The Canadian Federation of Independent Businesses (CFIB) say one of the main reasons their members don’t offer a retirement savings vehicle is the cost burden.
Read more: PRPP legislation receives royal assent
It’s no surprise then that the CFIB is enthusiastically supporting last week’s Royal Ascent of Bill C-25, the Pooled Registered Pension Plans Act.
“PRPPs will be an excellent addition to the retirement savings options for small business owners and their employees,” says CFIB’s new president Dan Kelly.
“Small firms tell us that the main reasons 80% of them do not have any form of company retirement plan for the business owner or their employees are the costs and administrative burden of offering a plan. If properly implemented by provinces and financial institutions, we expect PRPPs to move the ball forward on both fronts,” he adds.
“Current pension plans are beyond the reach of most entrepreneurs and company registered retirement savings plans (RRSPs) quickly become unaffordable as employers must pay payroll taxes like Employment Insurance, Canadian Pension Plan (CPP)/Quebec Pension Plan (QPP) and workers’ compensation premiums on top of any contributions to the plan,” says Kelly. “PRPPs, with no payroll taxes and lower administration fees, should allow more firms to put more money aside for retirement.”
CFIB is calling on provinces to move quickly to implement the legislation and to ensure that PRPPs remain entirely voluntary. “While Quebec has already introduced legislation to move forward, CFIB is very disappointed Ontario intends to block small firms from accessing this improved retirement tool for workers,” Kelly says. “CFIB will be monitoring financial institutions to ensure administration fees are significantly lower than current RRSPs.”