26 - Wednesday, August 24, 1988 - North Shore News. BUSINESS The good and bad news about the RRSPs of ‘88 OTTAWA calis it a delay in pension reform. I call it bad ‘news for most of us. For the third time, the federal government is delaying changes in RRSP and pension rules. But this time, we get stuck with most of the bad items while the good changes are delayed yet another year. That means you will have a harder time saving income tax as you save for retirement. Being a positive person, I have looked for as much good news as possible in Finance Minister Michael Wilson’s announcement last week. Although I was reasonably successful, unfortu- nately the bad news items carry more weight and affect more peo- ple. To summarize: ® BAD: The 1989 registered retirement savings plan contribu- tion limits will stay the same as this year’s. So you will still be able to put a maximum of only $7,500 (or $3,500 if you belong to a pension -plan) into an RRSP for 1989. The limit was to have risen to $8,500. *° BAD: You will not be able to carry forward unused RRSP con- tribution room until the 1990 tax year. The carry-forward rule was to have gone into effect for 1989. * BAD: if you belong to a stingy pension plan, you must wait another year before being allowed to put more into an RRSP. Until the latest delay, you would have had a higher RRS¥ limit in 1989. * BAD: Both 1989 and 1990 RRSP contribution limits will now be based on your earned income and pension position in 1989. So all the tax planning you did to make 1988 the key year — which it was until the latest changes — is wasted. What’s worse, your 1988 arrangements might make a repeat performance in 1989 tougher. ¢ BAD: If you live on pensions and non-business investments, you can just about say goodbye to MYT s Most drown- a ings occur when people are swimming. a Over 60% of FAC s all drownings occur when the victim falls in- to the water unexpectedly; from a wharf, shoreline or boat. Autopsies have shown that over one-third of these vic- tims (mostly males} were im- paired by alcohvi. The Canadian Reu Cross Society ae RRSP contributions — and tax deductions. Starting in 1990, you may no longer roll over pension income into your RRSP or use it as earned income to make a spousal contribution. This change is not dollars and sense Michael Grenby being delayed a year like everything else. (Non-business in- vestment income never quaiifies as earned income.) e BAD: If you belong to a money purchase pension, the employer-employee contribution limit remains at $7,000 for next year. The limit was to have risen to $10,500. e¢ GOOD: If you are in a generous non-contributory defined benefit pension (you don’t make any contributions), you may still put up to $3,500 into an RRSP for 1989. The proposed reducticn in the RRSP contribution limit now money in the bargain. Cot SON 8 meet hd Another Good Reason to pick up the SUNDAY North Shore News very Sunday youl find a SAVE-ON-FOODS mma | flyer loaded with values inside the NEWS. You can plan your shopping ahead and save time and WATCH FOR IT — SUNDAYS DISTRIBUTION tt you dort receive your 986-1337 your Sunday News, wed PDAS like to hear from you. FIRST IN FLYERS ON THE NORTH SHORE won't take effect until 1990. * GOOD: Subject to the various limits, you may still put up to 20 per cent of your earned income in- to an RRSP for 1989. The 18 per cent limit has been delayed until 1990. * GOOD: Once we hit 1990, the limits proposed last March will kick in: $10,500 for an RRSP and $11,500 for pension plans. ¢ GOOD: If you have private pension income and a spouse, you may put up to $6,000 a year into a spousal RRSP from 1989 through 1994. This proposal has not yet been delayed. ® GOOD: When you roll over retiring allowance/severance pay to an RRSP, the $2,000-per-year- of-service limit will start in 1989 instead of this year. Don Smith, of North Van- couver, a senior vice-president of The Alexander Consulting Group and an actuary who has served as a consultant to the federal gov- ernment since 1983 on its pension reform program, said ‘‘there is a high chance’’ the latest proposals will become law, although he ad- mitted there could be further delays, especially with an election _ likely this fall. “But even if there were a change of government, I don’t think we’d see too many changes in these proposals,’’ he said. ‘‘After all, it was Marc Lalonde in the Liberal government who first proposed pension reform in 1984.” Finance Minister Wilson blamed the latest delay on the complexity of the reform measures, and the resulting administrative difficulties facing both government and business. ‘ Save-On-Foods flyer in “Your Car for All Seasons” For Full Information without obligation Cail GRAHAM MATTHEWS now with SPECIALTY MOTOR CARS LTD. VOLVO — SUBARU 1235 MARINE DRIVE, NORTH VANCOUVER, BC. V7P 1T3 BUS. 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