Canada Eyes Pension Reform: RRSP Withdrawal Age Could Be Delayed Amid Rising Retirement Concerns

Canada Considers Pension Reform as Private Savings Become Retirement Pillar

Canada’s retirement income system may soon see major policy changes. On September 4, the Securities and Investment Management Association (SIMA) released a report urging the federal government to modernize outdated pension policies and better align with today’s economic realities.

Why Reform Is Needed Now

SIMA’s report warns that Canada’s current three-pillar retirement model—government benefits (CPP/OAS), workplace pensions, and personal savings—is no longer balanced. As life expectancy rises, workplace pension coverage declines, and cost of living increases, more Canadians are relying heavily on personal savings.

In 2023, personal savings made up nearly 50% of total retirement income—up from 36% in 2005.

Meanwhile, government-provided benefits are insufficient to cover basic living expenses in urban centers. Even when claimed at age 65, CPP and OAS combined provide a maximum of approximately $2,168/month ($1,433 CPP + $735 OAS), which falls short in cities like Toronto or Vancouver.

More than 60% of Canadian employees lack workplace pensions, pushing younger generations and middle-income earners to depend on RRSPs, TFSAs, and other personal investment vehicles. However, inflation, high housing costs, and stagnant wages are making it increasingly difficult for families to save.

SIMA’s Proposed Policy Changes

SIMA, formerly the Investment Funds Institute of Canada (IFIC), now represents firms managing over 80% of Canadian mutual fund and ETF assets. In its new report, it proposes several changes to help Canadians save more effectively for retirement:

• Delay RRIF conversion age: Increase the mandatory conversion age from RRSP to RRIF from 71 to 73, extending the period for tax-sheltered growth.

• Exempt small RRIFs: Eliminate required withdrawals for accounts under $200,000, allowing retirees with modest savings to better manage their funds.

• Remove GST/HST on fund management fees: These taxes currently reduce returns and are viewed as a hidden cost for investors.

• Expand access to advice: Encourage hybrid advisory models (digital + human) to bring financial advice to more Canadian households.

• Improve workplace RRSPs: Push for auto-enrollment features to boost participation in employer-sponsored savings plans.

SIMA CEO Andy Mitchell noted that the RRIF age change is likely to be considered first by Ottawa, as similar ideas have already been floated and would only defer—not reduce—government tax revenues.

Broader Economic Impacts

According to the report, in 2023:

• Personal savings contributed $150 billion to GDP

• Generated $27 billion in tax revenue

• Saved the government $16.5 billion in income support payments

Mitchell warned that failing to act will eventually increase federal financial burdens as more seniors depend on social assistance.

He added, “Retirement security is evolving, and public policy needs to evolve with it. If we don’t modernize the system now, the consequences will be felt not just by individuals, but by the economy at large.”

AiF Insight

Let’s face it — the government is running out of money. You’ll need to fund your own retirement.

With rising longevity and shrinking public resources, relying solely on CPP or OAS is no longer enough.
If you don’t plan your retirement income today, you may be forced to sacrifice your lifestyle tomorrow.

Ai Financial reminds you:
It’s time to start paying your future self.
Leverage tax-advantaged accounts like TFSA and RRSP, plus tools like investment loans and principal-protected funds — and build a retirement income you can count on.