British Columbia has introduced new legislation designed to help people save for retirement and provide an additional financial safety net for the approximately two-thirds of B.C. workers who do not have access to group pension plans.
B.C. Finance Minister Michael de Jong introduced the Pooled Registered Pension Plans Act on Feb. 28 — following in the footsteps of similar legislation introduced by Ottawa in December. B.C.’s legislation would make all workers in the province eligible to enrol in defined contribution (DC) pension plans.
The bill is part of a national effort to make well-regulated, low-cost pension plans available to millions of Canadians who do not have occupational pension plans, according to the province.
“British Columbia can now serve as a valuable role model for other provinces seeking to support their citizens through a new low-cost pension option for employers, employees and the self-employed,” said Ted Menzies, federal minister of state for finance.
Pooled Registered Pension Plans (PRPPs) will be managed by licensed financial institutions, reducing administrative burdens for employers and providing tax advantages to employers that are not available under alternative models such as group RRSPs.
Enrolment optional for employers
Based on consultations with stakeholder groups, including the Vancouver Board of Trade, the B.C. Chamber of Commerce and the Canadian Federation of Independent Business, B.C. has elected to make employer enrolment in these plans optional. If an employer chooses to offer a PRPP to its employees, they will be automatically enrolled and have the right to opt out.
Employers will not be obligated to make matching contributions. Workers whose employers do not set up a PRPP will be able to deal directly with a PRPP administrator to open an account — similar to opening an RRSP.
The Office of the Superintendent of Financial Institutions, a federal regulatory agency, has established a framework for licensing and regulating financial institutions that are interested in becoming PRPP administrators.
Quebec, Alberta and Saskatchewan have signalled their intention to pass similar PRPP legislation. B.C. has been working closely with the federal government to ensure this additional savings instrument is available to British Columbians as quickly as possible.
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