Summary
The BMO Retirement Institute is proposing to the government to give people more control over their savings. One of the main concerns is the age restriction in the registered retirement savings plan (RRSP). BMO recommends allowing them to choose when to withdraw money, instead of having to convert their RRSPs at the age of 71. They are also proposing to change the tax rates for the income, stating that investment returns should be taxed at the same rate as investment income from other plans. The final suggestion is to increase the maximum contribution limit for the plan.
Connections
This article connects to chapter 16.2 and the registered pension plan deduction. Most employees are enrolled in the registered retirement savings plan (RRSP), which exempts the money saved up in the plan from income taxes. The book leaves out some key points regarding this payroll deduction and gives a very vague description of the plan. The book doesn’t point out that banks are the source that gives out this plan. According to this article, BMO, a bank, wants to give Canadians more control over these savings. Why would BMO want to do this? I think they are simply just trying to make this plan more attractive so more people would open RRSP accounts. More of these accounts lead to more money for the bank’s investments which leads to more revenue, assuming the savings go to the bank.
Reflection
As a future employee myself, I am planning to open an RRSP account, whether my employer requires me to or not. I think this is a good way for me to manage my money and will give me something to live on when I retire in the future. Despite the fact the bank only wants to make revenue off my money, it is hard to ignore the benefits. The removal of the age restrictions could allow workers to keep the savings in the account as long as they want and obtain more savings. The exemption from income taxes is a good addition as well. What surprised me the most was that Canadians did not have full control of these savings. Canadians should have always had control of their savings since it is their money that they earned.
http://www.cbc.ca/consumer/story/2010/04/22/con-bmo-retirement.html
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I believe that RRSP is going to have a major impact on my career plans in the future. By increasing the maximum contribution limit, I would be able to invest more into an RRSP and therefore result in much less tax. I personally think that this would definitely be a positive change for me in the future. Not only would this be a great way to avoid tax but it would also give me the choice of investing more money with the RRSP. This would definitely encourage me to save and invest more money. As the saying goes, invest some dough.
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