Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Pension & Employee Benefits, December 2010

On December 15, 2010, Minister Flaherty released a backgrounder entitled "Framework for Pooled Registered Pension Plans" that is expected to be discussed at the December 19-20 meetings of the Ministers of Finance and Treasurers. It proposes changes to permit defined contribution Pooled Registered Pension Plans (PRPPs) and includes the possibility of mandatory employer participation.

To view a copy of Minister Flaherty's letter on this matter and the government Backgrounder, click here.

The main items discussed in the Backgrounder are as follows:

  1. Eligible Administrators of the PRPPs will be regulated financial institutions, including trust and insurance companies and other financial institutions with a trust subsidiary.
  2. The Administrator will have a fiduciary duty to plan members.
  3. The PRPPs will have a suitable low-cost default investment option for a broad group, and a manageable number of investment options for members to choose from.
  4. Administrators will be required to provide all members with prescribed information on a regular, periodic basis.
  5. There will be certain tasks that an employer that offers a PRPP must fulfill.
  6. Employers may be permitted to enrol their employees into a PRPP at any stage of their employment and there may be rights of an employee to "opt out" shortly after enrolment.
  7. The framework also provides that employers will have the ability to increase the employee's default contribution rate from time to time, potentially subject to a new "opt out" right.
  8. Employer contributions will be locked-in with some jurisdictions permitting what appears to be limited unlocking rights.
  9. Jurisdictions will make a determination as to whether to require mandatory employer participation.
  10. Employers contributing directly to a PRPP and their employees will be permitted to make contributions under the RPP limits, with the pension adjustment reporting. Self-employed persons and other employees will contribute on the basis of their available RRSP limit."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.