Mathyssen Tables Severance Reform Legislation to Help Jobless
December 8th, 2010 - 6:10pm
LONDON MP TABLES SEVERANCE REFORM LEGISLATION TO HELP JOBLESS
Bill would remove EI allocation and allow over-the-limit contribution to RRSP
OTTAWA – Today, New Democrat MP Irene Mathyssen (London-Fanshawe), will table legislation to allow Canadians receiving severance payouts to make a one-time, over-the-limit contribution to their Registered Retirement Savings Plan (RRSP). It will also remove the amount of severance pay received from Employment Insurance calculations.
“The inspiration for this bill was brought to me by the Canadian Auto Workers’ union local in my neighbouring riding,” said Mathyssen. “It is designed to help Canadians who are losing their jobs due to plant closures by providing them with an opportunity to contribute to their RRSPs. Certainly for workers at the Ford Talbotville plant, this would make a significant difference, as it would for thousands of other workers facing similar futures across this country.”
This bill, An Act to amend the Income Tax Act and the Employment Insurance Act (severance pay), changes the current income tax legislation, allowing for people who lose their jobs, through no fault of their own such as a plant closure, to have a one-time investment of the entire amount of their severance pay into their RRSPs. It also amends current employment insurance legislation to exclude severance pay amounts from the determination of earnings.
Under current rules, workers cannot collect EI benefits until their severance pay is used up. Mathyssen says it would make more sense to allow workers to save that money until EI benefits are used up, use it to pay down or even pay off a mortgage, or put it away for retirement, than to treat it and tax it as regular income.
“In today’s economy, Canadians should be given every possible opportunity to save money for their future,” said Mathyssen. “We hear all too often of seniors living below the poverty line and of families not being able to put food on their tables due to plant closures and job losses. Employment Insurance benefits are only 55% of a worker’s average income, making it hard to make ends meet. My legislation would give workers a little more flexibility in managing their budgets when a plant closes.”
“This bill will provide Canadians with an opportunity to save for their retirement as well as ensure they earn maximum Employment Insurance benefits in their time of need,” concluded Mathyssen.