Bill C-25, an Act relating to Pooled Registered Pension Plans
(PRPP) (Bill C25) passed first reading in the federal House of
Commons on December 1, 2011.
Bill C-25 is based on the federal government's
"Framework for Pooled Registered Pension Plans", released
in December 2010 following extensive consultation with the
provinces and various industry stakeholders. Its stated purpose was
to increase pension coverage among the 60 per cent of Canadian
employees and self-employed individuals who do not participate in
an employer-registered pension plan. The PRPP design is based on
the perceived needs of both groups. The government PRPPs is
promoting PRPPs as the most " accessible, straightforward and
administratively low-cost retirement option".
The PRPP retirement savings concept that is similar to a
Registered Retirement Savings Plan (RRSP) or registered defined
contribution pension plan (DC Plan). Key features include:
Employers may, but are not required to provide a PRPP to
Employers who provide a PRPP are required to select the Plan
Administrator, choose investment options and set employee
Employers who provide a PRPP may, but are not required to make
contributions to the PRPP;
Employers are require to automatically enroll employees in its
PRPP (parti0time employees after 24 months continuous
Within 60 days of enrollment, employees may opt out or remain
in the PRPP but are permitted to set contribution level at 0%;
Plan Administrators, described as a "certified financial
institutions" without further definition, provide and
administer PRPPs, rather than employers and act in a fiduciary
capacity in relation to PRPP members;
Plan Administrator are responsible for most administrative
responsibilities undertaken by the employer administering a
registered a pension plan; and
Third party administration is expected to lower administrative
costs and complexity for employers - pooling of different PRPP
funds is expected to result in lower investment costs.
Application of Bill C-25
Bill C-25 applies only to federally regulated industries and
employees. Before Bill C-25 becomes law, federal regulations must
be drafted and enacted. The federal government expects these
regulations to be operational at the end of 2012 or in early 2013.
In addition, draft tax regulations are needed to provide the
necessary tax - deferral for PRPP contributions and earnings.
In terms of how the PRPP concept will be implemented by
provincial regulators, Quebec, Manitoba and Saskatchewan already
provide PRPP-type retirement savings programs. Although the
provincial Finance Ministers initially supported the PRPP concept,
it is not universally favoured and it remains to be seen when and
whether the remaining provinces will adopt the PRPP concept. In
each case, legislative and regulatory reforms to minimum pension
benefit standards legislation will be necessary before PRPPs can be
Considerations for employers
Key details still need to be worked out and set forth in
regulations before an employer should consider whether the PRPP
structure is the best alternative for its employees. In the
interim, subject to the outcome of the Finance Ministers'
meeting on December 18-19, 2012, employers could use this PRPP
development period to test drive the PRPP concept with their
employees to determine whether the concept fits its employee and
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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