Bill C-25, the Pooled Registered Pension Plans Act, received royal assent yesterday, moving the legislation another step closer to becoming law. Federal tax legislation still needs to be passed, and regulations will soon be published to address provisions of the Act.
“Today we are celebrating an important step towards offering a new, large-scale and low-cost pension option to employers, employees and the self-employed,” said Ted Menzies, Minister of State (Finance). “Once operational, Pooled Registered Pension Plans (PRPPs) will allow many small business owners and their employees to have access to such a plan for the very first time.”
However, each of the provinces still need to pass their own enabling legislation before pooled registered pension plans (PRPPs) can actually come into existence. And so far, there’s no clear consensus as to which provinces are on board with PRPPs.
Quebec has implemented its own system—voluntary retirement savings plans (VRSPs)—that’s similar to the PRPP model, while Ontario has expressed dissatisfaction at the proposed system, advocating for an expansion of the CPP instead.
Minister Menzies took the opportunity yesterday to urge the provinces to implement PRPPs.
“Provinces can now easily and seamlessly use the federal legislation as a model to get their own side of the framework up and running,” he said. “And I urge all provinces to adopt PRPP legislation in the near term for the benefit of those Canadians currently without access to a workplace pension.”
Some organizations also spoke out in support of PRPPs yesterday, including the Canadian Federation of Independent Business and the Canadian Life (CFIB) and Health Insurance Association (CLHIA).
“Saving for retirement is a real concern for small businesses, as close to 80% have no company retirement plan for the business owner or their employees,” said Dan Kelly, president and CEO of the CFIB. “PRPPs will be a welcome addition to the retirement savings toolkit as they are intended to be lower cost, free of payroll taxes and administratively simple.”
“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 CLHIA.
Read more on PRPPs at benefitscanada.com/prpp.