CBABC proposes Registered Plan (Retirement Income) Exemption Act

As March 1 approaches, our thoughts naturally turn to RRSP contributions. Have we saved enough already? Should we top-up 2005? But a more important question might be: will our RRSP savings be secure? At CBABC, we are working to ensure they will be protected.

Currently in British Columbia, registered employer pension plans and RRSPs issued by insurance companies are generally exempt from enforcement measures by creditors while other RRSPs and types of retirement investments are not. This has created an inequity in treatment between wage earners who receive retirement pensions and those who are self-employed and obtain their retirement funds primarily through other investments.

There is no protection for registered retirement income funds (RRIFs), deferred profit-sharing plans (DPSPs), or RRSPs not issued by insurance companies. These types of unprotected retirement savings plans are the primary retirement savings options for many self-employed and small business operators, including many CBABC members. For that reason, CBABC has taken a strong advocacy role to protect life savings in RRSPs, RRIFs and DPSPs.

Since 2003, the Legislation and Law Reform Committee of the CBABC has actively monitored the law and policy across Canada governing creditor enforcement of RRSPs, RRIFs and DPSPs. This includes work by the Uniform Law Conference of Canada, the Alberta Law Reform Institute, the Canadian Personal Insolvency Task Force, the CBA National Bankruptcy and Insolvency Law Section and other law reform bodies.

In November 2005, the CBABC submitted its brief calling on the Government of B.C. to enact the Registered Plan (Retirement Income) Exemption Act. The Registered Plan (Retirement Income) Exemption Act is based on the Uniform Law Conference of Canada model statute. This Act would provide many benefits to self-employed and small business owners in the province, including lawyers. The Act would ensure protection of RRSPs, DPSPs and RRIFs from creditor enforcement, providing needed certainty in the law and harmonizing B.C. with federal laws.

Traditionally, Canadian law encourages retirement savings and the Registered Plan (Retirement Income) Exemption Act promotes and protects this worthy policy goal.

“We believe in the value of ensuring equity in the treatment of retirement investments before the law,” says CBABC President Meg Shaw. “Many lawyers and other self-employed people have planned their futures based on the retirement vehicles available to them; we want to ensure that they are not treated any differently than those who have different investment options.”

For more information about the CBABC’s advocacy campaign for the enactment of The Registered Plan (Retirement Income) Exemption Act for British Columbia, visit www.cba.org/bc.

This article was published in the February 2006 issue of BarTalk and is subject to the copyright by the British Columbia Branch of the Canadian Bar Association, 2006, all rights reserved.