Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan...

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Current Trends and Issues in Financial Planning: 2009

Transcript of Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan...

Page 1: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Current Trends and Issues in

Financial Planning:2009

Page 2: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

The Economy

Page 3: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Economic Update—Outlook for Canada

• despite signs of recovery (i.e. the ‘green shoots’),in April, the Bank of Canada stated the global recession has intensified and there has beenweaker than anticipated activity in all majoreconomies

• expectations are that the Canadian economy willcontract by 3% in 2009

• Canadian exports fell in the fourth quarter of2008

• household spending declined; savings increased

Page 4: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Economic Update—Outlook for Canada

• while better positioned than the U.S., recovery in Canada will be delayed and will be more gradual

• recovery will be tied to:• the monetary policy of the Bank (e.g. quantitative

easing)• Canada's sound financial system and• the relative strength of the balance sheets ofCanadian banks and Canadian households

• core inflation will decline in 2009 • Canadian dollar should remain relatively strong

Page 5: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Economic Update—Outlook Globally

• poor prognosis globally given declining wealth andbank balance sheets, a weak U.S. residential marketand a faltering automotive sector

• one bright spot is China as it is still growing albeit, ata slower rate

• Bank of Canada anticipates negative growth in 2009with a more positive outlook in mid-2010

• global financial markets are showing signs of a turnaround despite tight credit

• Bank of Canada remains negative on the bankingsystem until 2010

Page 6: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Retirement Planning

Page 7: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Saving for Retirement as a Goal

• in 2006, saving for retirement and home ownershipwere the top priorities for Canadians:

– 2/3 of Canadians were saving for retirement– 2/3 of Canadians between age 35 and 54 and nearly

1/2 of Canadians between age 18 and 34 were planningfor retirement

– 62% of Canadians between age 18 and 34 had an RRSP

• 2/3 of those who set retirement savings goals feltthey were well ahead or almost exactly where theythought they should be

Page 8: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Saving for Retirement as a Goal

• in the RBC Retirement Study of April 2009,reducing debt is among top priorities for babyboomers

• 50% of boomers have changed their view ofretirement:

• 26% feel they may have to work longer than expected• 20% believe they may not be able to live the lifestylethey thought they would in retirement

• 14% feel they will need to do more retirement planning

Page 9: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Review of Canada Pension Plan

• current contribution rate of 9.9% to be maintained• proposed changes to be phased in between 2011and 2016 include:

– greater flexibility to receive benefits while still working– eliminate requirement to wholly or substantially cease

working– retirement before age 65: annual reduction of 36%– retirement after age 65: annual increase of 42%– number of low earning years dropped increased to 8

years

Page 10: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Personal Financial Update

Page 11: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Personal Financial Update

• unemployment rate hit 7.7% in February 2009

• increase in the application for EI benefits• increase in personal bankruptcies

Page 12: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

New Credit Card Regulations

• Credit Business Practices Regulations will:– mandate a minimum 21-day, interest-free grace period

on all new credit card purchases when outstandingbalance is paid in full

– lower interest costs as payments must be allocated infavour of the consumer

– require express consent of consumer for credit limitincreases

– limit debt collection practices – prohibit ‘over-the-limit’ fees directly due to holds placed

on the credit card by merchants

Page 13: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

New Credit Card Regulations

• Cost of Borrowing Regulations will:– provide clear information through a summary box that

will set out key features (e.g. interest rates and fees) – provide information on the time it would take to fully

repay an outstanding balance based only on minimumpayments being made every month

– mandate advance disclosure of interest rate increaseseven if this information had been included in the creditcontract

• Finance Minister, Jim Flaherty, refused to capinterest rates on credit cards

Page 14: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Income Tax Update

Page 15: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Highlights of the 2009Federal Budget

• increase of SMABUD limit to $500,000• increase of the top dollar threshold for the 2 lowest

federal tax brackets by 7.5% • changes as they relate to housing:

– increase of HBP withdrawal limit to $25,000– introduction of the $5,000 First-time Home Buyers’ Tax

Credit– introduction of the temporary Home Renovation Tax

Credit • ability to use post-death RRSP / RRIF losses to

offset income inclusion in the year of death

Page 16: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Investment Planning

Page 17: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Registered Disability Savings Plan (RDSP)

