Saskatchewan Finance Minister Ken Krawetz announced yesterday in his budget address that his government intends to introduce pooled registered pension plan (PRPP) legislation in 2013.
Budget documents indicate that the Saskatchewan legislation would not require employers to offer PRPPs, but where an employer chooses to adopt a PRPP for its organization, employees will be automatically enrolled but given the opportunity to opt out.
Read more:
• PRPP inducements: What they mean for employers
• Filling the PRPP holes
“The Red Lily province may be the first in the country to make PRPPs available to all business sectors and the self-employed,” writes Shawn Patton, partner, senior consultant, with Ampersand Advisory Group, on his firm’s website. “Looking to the horizon, the new PQ government in Quebec has also signalled its intentions to proceed with VRSPs, and Alberta may be another province set to introduce pooled registered pension plan legislation in the months ahead.”
The following is an excerpt from the Saskatchewan 2013/14 Budget:
Saskatchewan has been supportive of the federal government’s efforts to strengthen Canada’s retirement income system through the introduction of PRPPs.
In order to make PRPPs available to all Saskatchewan employees and the self-employed, the government will be introducing the Pooled Registered Pension Plans Act in 2013.
The design of PRPP legislation in Saskatchewan will closely mirror the federal PRPP legislation, with modifications as necessary to align with existing provincial pension rules.
As with the federal legislation, PRPPs will be a voluntary option for employers, allowing them to choose whether or not to offer a PRPP to their employees. Where an employer chooses to adopt a PRPP, employees will be automatically enrolled but given the opportunity to opt out.
While automatic enrollment for employees of participating employers encourages saving for retirement, providing employees with the ability to opt out ensures they retain the freedom to set individual financial priorities.
As under federal legislation, administrators of PRPPs in Saskatchewan can be any eligible Canadian corporation that meets the licensing requirements under PRPP legislation. Financial institutions and life insurance companies are the most likely potential administrators; however, other corporate entities that have the necessary expertise and experience may also qualify.
Upon retirement, it is anticipated that employees will have the same options for de-accumulating assets from a PRPP as are currently available for de-accumulation from a DC pension plan in Saskatchewan. In particular, the options on retirement are a registered retirement income fund, a variable pension benefit or a life annuity.
The introduction of PRPPs provides an opportunity for the Saskatchewan Pension Plan (SPP) to continue to evolve in serving Saskatchewan residents and businesses by becoming a PRPP provider. Along with the introduction of provincial PRPP legislation, Saskatchewan will be introducing changes to The Saskatchewan Pension Plan Act. These legislative changes will enable the SPP to take the necessary steps to meet licensing requirements in order to offer a PRPP.