TD Canada Trust will no longer offer free banking for seniors — a move some experts say makes sense in an age when elderly Canadians have more money than ever.
Some two million TD customers over 60 will get to keep their Plan 60 accounts, which allow unlimited transactions at no cost. But new customers over 60 will have to dish out bank fees like everyone else.
"We’re always looking at the marketplace and looking at our customer base and evaluating what we’re offering," TD spokeswoman Barbara Timmins said.
With the population of seniors on the rise, offering free banking to everyone over 60 may not be financially tenable. Statistics Canada estimates a quarter of Canada’s population will be senior citizens by 2036.
What’s more, Timmins said, seniors are a diverse group with different banking needs. Some are still working. Many are among banks’ wealthiest customers.
"When seniors’ plans (were) first introduced, it recognized the large number of seniors who were on a fixed income and deserving of a break in service charges," said David McVay, a financial consultant with McVay and Associates. "While there are many seniors today that still fit that description, as a whole, seniors today are working longer, have better pensions and better retirement savings."
According to the most recent Statistics Canada figures, from 2005, families where the family head was between 55 and 64 had the highest median net income at $407,417. Families headed by people over 65 were the second highest at $303,167.
That compares to $231,900 for 45-54, $135,408 for 35-44 and $18,750 for those younger than 35.
In lieu of its no-free banking, TD will offer new customers over 60 three options that provide a 25% monthly fee discount.
But for those who need it, Timmins said the Value + account, a very basic package that offers ten transactions for $3.95 a month, is available to anyone.
Other major banks — Scotiabank, CIBC, and the Bank of Montreal — still offer free accounts for seniors, though McVay expects that will change.
"I believe most banks will continue to offer free or low-cost banking for the less advantaged end of the market, but providing discounts to a market where the need no longer exists and who are receiving excellent value in other ways doesn’t make good business sense," he said.