The federal government hopes to implement new framework allowing for the establishment of Pooled Registered Pension Plans “as soon as possible” in order to help Canadians better prepare for retirement, Ted Menzies, Minister of State at the Department of Finance said on Friday.

Speaking at the Investment Fund Institute of Canada’s annual conference in Toronto, Menzies said the government continues to make progress on its goal of introducing PRPPs.

He hopes to present the PRPP legislation to the House of Commons before the end of the year. Then, each province needs to pass their own legislation related to the plan.

“This is a fundamental change; it’s something new in our overall pension system,” he said. “We’re hoping it will come into force as soon as possible.”

Finance ministers from across the country agreed on a framework for the introduction of PRPPs in December 2010 as part of efforts to bolster the strength of Canada’s retirement income system.

The plans will allow individuals who currently aren’t members of a pension plan – such as the self-employed and employees of companies that don’t offer a plan – to participate in a large-scale, low cost pension plan, the government says.

“Over 60% of workers in Canada don’t have a workplace pension plan. That’s a lot of people,” Menzies said. “There hasn’t been a low-cost mechanism to do that. This will provide a low-cost, broad-based opportunity for employers to offer this to their employees.”

The cost savings in investment management costs through the PRPPs will result from the use of large pooled funds, Menzies said.

“In effect,” he explained, “they will be buying in bulk.”

Under the proposed framework, PRPPs will be administered by private-sector financial institutions. Menzies said he’s seen broad-based interest among institutions interested in administering the plans, which he considers positive.

“The more players we have in it,” he said, “the more options there are, the more competition there is, the lower the cost for those people that want to save for their retirement.”

Menzies has been consulting with Canadians on the proposed PRPP framework over the summer, and he said the consultations have reinforced the need for a more robust retirement savings framework.

“We’ve had many positive comments from the business sector and from individuals that don’t now have a pension plan,” he said. “This is an option that employers have been looking for.”

The consultations have revealed that many individuals across the country don’t feel financially prepared for retirement, Menzies said. He pointed out that more than 90% of Canadians don’t take advantage of Registered Retirement Savings Plans.

The PRPP framework won’t solve the retirement savings gap for all Canadians, Menzies admitted.

“This won’t capture everyone – not everyone will take us up on this offer,” he said.

Menzies said an increase to the Canada Pension Plan is still an option that the government will consider as part of process of reforming Canada’s retirement savings system. He noted that a triennial review of the CPP will begin soon.

In the meantime, he said PRPPs will present a meaningful new retirement savings option for Canadians.