New Pension Requirements Coming Soon
Attention Small Business Owners
It is estimated that 7.5 million Canadians do not have Pension Plans.
PRPP’s ( Pooled Registered Pension Plans) the federal government has taken another step toward launching Canadians’ newest pension option. Tailored to meet the needs of small business owners and self‐employed individuals, the PRPP seeks to make pensions accessible to the significant number of Canadians who don’t currently have a group retirement program in their workplace.
Created as a defined contribution (DC) pension, the PRPP will feature a streamlined investment selection and simple application process. In consultation with the provinces and the financial services industry, the federal government has consistently articulated the importance of making the option easy for business owners to manage as well as affordable for both employers and employees.
A few of the PRPP features and benefits that have been confirmed at this point are noted here. These will be updated as provinces announce their plans.
- No employer contributions are required. Employers who do choose to contribute will have the flexibility to change contributions.
- The employer will not have fiduciary responsibility. Instead, the administrator the employer selects will have a duty of care to plan participants, providing oversight of investment options, regular member updates, and educational resources. (Even with Group RRSPs, employers have fiduciary responsibility – an accountability misunderstood by many advisors according to Manulife’s research.)
- After completing the initial plan set‐up, employers will have minimal involvement in ongoing administration (notifying administrator of new and terminating employees; deducting and remitting contributions).
If you have any questions please contact me.