Yesterday, the government unveiled the federal budget, their last budget before the 2019 fall election.
Notably, the budget builds on the national pharmacare strategy that was introduced last year.
As you can recall, last year’s budget introduced an advisory council to explore a national prescription drug program. The council’s recommendations will be announced in June, however, yesterday’s budget introduced the government’s high-level roll-out plan.
A new department, the Canadian Drug Agency, will be created to manage pharmacare, handling a national formulary and helping lower total drug prices for Canada. The government has proposed $35-million over the next four years to help establish the agency.
A national strategy for high cost drugs for rare diseases has also been proposed. Many of these drugs often exceed $100, 000 per patient per year and the government is committing $1-billion over two years and $500 million each year thereafter to help Canadians access these drugs.
More details and understanding will be provided with the advisory council’s report in June.
In addition to the pharmacare update the budget also proposes additional types of annuities permitted under registered plans.
Currently, it’s generally required that an annuity is purchased with registered funds beginning at the age of 71 for tax purposes. The budget proposal would allow seniors to purchase an advanced life deferred annuity (ALDA), that can be deferred until age 85.
Variable payment life annuities (VPLAs) were also proposed for pooled registered retirement pension plans and defined contribution registered pension plan members. While a VPLA will require at least 10 participating members, it will provide payments based on the investment performance of an underlying annuity fund and on the mortality experience of the participating members.
The budget also included a measure to protect Canadian pension benefits clarifying that if a pension plan is shut down, it must continue to provide the same benefits as it did when in place. This will require DB plans to transfer responsibility to a life insurance company through annuities, protecting pensioners if an employer becomes insolvent.
A final addition worth noting is the increased withdrawal limit for first-time buyers to withdraw money from their RRSPs to purchase a home without having to pay tax on the withdrawal. This has increased to $35,000 from $25,000.
To review the full budget please visit https://www.budget.gc.ca/. If you have any additional questions regarding the budget please reach out to your Accompass consultant.