It wasn't until last week that RRSPs were also finally shielded by law

By Miriam Maisonville

Economic uncertainty is at the forefront of everyone’s thoughts these days. Personal bankruptcies are on the rise and individuals cannot help but feel vulnerable. Worry concerning the future ability in this economic climate to provide for our retirement is among the many issues that concern British Columbians today.

The vast majority of British Columbians who are workers, entrepreneurs, small business owners and professionals do not have access to company or government pension plans – they must save for their retirement themselves.

Government policies, both federal and provincial, encourage these individuals to plan and save for their retirement through vehicles such as Registered Retirement Savings Plans (RRSPs).

What many people do not realize is that, up until now, pension plans were exempt from seizure from creditors, but individual savings through RRSPS, DPSPs, and RRIFs were not protected under B.C. law.

This anomaly was recently righted on Thursday November 20 when the Minister of Finance, Colin Hansen, introduced legislation to protect these invaluable savings instruments from seizure by creditors through provisions in the Economic Incentive and Stabilization Statues Amendment Act, 2008.

Protecting Registered Plans from creditors ensures that those who do not have access to company or government pension plans are treated equally under the law.

The significance of the Government’s actions is immeasurable. According to the Government’s 2008 Small Business Profile, small businesses in British Columbia represent 98 per cent of all businesses, employ over 46 per cent of the population and represent 33 per cent of the Province’s GDP.

Since first introduced in the 1950s, RRSPs have become an essential part of Canada’s retirement system. According to Statistics Canada, as of 2005, Canadians have saved $600 billion in accumulated RRSP assets. Today, RRSPs are more popular than employer pension plans.

Unquestionably it remains the duty of debtors to pay their creditors. Those who are self-employed, however, are now on equal footing with people with government or company pensions in that their Registered retirement Savings can now enjoy the same protection as those who benefit from a Registered employer pension plan.

The Canadian Bar Association B.C. Branch has advocated for this change for many years now and did so with the support of other organizations such as small business interests, professional associations, and Chambers of Commerce from across the province. With their backing, the Canadian Bar Association was able to make a compelling case in favour of extending protection.

This legislation could not be realized without the support of the Honourable Joan McIntyre (MLA West Vancouver-Garibaldi and Minister of State for Intergovernmental Relations) who worked tirelessly on this issue and who immediately saw the merits in the CBA’s proposal, the Attorney General, the Honourable Wally Oppal Q.C., who must be recognized for his role in advancing the legislation and Premier Gordon Campbell for including it in the legislation designed to aid in this economic climate. Under his leadership this legislation has been realized.

Representing over six thousand practicing lawyers, the Canadian Bar Association BC Branch is proud to have been at the forefront of this dialogue with government. The introduction of this legislation is of great importance to our membership, not only because our members will benefit but it also the majority of lawyers who do not have access to protected pension plans.

Many professions are undertaking increasing responsibilities and new liabilities. Greater protection of their savings would not reduce liability, but offer some security to professionals that their retirement savings would not be at risk.

Introduced by the government as part of a package to offset some of the difficult economic times we are experiencing, this measure injects fairness into the system, and could not come at a more appropriate time.

Most of us will never have to rely on this measure. But we can all derive value from it, in knowing that should circumstances require it, our RRSPs will be there when we need them- just as a pension would be. Knowing that we can remain self sufficient in retirement and not have to rely on any social safety net is invaluable to an aging population.

Miriam Maisonville is the President of the Canadian Bar Association, B.C. Branch.

Read President Maisonville's Vancouver Sun Op Ed in context on page D2 in the Business Section.

[posted November 25, 2008]