Ontario has cleared the way for pooled registered pension plans (PRPPs) in the province by passing the necessary legislation to enable firms to offer the new voluntary retirement savings option, the Ministry of Finance announced Tuesday.
The legislation creates a framework for PRPPs for businesses to offer these types of plans to their employees as well as making PRPPs available to the self-employed.
Ontario joins five other provinces that have passed legislation to implement PRPPs: British Columbia, Alberta, Saskatchewan, Quebec and Nova Scotia.
The federal government has pushed the creation of PRPPs as a voluntary way to increase retirement savings. However, Ontario also remains committed to introducing its own public plan, the Ontario Retirement Pension Plan (ORPP).
"The retirement savings challenge is complex, requiring a variety of tools to ensure a strong and stable retirement income system. Voluntary retirement savings mechanisms such as PRPPs are an important part of the savings toolbox," says Charles Sousa, Ontario's minister of finance. "The actions we are taking now will enhance retirement savings for all Ontarians and strengthen our economic future."
The Ontario government notes that, currently, only 28% of private sector employees in the province have a workplace pension plan, and it says that many people are not saving enough on their own to maintain their standard of living in retirement.
Participation in PRPPs is voluntary for both employers and employees. At firms that decide to offer them, employees would be automatically enrolled into the plan, but they would have the right to "opt out" within 60 days. PRPPs are also portable for the employee.