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Poll

We need your opinion

Are there plans to change the type of pension/retirement savings plan you offer/is offered by your employer in the next 12 months?  

Result
Tax Prepaid Savings Plan

Issue

The 2003 federal budget raised the possibility of a new retirement savings vehicle – a Tax Prepaid Savings Plan (TPSP).  The Conservative Party also raised the prospect of similar savings vehicle during the 2004 federal election, although under a different moniker.

A TPSP is a vehicle in which one deposits “after tax” dollars which earn income, tax free, which is the TPSP.  Withdrawals from the TPSP would be tax-free and they may or may not affect one’s status under social security.

Action to Date

The ACPM’s Advocacy and Government Relations Committee (AGRC) formed a sub-committee in 2003 to review the concept of TPSPs. As a result, the concept of TPSPs was endorsed by the AGRC.  In summary, the AGRC gave a “lukewarm” endorsement to the idea. The AGRC’s main concern was that a focus on TPSP concept would divert the federal government’s attention from the need to increase RRSP/pension limits. The ACPM’s position was communicated to the federal government during a consultation session on December 3, 2003.

The 2007 Federal Budget introduced the Tax Free Savings Account (TFSA), an after tax vehicle allowing Canadians to contribute up to $5000 per year.
 

Future Action

The AGRC is monitoring this issue.  Given the introduction of the TFSA, we don’t expect further activity with TPSPs.