Pension Plans for SMEs: NS Introduces Pooled Registered Pension Plan Law

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Pension Plans for SMEs: NS Introduces Pooled Registered Pension Plan Law

October 16, 2014

By Michael Murphy, Lawyer at McInnes Cooper,
Kiersten Amos, Former Lawyer at McInnes Cooper

Note: As of June 25, 2016, provincially regulated workers and employers in Nova Scotia, Quebec, BC and Saskatchewan can participate in Pooled Registered Pension Plans (PRPP) regulated by the Federal Government. Pan Canadian PRPPs can now be offered on a cost-effective basis in participating jurisdictions, with regulation and supervision occurring largely or entirely at the federal level.

On October 15, 2014, the Nova Scotia government introduced legislation that will, if passed into law, permit Pooled Registered Pension Plans (or “PRPPs”) in NS:

Pooled Registered Retirement Pension Plans. PRPPs are intended to give employees and self-employed people who do not have access to a traditional workplace pension an accessible, low cost retirement option. PRPPs pool the assets of individual members so they can offer more investment and savings opportunities at lower administrative costs. PRPPs are also portable so they can move with members throughout their careers.

SMEs. PRPPs are an attractive option for small to medium-sized employers wanting to provide employees with a pension plan, but avoid the administrative complexity and potential liability related to traditional pension plans. Participation is voluntary and employer contributions to PRPPs are not mandatory.

PRPPs in Canada. The federal government has passed legislation permitting PRPPs for federally regulated industries. Under that legislation, PRPPs are voluntary and must be administered by qualified financial institutions licensed specifically for the purpose of providing PRPPs. On October 7, 2014, the federal government announced that five life insurance companies have been licensed to provide PRPP’s for federally regulated employers. British Columbia, Saskatchewan and Alberta have also passed, but not yet made effective, similar legislation. Quebec has enacted legislation requiring businesses over a certain number of employees to make available to employees a Voluntary Retirement Savings Plan, a form of PRPP.

Proposed NS Legislation. Like the legislation in Saskatchewan and BC, the proposed NS legislation imports various provisions from the federal legislation. The intent is that if a qualified financial institution is licensed by the federal government, then that license will be sufficient under the provincial legislation. Many of the details surrounding PRPPs, such as the ways in which funds may be invested, and the types of investment options offered, will be found in the regulations that will be implemented pursuant to the PRPP legislation.

Timing. The government says it expects to complete the regulations and have the framework to offer PRPPs in NS in place in early 2015.

Read Bill No. 38, “An Act Respecting Registered Pension Plans”.

Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Pension and Benefits Team to discuss this topic or any other legal issue.

McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.

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