The government of Manitoba has announced it will introduce pooled retirement pension plans as a new option to help the province’s employees save for retirement.
While the government offered scant details about the matter in its throne speech on Monday, it plans to propose PRPP legislation in the next couple of days, according to Duncan Hamilton, special assistant to Manitoba’s minister of finance.
Manitoba will likely make PRPPs a voluntary option for employers as Hamilton notes the bill will be “very similar to what other provinces have already done.”
“We’ve had a number of consultations with seniors, investment firms and the public and something that came up often is PRPPs being a good option for small companies that aren’t necessarily big enough to offer their own pensions,” says Hamilton.
But, while the government is taking a step in the right direction when it comes to increasing pension coverage for Manitobans, it might fall short if there’s not a lot of employer take-up, says Mitch Frazer, a pension lawyer at Torys LLP.
“I’m not sure there will be a big groundswell of people who will be doing this,” he says. “The legislation does not appear to make it mandatory, so if it’s not mandatory how many people will actually do this?”
According to Frazer, while PRPPs allow employers to offer a retirement benefit to employees with limited or no fiduciary duty, they’ll only adopt it after competitors and other employers take the lead. “The more people do it, the cheaper the fees,” says Frazer. “So, I think that’s the key . . . how cheap it will be and how many people sign up.”
It’s also unlikely Manitoba employers will opt for PRPPs right away since the federal government has just reached an agreement to enhance the Canada Pension Plan, notes Scott Anderson, vice-president of retirement at HUB International STRATA Benefits Consulting in Winnipeg.
“Any employer that doesn’t have a plan in place already is going to be in a static state until they see what happens with the CPP,” says Anderson. “So very few employers will make a choice over the next couple of years to implement a new retirement plan before they see what the impact of the new CPP rules are going to be on them.”
While Manitoba originally opted out of the CPP agreement struck by federal, provincial and territorial ministers, it joined the other provinces in July in working towards the enhancement. However, Manitoba’s participation is contingent on additional research and analysis on several proposals it set out in a public consultation at the beginning of November.
Since the federal government introduced PRPPs to federally regulated employees in 2012, Alberta, British Columbia, Nova Scotia, Ontario, Saskatchewan and Quebec have introduced legislation. However, Quebec is the only province where the plans are mandatory.
“Truthfully, it’s had a lot of whimper in the other provinces . . . by making it voluntary it’s had no traction,” says Anderson.