Federal legislation that puts in place the framework to implement Pooled Registered Pension Plans (PRPPs) received Royal Assent Thursday.
PRPPs are expected to be an attractive new pension option for the millions of Canadians currently without access to a workplace pension plan.
PRPPs are defined-contribution pension plans designed for small and medium-sized businesses. These plans would cost less to implement than group RRSPs because employers would not be required to administer the plans. Nor would they be required to match employee contributions.
“Once operational, PRPPs will allow many small business owners and their employees to have access to such a plan for the very first time,” said Ted Menzies, Minister of State (Finance).
The Canadian life and health insurance industry applauded the government’s efforts.
“The big winners are small and medium sized businesses that currently can’t afford to offer pension plans, as well as those private sector workers and the self-employed who don’t have access to a pension plan,” said Frank Swedlove, president of the Canadian Life and Health Insurance Association (CLHIA).
All provinces have agreed to implement PRPPs but, so far, only Quebec has moved ahead with legislation to implement its version of PRPPs, called voluntary retirement savings plans. The Quebec legislation would ensure that all Quebec workers in workplaces with five or more employees, along with the self-employed, have access to a workplace retirement savings plan by 2015.
“We urge all provinces to move quickly and decisively to introduce PRPP legislation to give their workers every opportunity to save for retirement,” added Swedlove.