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Bill Nafziger's Submission in Response to Finance Canada's Regulatory Framework for Federally Regulated Defined Benefit Pension Plans consultation:
July 29, 2005,
Please allow access to locked in pension funds at retirement as there is no justification of government not allowing full access to personal funds of a tax payer.
I currently am experiencing the same dismay and frustration with Ontario provincial legislation which create the same pension inequities as does your federal legislation.
Much to my dismay upon retirement, I discovered that my company pension funds are locked in and that when I am 80 years old (and probably dead), a huge part of my equity will still be locked in (65 to 75% or more of my original equity depending on market earnings, etc.). My intention was to liquidate my pension fund over twenty plus years at a rate beneficial to existing tax rates and my earnings thus crystallizing and realizing the tax savings at a lower income level as indicated on current futuristic RRSP proposals. I could not believe that I was restricted on the maximum amount of funds that I could withdraw, could not buy a RIFF, etc., and not even have access to my own money. Currently I have two options in the future which are to sell our income producing properties which are providing a return of 18% or live with a much lower return and dollar amount from the locked in pension funds unless I can find some way to unlock the locked in funds.
The injustice and inequity of the current Ontario pension regulations is unfair as it certainly does not benefit the recipient of locked in pensions unless they are mentally incapable of handling their own funds but does benefit large financial institutions and government as they control and then tax the funds upon your/your spouses demise at probably a much higher tax rate than existed at the time the funds were being purchased.
The logic of locked in funds break down upon your demise/death, as the locked in funds are inherited by your spouse absolutely unlocked. Does this make any sense?
I urge you to change the current locked in pension restrictions in Ontario to allow an Ontario resident to purchase a RIFF and/or a PRIFF (Prescribed RIFF available in Saskatchewan since 1993) with their locked in funds upon retirement. This would allow equality with an Ontario resident who used RRSP's to build a retirement fund and purchase a RIFF which is currently disallowed under current locked in pension fund restrictions. Locked in pension funds would then not have a maximum withdrawal rate restriction thus allowing an individual to withdraw a varying amount of funds over their retirement as required to realize their maximum tax savings or utilize their funds for essential services.
There would also be savings for the Ontario Government as there would be a reduction in the number of civil servants currently employed by the Financial Services Commission of Ontario to maintain and enforce all of the current bureaucratic rules regarding locked in funds in Ontario.
A PRIFF available in Saskatchewan since 1993 removed the maximum withdrawal restriction on locked in funds and also the current RIFF in Ontario have no maximum withdrawal restriction, which indicates the majority of persons who have spent a lifetime building the retirement fund are mentally and financially competent.
You have my explicit permission to post this letter on the Finance Canada Website and please contact me via email in English.