While the federal government’s proposed pooled registered pension plan (PRPP) has its critics, pension plan sponsors welcome the relief that it could afford them, according to the latest MorneauShepell 60 Second Survey.
Among the 79 participating organizations, the survey found 74% were considering adopting a PRPP because it would allow them to offload fiduciary liability and the administrative burden onto a third party.
Another 23% said the promise of lower operating costs were the most appealing factor.
Still, only 13% said they might adopt the PRPP as a replacement for their existing plans, while 35% were reserving judgment until they had more information. Just over half said they would most likely maintain the status quo.
“We are not surprised about the fairly low percentage of existing plan sponsors who are willing to adopt a PRPP,” said Fred Vettese, chief actuary, MorneauShepell. “We expect that the percentage will grow over time as employers develop a comfort level with PRPPs. Let’s also keep in mind that nearly half of the respondents are employers with defined benefit plans, a group we never expected to see migrating to PRPPs in any event.”
When asked what the drawbacks of the PRPP might be, 25% could not see any, while the same percentage was concerned with transition difficulties.
The remaining 50% of respondents was fairly evenly spread between loss of employer control, the inability to brand the PRPP as a company-sponsored vehicle and the fact that PRPP was a pure DC arrangement with employees bearing the risk.
Of the 79 organizations in the survey, 90% already sponsor a retirement arrangement.