Throughout 2012, Ted Menzies, then the federal minister of state for finance tasked with the development of pooled registered pension plans, consistently proclaimed they were “the right solution at the right time” to get Canadians saving for retirement.
Unfortunately for Menzies, his enthusiasm never really rubbed off on the country’s provincial governments, whose help he needed to get PRPPs going in a significant way.
Menzies’ aim was to create a low-cost alternative for workers at smaller companies that don’t offer their own pension plans, as well as self-employed people. Bill C-25 received royal assent in June 2012, making PRPPs available to workers in federally regulated sectors.
But four years on, the idea continues to languish, with enabling legislation passed in just six provinces, only four of which bear much resemblance to the federal template. PRPPs are actually available in even fewer jurisdictions, as several provinces have yet to enact supporting regulations.
Despite the faltering start, Torys LLP pension lawyer Mitch Frazer still has hopes for the future of PRPPs.
“They have become a kind of glorified RRSP, but I still think they have potential. If you can get enough people contributing, then that’s going to reduce the overall fees members will have to pay, and anything that extends coverage and gets people saving for their retirement is a positive thing, in my view,” says Frazer.
While the Canada Pension Plan has been the focus recently, here’s how things stand across the country when it comes to PRPPs:
- The non-starters:
Despite Menzies’ hard sell, governments in Manitoba, New Brunswick, Newfoundland and Labrador and Prince Edward Island haven’t moved to introduce PRPP legislation.
- The slow coaches:
While initially reluctant, Ontario changed its tune when Premier Kathleen Wynne’s government adopted the federal legislation in 2015. During its 2016 budget in February, it announced it would introduce changes to its PRPP legislation to “further facilitate harmonization with other jurisdictions,” with regulations also in the works. McCarthy Tétrault LLP partner Lorraine Allard says that province’s focus on the Ontario Retirement Pension Plan may have undercut its commitment to PRPPs.
In Alberta, the province departed from the federal example and drafted its own PRPP legislation. The supporting regulations have yet to materialize, however.
- The eager beavers:
British Columbia, Nova Scotia and Saskatchewan all introduced PRPP legislation closely modelled on the federal version, shortly after its passage. However, all three took until earlier this year to finalize regulations. In June, those provinces and Quebec entered into an agreement on the issue with the federal government. Under the agreement, pension administrators wishing to seek a licence or register a PRPP will only have to apply through the federal Office of the Superintendent of Financial Institutions.
- Quebec charts its own course
The most enthusiastic response has come from Quebec, which was the first province to introduce legislation inspired by the federal version. However, the province’s approach also differs significantly from all other versions across the country. Although Quebec named its version of the PRPP the voluntary retirement savings plan, participation will eventually be mandatory for all employers with more than five employees, as long as they don’t offer their own workplace pension. Employees can still opt out, however.
Under Quebec’s phased approach, employers with more than 20 employees must offer voluntary plans by the end of 2016. Employers with between 10 and 19 employees will need to offer them by Dec. 31, 2017, while the province has yet to set a final date for those with between five and nine employees.
Michael McKiernan is a freelance writer.
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