Canadians Design New Private-Section Pension

A news report in the St. Albert Gazette said retirement savings programs were a key topic of conversation at a finance meeting in Kananaskis last week.

The news story said the proposed framework was designed to enable more people to benefit from the lower investment management costs that result from membership in a large, pooled pension program.

Regulated financial institutions will act as administrators of the plans on behalf of businesses and will be responsible for performing all of the required management and operational functions of a plan operating as a PRPP. Businesses owners will be responsible for choosing a plan that best fits their needs and for enrolling employees in the plan, the news story said.

“This new private-sector retirement savings vehicle will improve the range of retirement savings options available to Canadians by providing a low-cost retirement savings opportunity for employees — with or without a participating employer — and the self-employed,” said federal Finance Minister Jim Flaherty, in a statement, according to the news story. “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.”

Alberta Finance Minister Ted Morton said he was in favour of the plan, calling it the “type of targeted solution Alberta has been advocating to address concerns that many middle-income Canadians are not saving enough for their retirement,” in a statement released last week.

Flaherty said finance ministers also reviewed work done on a range of options for expanding the Canada Pension Plan during their meeting last week.