The plans address how more Canadians are delaying retirement owing to longer life expectancy and financial necessity but may not benefit older Canadians who are self-employed or have lower incomes, experts say.
Mr. Poilievre’s plan includes extending the deadline for withdrawing from registered retirement savings plans, tax breaks for working seniors, and a commitment to keeping the retirement age at 65.
“Our seniors should not have to work. But they should not be punished when they choose to,” Mr. Poilievre said in a statement. “We should reward rather than punish work.”
Raising the RRSP age limit
Currently, Canadians must convert their RRSPs into a registered retirement income fund or purchase an annuity by Dec. 31 of the year they turn 71. Once an RRSP is converted into a RRIF, they must start withdrawing a minimum amount each year, which counts as taxable income.
Under Mr. Poilievre’s proposal, the RRSP age limit would be extended to 73, giving seniors two extra years to keep their savings growing tax-free before making withdrawals.
“It’s a step in the right direction,” said Laura Tamblyn Watts, CEO of seniors’ advocacy group CanAge. She noted that this change would help seniors continue saving if they are still working. However, she pointed out that it primarily benefits wealthier seniors who can afford to delay tapping into their retirement funds.
One instance in which delaying RRSP withdrawals can help lower-income seniors would be to reduce their taxable income and allow them to qualify for government benefits such as the Guaranteed Income Supplement for a longer period, according to Jonathan Farrar, an accounting professor at Wilfrid Laurier University.
Currently, single seniors must have an income below $22,056 to qualify for GIS. For couples, the maximum income threshold is $29,136 if both partners receive full OAS. Since RRSP withdrawals are taxable income, postponing them could help some seniors stay eligible for GIS for additional years.
Tax breaks for working seniors
Mr. Poilievre has also proposed increasing the tax-free earnings threshold for working seniors. Under the current system, the basic personal amount – the amount that can earned tax-free for all Canadians – is $15,705. For seniors, that threshold is topped up by an additional $8,790 through the age amount credit.
Under the Conservative plan, the basic personal amount for working seniors would increase, allowing them to earn up to $34,000 tax-free – about $10,000 more than under the current system.
This would be a big win for working seniors, who are a growing group in Canada, Ms. Tamblyn Watts said. “It’s acknowledging that older people often want or need to continue working.”
In 2022, one in five seniors aged 65 to 74 were working, and almost half of them were working out of necessity, according to Statistics Canada. Immigrant seniors were more likely than their Canadian-born counterparts to work by necessity.
“Many seniors who are working, especially at modest incomes, are doing so because they’re struggling to pay the bills,” said Franco Terrazzano, federal director of the Canadian Taxpayers Foundation.
However, Ms. Tamblyn Watts noted that Mr. Poilievre’s tax break appears to apply only to employment income, not self-employment earnings. Many seniors do part-time consulting or gig work, which is especially common among lower-income seniors, she said.
Self-employed workers also tend to retire later – the average retirement age for self-employed Canadians is 68.9, compared to 65.3 for all retirees, according to Statistics Canada.
Keeping the retirement age
The Conservative Party has pledged to keep the retirement age at 65 for OAS, GIS and Canada Pension Plan benefits.
That’s a departure from the policy of a Conservative government under Stephen Harper in 2012. The government had planned to raise the retirement age to 67, arguing that it was necessary to address demographic pressures on public pensions. The Conservative Party lost the subsequent election and the plan was never enacted.
Some experts, however, including those at the C.D. Howe Institute, argue that raising the retirement age is necessary to sustain public pension programs as Canada’s population ages.
The Conservatives have not yet said how much these proposals would cost or how they would be funded.
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