More CDIC deposit protection needed for registered retirement investments
All guaranteed registered retirement investment products held at CDIC member financial institutions - whether RRSPs, RRIFs or LIFs - should carry 100% deposit insurance protection.
Investors conscious of deposit insurance limitations and sensitive to interest-rate returns often choose small or mid-sized institutions for higher retail deposit rates on their retirement deposit accounts.
Canada Deposit Insurance Corporation (CDIC) coverage protects investment deposits to a maximum of $100,000 per individual, per institution. Joint registration is only available for non-registered accounts.
Seniors are becoming concerned that when they are widowed, retirement plan balances transferred to the surviving spouse's name could exceed the insurable value of CDIC deposit protection.
"Over the last few decades, we've seen retiring couples refocus their portfolios towards income-producing investments, choosing secure fixed-rate investments such as GICs or long-term annuities," says Martin Kosterman, a retirement income specialist, investment fund consultant and senior insurance advisor at Fiscal Agents.
The sometimes roller-coaster effect found in the equity markets is less
palatable for seniors, as other lifestyle and time-of-life realities unfold.
"Choosing the simplicity and protection of fixed-income or conservatively
managed accounts is common practice when security outweighs growth,"
Over time, these individuals have benefited from sound investment planning and accumulated RRSP-type portfolios in excess of the deposit insurance limits. To maintain financial security, additional deposit protection is now needed.
Fifty percent of provinces have realized the need for higher coverage limits for provincially insured retirement deposits, such as those purchased from credit unions, and have much higher limits than CDIC. For example, Alberta, Saskatchewan, Manitoba, PEI, and New Brunswick provincial deposit insurance protection is unlimited at 100%, wherein $100,000,00 B.C, Quebec and Nova Scotia and Newfoundland at $250,000. Ontario provides $100,000.00 per registered account. If the provinces can provide a higher limit for their credit unions why can't the federal government bring its coverage for banks and trust companies in line with current needs?
We at Fiscal Agents feel that CDIC coverage should be increased to 100% for registered plans. This probably won't happen anytime soon however without a lobbying effort on the part of the public. We are therefore recommending that all concerned either write directly to the Finance Minister Jim Flaherty or complete one of our preprinted form letters available via the links below, forwarding it to our offices which we will submit in bulk to the Finance Minister. The respective addresses are as follows:
Below are links to the pre-printed letters we have made available suitable for mailing or sending via fax, in Adobe PDF format.
For any questions that you may have about current CDIC policies please contact them directly at 1-800-461-2342. You can also contact our office at (905) 844-7700 if you have any questions about deposit insurance coverage on your existing investments.
of Canadian Deposit Insurance Agencies