New retirement option promoted

IFIC, which is the industry association for Canada’s mutual fund companies, wants the current RRSP limits doubled (good for selling more funds) but has also thrown its weight behind the new scheme proposed by the C.D. Howe Institute.

A TPSP contribution would not produce a tax deduction, so it would not come with a tax cost to the government, at least initially. However, once the money is in the plan it would compound tax sheltered until retirement. In that sense, the program would be similar to a registered education savings plan (RESP).

The kicker is that when money is withdrawn from the plan, there would be no tax consequences. The result would be to provide seniors with a tax-free income stream.

I think it’s an idea that’s worth exploring, but I wouldn’t hold my breath. The federal government hasn’t shown much sympathy to expanding its retirement savings support in recent years.

From the Sept. 2001 edition of Mutual Funds Update, a monthly newsletter edited and published by Gordon Pape. For a free three-month trial subscription to the electronic edition, go to