The following was received in the CPC office by e-mail on September 27th. Ms. Morse has given permission for it to be printed here.

To Canadian Pensioners Concerned:

I am a pensioner (over 65) and thought that your organization might be interested in noting and perhaps investigating the implications of the following for your clientele.

One of my Toronto Dominion RSP-GICs matured a short time ago. As I require dental surgery in the next while and no longer have dental insurance, I decided to redeem this small investment ($5500) rather than reinvest at today's low rates.

The Toronto Dominion (TD) representative explained to me that they would withhold 20% for income tax (10% under $5000, 20% over), and that was fine by me. However, she then mentioned that the TD would charge me a fee of $50 for the redemption (if I transferred it to a RRIF I would not be charged). Quite frankly, I was shocked - it struck me as nothing more than a 'money grab', and really poor public relations. For this instance, she said she could waive the fee, but this was a one-time thing, and in the future, she would not be able to do this. (I have numerous other RSP-GICs at other banks and was told that they do not charge for redeeming RSP-GICs - at least so far).

To support this fee, the representative told me that RSPs are intended to be turned into RRIFs. I personally thought this to be a choice, rather than a hard and fast rule, and found it to be no excuse to penalize me for withdrawing my funds from their institution. In this particular case, the fee was waived, and luckily I have only two other small investments at this particular bank and will roll them into my TFSA over the next two years.

I am fortunate to have an indexed pension, and did not save RSPs so much as a source of regular income, but as a safeguard against unforeseen major expenses. Therefore they have been invested in numerous GICs and in smaller amounts, in order that they could be easily withdrawn for emergencies without a large penalty during low interest periods. I don't expect that I'm unique in this regard. At the Toronto Dominion, it would appear that a person with say $100,000 in lots of $5000 or so, would end up paying $1000 in order to withdraw their money if they did not wish to convert to RRIFs.

So, I thought I'd pass this along -- you may wish to warn your members.