Tuesday, March 20, 2007

 

Over the last year SEDI has continued to advocate for greater federal investment in progressive measures to promote savings and ownership for Canadians and financial literacy.  In his 2007 budget, federal Finance Minister Jim Flaherty noted that his government wants a legacy of having " helped families pay down their debts, help their children through school, purchase their own homes and realize their dreams."    The budget committed the government to several measures in this regard including:

 

- A $3 million initiative to increase financial literacy among Canadian youth and Canadian investors.

- Increases to the annual amounts families can save for their children's education through Registered Education Savings Plans and the Canada Education Savings Grant.

- A new Registered Disability Savings Plan, including savings bonds and grants to help families caring for children with disabilities save for their children's future well-being.

- Changes to rules on Registered Retirement Savings Plans and pension rules so more Canadians will have more tax-sheltered room and more time to save for their retirement and to combine work and retirement in more flexible ways.

 

SEDI is pleased to see the government acting to recognize the importance of assets and financial capability to Canadians and beginning to respond to many of the ideas we've been proposing for the past several years.  We see this budget as a downpayment on a larger agenda to make ownership, assets and financial capability available to all Canadians. 

 

We look forward, with the National Steering Committee on Financial Capability, to exploring opportunities created through the new financial literacy initiative.

 

We're pleased to see that the government has responded to the advice it received from the Minister's Task Force on Disability Savings and the recommendations made by SEDI, to include savings incentives for lower income families in the new RDSP.  We continue to beleive though, that families and beneficiaries need relevant, affordable and accessible financial information, education and advice to make informed decisions about RDSP planning, savings and uses.

 

Improvements to increase education savings are welcome but we're concerned that the current changes may do little to for lower and modest income families.  In addition to raising the annual cieling, the government should do more to raise the floor by accelerating and simplifying the match rates available to lower income families and by improving awareness and uptake of the Canada Learning Bond.

 

SEDI has long argued for changes to recognize RRSPs as Canadians actually use them -- flexible savings vehicles to meet different demands at different stages in the lifecycle.  The changes to enable more Canadian workers to flexibly combine paid employment and retirement are a step in the right direction, for the increasing number of Canadians who expect to work after they retire.  But for lower income working Canadians, there is still a gap to be addressed -- they need protection so their RRSP savings are protected against needs-tests for benefits and aren't penalized dollar for dollar when they retire and turn to Canada's income support system for seniors.  Increasing RRSP age limits and investment options makes sense for middle and upper income earners but lower income workers who are trying to build long-term assets need other kinds of support that haven't been addressed in this budget.

 

Overall, we welcome the direction and many of the measures of this federal budget.  It strengthens our resolve to continue our work so that all Canadians, regardless of income can share in the vision outlined by the government.