PARLIAMENT HILL—Canadians could soon have another retirement savings option, though it may not be quite the guarantee offered by the Canada Pension Plan (CPP).
Ted Menzies, Minister of State (Finance), on Thursday announced new legislation to create Pooled Registered Pension Plans (PRPP). The voluntary plans, which are targeted at small and medium-sized businesses, will need provincial approval but don’t face the same legislative hurdles as revising the CPP.
Opposition parties described the move as a step in the right direction but not a fundamental solution to the savings shortfall facing future retirees.
New Option
“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,” Menzies said on Canadian Multicultural Radio, where he made the announcement.
The new plans offer smaller employers a relatively inexpensive way to administer a pension option for employees, but the plans will be offered by private sector financial institutions.
“If you invest in a PRPP you will benefit from lower investment management costs associated with the large scale of these funds,” said Menzies. “Essentially, you will be buying in bulk. This will leave you with more cash in your pocket when you retire.”
Criticisms
NDP pensions critic Wayne Marston said the plans don’t address the fundamental problem of Canadians not saving for retirement.
Canadians have other voluntary saving options now, but are electing not to save, noted Marston
“In thirty years, they are going to hit a wall,” he said.
