The government of Saskatchewan has introduced legislation to implement pooled registered pension plans (PRPPs) in the province.
The Pooled Registered Pension Plans Act will ensure all Saskatchewan workers are eligible to enrol in low-cost, tax-assisted pension plans, providing an alternative for those workers who currently do not have access to group pension plans, said the provincial government.
Amendments are also being introduced to the Saskatchewan Pension Plan Act which will permit the trustees of the Saskatchewan Pension Plan (SPP) to apply to be a licensed PRPP provider.
“As our province grows, it is important that our government looks for ways to help improve the quality of life for Saskatchewan people,” Finance Minister Ken Krawetz said. “In some instances the generators of job growth — entrepreneurs, small businesses and self-employed people — struggle to provide a registered workplace pension plan. PRPPs offer people an important option — a simple, defined contribution plan that keeps costs and fees down for employers, particularly small businesses.”
The province’s introduction of legislation follows the federal government’s legislation passed in December 2012, as part of a national effort to make pension plans available to millions of Canadians who don’t have access to occupational pension plans. British Columbia and Quebec have introduced similar legislation.
PRPP providers will administer these new plans, reducing the administrative burden on employers. In addition, employer contributions to PRPPs will not be considered salaried compensation and will have certain payroll advantages over alternative models like group registered retirement savings plans (RRSPs), said the provincial government.
Under the legislation, an employer’s enrolment in these plans is optional. If an employer chooses to offer a PRPP to its workers, the employees will be automatically enrolled but will also have the ability to opt out.
Employers will not be obligated to make matching contributions and workers whose employers do not set up a PRPP, as well as self-employed individuals, will be able to deal directly with a PRPP administrator to open an account, similar to opening an RRSP.