• effective December 2008, the RDSP helps familiessave for a loved one with a disability

• eligibility is based on being able to claim theDisability Tax Credit (DTC)

• RDSP is modelled after the RESP with a lifetimecontribution limit of $200,000

• contributions can be made to the end of age 59• contributions may attract Canada Disability SavingsGrant and Canada Disability Savings Bond

Page 18: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Registered Disability Savings Plan (RDSP): CDSG

• maximum CDSG of $70,000 or to age 49• for 2009, if net annual family income is below$77,664, CDSG is:

– $3 for every $1 of contribution (i.e. 300%) on the first$500 contributed plus

– $2 for every $1 of contribution (i.e. 200%) on the next$1,000 contributed

• if net annual family income exceeds $77,664, CDSGis $1 for every $1 contributed up to $1,000

Page 19: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments

• maximum CDSB of $20,000 or to age 49• for 2009:

– if net annual family income is below $21,817, CDSB is$1,000 with no contribution required

– if net annual family income is between $21,817 and$38,832, a partial CDSB is paid

• funds can be withdrawn at any time however, ifwithdrawn within 10 years of a CDSB or CDSGpayment, the CDSB or CDSG must be repaid

• income and CDSB or CDSG is taxable to thebeneficiary

Page 20: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Registered Disability Savings Plan (RDSP): Change in Circumstances

• if RDSP beneficiary can no longer claim the DTC:– RDSP must be closed by the end of the calendar year

following the first full calendar year the beneficiary is nolonger eligible

– CDSGs or CDSBs received within 10 years repaid – remaining funds, less principal contributions, is taxed in

the hands of the beneficiary• if RDSP beneficiary dies:

– RDSP must be closed by the end of the calendar yearfollowing the year of death

– CDSGs and CDSBs received within 10 years repaid– remaining funds payable to the deceased’s estate

Page 21: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Tax-free Savings Accounts (TFSAs)

• candidates for and uses of the TFSA:– ‘rainy day’ fund– for low income individuals– individuals who have maximized RRSP contribution

room– parents who wish to help adult children– savings vehicle for a future large expenditure– couples with disparate incomes– parents saving for child’s education– individuals with fluctuating incomes– individuals expecting large tax liability on death

Page 22: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Single Securities Regulator

• Expert Panel on Securities Regulation, led by theHonourable Tom Hockin, released its final reporttitled Creating an Advantage in Global Capital Markets; italso proposed a draft securities act

• central recommendation is the establishment of asingle national securities regulator administering asingle federal securities act

• decentralized national regulator—the CanadianSecurities Commission—with one head office but withseveral powerful regional offices

• some provinces oppose recommendation

Page 23: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Professional Practice

Page 24: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

National Do Not Call List (NDNCL)

• effective September 2008, NDNCL applies to telemarketers

• solicitation: the act of selling or promoting a productor service or requesting money or 'money's worth‘directly or indirectly

• Unsolicited Telecommunications Rules include:– restrictions on the time-of-day calls can be made– calling protocols and– cover the use of Automatic Dialing and Announcing

Devices

Page 25: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

National Do Not Call List (NDNCL)

• companies who have done business with a consumer in the last 18 months, can call thatindividual even if registered on the NDNCL

• after 18 months since the last transaction, this exemption expires unless the consumer consents tofurther calls

• you can register your organization online at: http://www.LNNTE-DNCL.gc.ca

• violation could result in a penalty of up to $1,500for an individual and up to $15,000 for acorporation per infraction

Page 26: Current Trends 2009 PowerPoint Presentation · 2009-06-16 · Registered Disability Savings Plan (RDSP): CDSB & RDSP Payments • maximum CDSB of $20,000 or to age 49 • for 2009:

Acknowledgement

•Thank-you to the CIFP Education Committee:• Paul Griffin (Committee Chair)• Don Nilson• Wilf Pelletier• Steven Warden• Barbara Trieloff-Deane• Patrick Longhurst• William Jack• Brent Rolfe• Marion Weisgerber

• from CIFP, thank-you to Robert Jeffrey