One of the selling points for Pooled Registered Pension Plans (PRPPs) is the expectation of lower administrative costs than many pension plans offered by employers, according to a news release. However, this will be difficult to achieve without a consistent national regulatory framework for such programs, which will require more coordination from the provinces than has been seen to date, Towers Watson says.
In light of those efforts, Towers Watson suggests four “guiding principles” to developing a national retirement income system:
- Reform should target those in need of increased retirement savings – middle income earners;
- The costs of reform should be sustainable, and affordable to taxpayers, employers and governments;
- Reform should limit concentration of investment and other risks; and
- Reform should maintain an appropriate balance between individual and government responsibility for individual savings, and ensure an appropriate level of individual choice.
“We believe that the proposed PRPPs have greater potential to be both flexible and affordable than contemplated changes to the CPP. However, as registered pension arrangements will remain an important tool for attracting and retaining a skilled workforce for employers in many sectors, it is essential that PRPPs not undermine these plans,” said Martine Ferland, Canadian Retirement Practice Leader at Towers Watson, in the news release.
The consultancy declares: “Towers Watson encourages the federal and provincial governments to work together to modernize Canada’s pension and tax laws so as to encourage broader participation in affordable and flexible retirement savings programs.”
The Canadian government’s latest pronouncement on potential pension expansion is at http://www.fin.gc.ca/activty/pubs/pension/prpp-irpac-eng.asp, while Towers Watson’s analysis of it is at http://www.towerswatson.com/assets/pdf/3882/Issue-2_Rethinking-Retirement.pdf.