Skip to content

Client Update: Pension update: Countdown to Nova Scotia Pooled Registered Pension Plans

On May 4, 2016, the Nova Scotia Pooled Registered Pension Plans Act (“PRPP Act”) was proclaimed in force, and finalized Pooled Registered Pension Plan Regulations were released. While there were no major changes from the previously released draft regulations, the proposed rules were clarified with respect to licensed administrators, payments and options available after separation of spouses and required terms for life annuity contracts purchased with PRPP funds. As Pooled Registered Pension Plans (“PRPPs”) will soon be available to Nova Scotia employers, we count down some of the key milestones and features.

What is a PRPP?

10. PRPPs are defined contribution plans – Employers and employees get to decide how much to contribute with no specified promise or goal of a certain monthly benefit at retirement.

9. Pooling to reduce costs The legislation allows multiple employers to “pool” their employees’ contributions under a single plan, which makes administration feasible for smaller employers while helping to keep costs low. Licensed administrators must provide the plan for “low cost” (i.e. at or below those for defined contribution plans with 500 or more members).

8. Participation is voluntary  Employers are not required to set up a PRPP. An employer may do so by entering into a contract with an administrator that sets the amounts and frequency of employer and employee contributions. Employer contributions are voluntary and may be set at zero. Employees may also set their contribution rate to zero once 12 months have elapsed after starting their contributions to the PRPP. Employees also have the one-time option to withdraw entirely by notifying the employer within 60 days of being told of their membership in the plan.

7. Plans are set up by licensed third party administrators – Administrative duties are carried out by licensed third party administrators (so far, insurance companies) rather than employers. The licensing and registration requirements are: (a) corporations must be federally licensed administrators; and (b) PRPPs must be registered federally.

PRPPs across Canada

6. Nova Scotia follows the Federal model  The model was first developed by the Federal government under the Federal Pooled Registered Pension Plans Act (“Federal Act”). The Nova Scotia PRPP Act originally passed in October, 2014 adopted the Federal framework, and draft regulations were released in September, 2015. As a result, the Federal Act will apply in Nova Scotia, subject to minor exceptions in matters such as the definition of spouse and transfer options. Other provinces such as British Columbia, Saskatchewan and Ontario have taken a similar approach by adopting the Federal Act.

5. Not all Provinces have followed suit – Nova Scotia is the first and so far the only Atlantic Canadian province to adopt PRPPs. Other provinces have adopted them but with different approaches. For example, enrollment in Quebec VRSPs (that province’s PRPP’s) is mandatory for certain employers. Alberta generally followed the Federal model but with its own legislation rather than adopting the Federal Act.

4. Multilateral agreement  An agreement is being finalized to streamline administration and supervision of PRPPs, particularly those that operate in multiple jurisdictions. Any province that has passed PRPP legislation, including Nova Scotia, may join the agreement. The agreement would mean that federally licensed administrators are exempt from having to be licensed in the provinces that are part of the agreement. All licensing would be handled by the Federal Office of the Superintendent of Financial Institutions (OSFI).

PRPPs in Nova Scotia

3. Portability – As previously reported, one of the differences in Nova Scotia is that funds in PRPPs can be transferred to retirement savings arrangements that are prescribed under the Pension Benefits Act. Funds in a PRPP may be transferred to a locked-in vehicle, such as a locked-in retirement account.

2. Spouses – Also, the PRPP Act follows the definition of spouse under the Nova Scotia Pension Benefits Act, which allows a member to have more than one spouse. The regulations require transfer of a spouse’s “proportionate share” of funds out of a PRPP account upon separation. They may be transferred to the spouse’s PRPP account, pension plan or prescribed retirement savings arrangement, or to purchase a life annuity.

What’s next?

1. PRPPs coming soon – After the multilateral agreement is finalized and PRPPs and administrators will be licensed in Nova Scotia, businesses with employees in the province will be able to offer this new retirement savings option. The Province expects this to be completed in the Spring. Assuming Nova Scotia joins the agreement, the first step to making PRPPs available will be administrators obtaining a federal license and registration. A list of federally registered plans and licensed administrators is online. Those companies will soon begin offering PRPPs in Nova Scotia.

