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Frank Stokes' Submission in Response to Finance Canada's Regulatory Framework for Federally Regulated Defined Benefit Pension Plans consultation:
This is my input in response to your Consultation on Private Defined Benefit Pensionï¿½Plans.
CPP/QPP allows pension splitting (they call it "sharing" when done within an enduring marriage), and the administratorsï¿½inform CPP/QPP recipients inï¿½the literature thatï¿½this can reduce their income tax.
It seems odd that CPP/QPP is the only sort of pension in Canada that allows such splitting.ï¿½ It means that those who have little or noï¿½CPP/QPP pensionï¿½among their retirement income are at a tax disadvantage.ï¿½ This isï¿½clearly unfair.
I realize that it was probably not the primary intention of the CPP/QPP administrators to allow recipients to save income taxes by splitting ("sharing") their benefits, but rather to put benefits directly into the hands of any low-pensioned or non-pensioned spouse.ï¿½ And perhaps the advertisement of the tax saving is only doneï¿½to encourage the higher-pensioned spouse to actually sign over benefits to the lower-pensioned spouse.ï¿½ But regardless of the motivation or intent of the administrators, the situation created by the exclusivity of benefit splitting for CPP/QPP recipients constitutes a real and unfair tax disadvantage for many other taxpayers who cannot do such, or as much,ï¿½splitting due to the non-assignment rule of the Income Tax Act.
I recommend that the government immediately correct this unfair situation by allowing all sorts of pensions (and otherï¿½retirement income, to be fair) to be split for income tax purposes.
Such a change need not createï¿½extra workï¿½for retirement incomeï¿½payers (sending separate, balanced payments the way CPP/QPP does) , becauseï¿½the governmentï¿½could simplyï¿½provide the option to split retirement income on the income tax return form.
You may publish this submission.