Skip to content.

Federal Government Proposes "Pooled Registered Pension Plans"

On December 16, Minister of Finance Jim Flaherty released a draft report entitled "Framework for Pooled Registered Retirement Pension Plans" (the "Draft Report") in advance of his December 20 meeting with provincial and territorial finance ministers in Kananaskis, Alberta.

The Draft Report proposes the creation of Canada-wide pooled registered pension plans (PRPPs) as a mechanism to enhance retirement savings in lieu of further enhancements to the Canada Pension Plan.

PRPPs would be large, independent, defined contribution pension plans in which employers, employees and the self-employed could enroll. A registered financial-sector administrator would be responsible for managing the collective investment of the PRPP fund and overseeing day-to-day plan administration. Participants would benefit from both a PRPP’s economies of scale and the array of investment offerings tailored to participants’ goals and levels of risk tolerance.

Crucially, the Draft Report proposes that only "regulated financial institutions that are capable of taking on a fiduciary role" would be eligible to administer PRPPs. The Draft Report also specifies that this would include "trust and insurance companies, and other financial institutions with a trust subsidiary."

This is a draft document. Minister Flaherty is encouraging his provincial and territorial counterparts to reach agreement on a final framework document for stakeholder input by the summer of 2011. Accordingly, there will be time for interested parties to make submissions. There will no doubt be requests to modify the framework to broaden the class of eligible administrators to include entities such as existing pension administrators, investment dealers, specially incorporated subsidiaries or others.

PRPPs represent an exciting opportunity to expand the retirement savings vehicles available to Canadians. Financial institutions seeking to offer PRPPs will want to stay on top of this proposal in order to develop timely and appropriate products and services. Employers should also stay on top of these proposals so that the final framework document reflects their needs and concerns.

If you have any questions about the Draft Report or how PRPPs may affect you, please contact any member of the Pensions, Benefits & Executive Compensation Group or your regular McCarthy Tétrault lawyer.