Canada will see the introduction of a new private sector retirement savings vehicle as federal Minister of Finance Jim Flaherty announced a pooled registered pension plan (PRPP) proposed last week will go ahead.
This new plan will provide a low-cost retirement savings opportunity for employees — with or without a participating employer — and the self-employed, he said, after a meeting of Canada’s provincial and territorial finance ministers yesterday in Kananaskis, Alta.
“PRPPs will be a major breakthrough for the Canadian pension market. They will make well-regulated, low-cost, private-sector pension plans accessible to millions of Canadians who have, up to now, not had access to such plans,” said Flaherty. “In fact, many employees of small and medium-sized businesses and self-employed workers will now have access to a private pension plan for the very first time.”
Several of the provinces had also pushed for changes to the Canada Pension Plan (CPP) but no decisions were made on that front.
“We agreed that our officials should continue their work on CPP,” he said. “We will come back at the June meeting to discuss options and concerns.”
The ministers agreed more work is needed with respect to how the CPP can be enhanced in the future, said Tom Marshall, minister of finance for Newfoundland and Labrador
"Newfoundland and Labrador strongly expressed its support for changes to the CPP and I am pleased that it remains high on the ministers’ agenda. Provinces and territories, along with the federal government, will explore ways to advance this issue as we work towards the next meeting in June."
The ministers also discussed the economic situation domestically and internationally, and the need for eliminating deficits and lowering debt. While there are encouraging signs of improvement across a range of indicators, the situation remains fragile, with concern over mounting public debt in many countries and its implications for long-term growth, said Flaherty.
“It is important to remember that Canada’s economy is recovering well before other nations precisely because we had our fiscal fundamentals in order going into the recession,” he said. “Returning to that position will give our recovery more traction and make us even stronger going forward — supporting jobs and growth and insulating us from these global shocks in the future.
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