing to the ORPP.

Recommendation 7:

Work with the federal government to prevent the clawback of GIS benefits for those retirees receiving ORPP benefits.

Recommendation 8:

The ORPP should cover Ontarians in paid employment as well as the self-employed as much as possible, with the latter paying both employer and employee portions.

Recommendation 9:

ORPP assets should be managed independently by a public investment board accountable to the ORPP Board of Directors.

Recommendation 10:

Workers should have direct representation or representation through unions on the governing body of the ORPP.

Recommendation 11:

The Ontario government should explicitly exclude PRPPs as comparable plans to the ORPP.

http://www.northumberlandview.ca/index.php?module=news&type=user&func=display&sid=32

LifeView: 80% of Canadians see the importance of keeping seniors connected through Internet technology

Contributed by admin on Feb 12, 2015 – 07:43 AM

Data from the .CA Community Investment Program and Ipsos Reid examines how digital technology links families

OTTAWA, Feb. 12, 2015 /CNW/ – A new poll released today by the .CA Community Investment Program and Ipsos Reid shatters the traditional view of the Internet as a tool for the young and signals that Canadian seniors want to share in the benefits of the digital revolution.

86 per cent of Canadians, including those over 55 (90%) and those caring for a parent over 65 (87%), agree that providing better access to the Internet, along with training on how to use it, would help older Canadians stay better connected to their communities and families.

“With one in six Canadians now over the age of 65, this study confirms the urgency of supporting projects that connectCanada’s seniors with digital skills,” said David Fowler, Director of Marketing and Communications for .CA. “Investing in the Internet is critical to business and economic growth, but we also see benefits in keeping families, friends and communities connected.”

Recognising this demand from older Canadians for new digital skills need for resources to keep seniors connected, the Nova Scotia Community Access Program, with support from the .CA Community Investment Program, is launchingConnecting Older Adults with Mobile Technology, a training program that will help seniors use tablets to access information and communicate with family.

Summary of results:

• Older Canadians are more likely to see the importance of connecting seniors than younger Canadians.
• 84 per cent of respondents consider the Internet to be important to completing everyday tasks such as e-commerce, banking or accessing government services.
• 77 per cent of respondents regard the Internet as important to maintaining safety and security.
• 57 per cent of Canadians with a parent nearing retirement report that the Internet is “very important” to keeping in touch with family and friends.
• 47% of those caring for a senior consider the Internet to be “very important” to maintaining safety and security (emergency contact, remote monitoring)

For more information on this survey data, consult the factsheet.

About .CA and the Community Investment Program

Through the Community Investment Program, .CA funds projects that aim to build a better Internet in Canada. The .CA team manages Canada’s country code top-level domain on behalf of all Canadians. A Member-driven organization, .CA represents the interests of Canada’s Internet community internationally. Funding through the .CA Community Investment Program is open to not-for-profits, charities, community groups and researchers. Applications are being acceptedonline until March 6.