- Backgrounder: The Retirement Income Landscape in Canada
- Backgrounder: How Pooled Registered Pension Plans Will Address Gaps in Canada’s Retirement Income System
The Honourable Ted Menzies, Minister of State (Finance), and the Honourable Christian Paradis, Minister of Industry, today announced that the Government of Canada is introducing changes to Canada’s pension landscape that will make saving for retirement easier for millions of Canadians.
Legislation was introduced today in Parliament, implementing the federal portion of the Pooled Registered Pension Plan (PRPP) framework. Since PRPPs are particularly applicable to small business, Minister Menzies delivered his remarks at a small radio station without a company pension plan.
“Today marks a major milestone in our efforts to ensure the ongoing strength of Canada’s retirement income system by providing a pension option for the many workers, like those here at Canadian Multicultural Radio, who currently do not participate in a company pension plan,” said Minister Menzies. “Incredibly, just over 60% of Canadians do not have a workplace pension plan. Canadians work hard to realize their retirement dreams, and PRPPs will offer them a new, low-cost and accessible pension option to help meet their goals.”
“We are thrilled at the opportunity to provide our staff with an option for retirement savings,” said Thomas Lambert, Chief Executive Officer of Canadian Multicultural Radio. “The PRPP is just the kind of option we’ve been searching for. With the savings on the administrative costs we can incentivize our staff towards better retirement savings.”
PRPPs are the outcome of several years of cooperation, research and consultations by Canada’s finance ministers on the best ways to ensure the long-term strength of Canada’s retirement income system.
“If you invest in a PRPP you will benefit from lower investment management costs associated with the large scale of these funds,” said Minister Menzies. “Essentially, you will be buying in bulk. This will leave you with more cash in your pocket when you retire.”
Provincial enabling legislation will need to be introduced for the framework to become fully operational.
“Canadians want their governments to act on their priorities and deliver results on a timely basis, and the PRPP is a prime example of what we can accomplish for Canadians when governments work together,” said Minister Paradis. “The Government of Canada is therefore confident that the provincial side of the framework will soon be in place to help Canadians reach their retirement objectives.”
In addition, the tax rules for PRPPs are being developed by the Government of Canada and will be released in draft for comment shortly. The PRPP tax rules will apply to both federally and provincially regulated PRPPs.