Pension plans can be a very helpful retention mechanism for good employees (and, it must be noted, bad ones too), and many larger employers offer them to their employees as part of their overall compensation package. However, the cost and complexity of pension plans have also meant that they may not be considered by most smaller employers. Recent legislative enactments have attempted to address this.
In 2012, the federal government enacted the Pooled Registered Pension Plans Act, creating Pooled Registered Pension Plans (PRPPs) at the federal level, in an effort to make large–scale defined contributions pension plans available to employees of small companies and to self–employed individuals. PRPPs are designed to be easy for small–scale employers to join, with the bulk of administration being handled by professional third–party financial constitutions, while also providing participants with all of the investment savings and opportunities of large pooled funds. On May 2, 2016, the government of British Columbia brought sections of Bill–9 into force, allowing provincially–regulated BC employers to offer their employees the ability to participate in PRPPs.
As British Columbia employers in smaller enterprises may wish to offer their employees the option of participating in a PRPP, now is a good time to learn how they work and whether they are right for your workplace. Take a look at the CRA’s PRPP info page to learn more. Importantly, while PRPPs offload a number of administrative functions to third–parties, the decision as to which third party to select and the ongoing monitoring of that provider would remain the employer’s responsibility.
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