Employers can consider whether they wish to offer a PRPP to their employees. In doing so, employers will need to decide:

  • Which employees will be eligible;
  • Amount and frequency of contributions;
  • Which administrator to use.

Employers should keep in mind that PRPPs are not risk-free. Even with a third party administrator, employers have important responsibilities in PRPPs including working with and monitoring the administrator, selection of investment options and communications with employees. Those responsibilities do not mean that employers should avoid PRPPs but should be considered when employers look at this retirement savings option. For some more information on issues to be aware of, see the PRPP Checklist.

If you have any questions about PRPPs, please contact the members of our Pensions and Employee Benefits team including Level Chan and Dante Manna.

SHARE

Archive

Search Archive


Search
Generic filters

 
 

The Winds of Change (Part 4): A Review of Rental and Royalty Regimes for Wind Development on Crown Lands: Options for Newfoundland and Labrador’s Economic Wind Policy

August 3, 2022

By: John Samms, Sadira Jan, Paul Kiley, Dave Randell, Alanna Waberski, and Jayna Green As we explained in our July 6, 2022 “Winds of Change” article, the announcement made by Minister Andrew Parsons on April…

Read More

Update on the Economic Mobility Program for Refugees (phase 2): The Economic Mobility Pathways Project (“EMPP”)

August 2, 2022

Included in Beyond the Border – July 2022 By Brittany Trafford; Fredericton   Brief Overview In an attempt to address the Canadian labour market shortages, the Economic Mobility Pathways Pilot (“EMPP”), was introduced in 2018.…

Read More

HR Best Practices When Employing Foreign Workers

July 29, 2022

Included in Beyond the Border – July 2022   By Brendan Sheridan; Halifax Canadian employers are increasingly relying on foreign workers to fill gaps in the labour market and to provide specialized skills. In 2020,…

Read More

Beneficial Ownership Registry Rules Come to New Brunswick

July 28, 2022

By Alanna Waberski, Graham Haynes and Maria Cummings On June 10, 2022, the Government of New Brunswick proclaimed into force Bill 95, which amends the Business Corporations Act (New Brunswick) (the “NBBCA”) to require corporations…

Read More

Recent trends in defined benefits pension plans – a review of public sector plans

July 28, 2022

Included in Discovery: Atlantic Education & the Law – Issue 10 Hannah Brison and Dante Manna Increased financial volatility caused by recent global events has caused public sector defined benefit (“DB”) pension plans to reflect…

Read More

Atlantic Canada offers immigration pathways for workers in Trucking, Health, Construction and Food Service Industries

July 27, 2022

Included in Beyond the Border – July 2022 By Sara Espinal Henao; Halifax It is a well-known fact that Atlantic Canada needs workers. In the aftermath of COVID-19, regional employers in the trucking, health, construction,…

Read More

The winds of change (part 3): Newfoundland and Labrador releases wind energy guidelines

July 27, 2022

By: John Samms, Matthew Craig, Dave Randell,  and Jayna Green On July 26, 2022 the Province of Newfoundland and Labrador (the “Province”) released “Guidelines: Nominating Crown Lands for Wind Energy Projects” (the “Guidelines”). Described as…

Read More

Trends in tenure and promotion for unionized employers

July 25, 2022

Included in Discovery: Atlantic Education & the Law – Issue 10 By Kate Profit    Tenure is a well known and often discussed topic amongst academics. Viewed by unions as a cornerstone of modern universities,…

Read More

Car-Sharing Comes to PEI – Insurance Implications

July 22, 2022

Dalton McGuinty Jr. and Kegan Bradley On May 17th, 2022, Canada’s largest car-sharing company, Turo, brought their platform to Prince Edward Island. The service allows car owners (lessors) to lend out their vehicles to drivers…

Read More

Federal Government announces significant investments in Nova Scotian clean energy initiatives

July 21, 2022

Nancy Rubin & Tiegan Scott On July 21, 2022, the Federal government announced a new investment of up to $255 million for clean energy initiatives in Nova Scotia. The funds will be allocated in two…

Read More

Search Archive


Search
Generic filters

Scroll To Top