Insurance industry call for action on PRPPs

The Ontario government’s reluctance to move ahead with implementing PRPPs in the province has raised the ire of several prominent industry leaders.

A letter to Ontario finance minister Dwight Duncan—jointly signed by Frank Swedlove, president of the Canadian Life and Health Insurance Association, Perrin Beatty, president and CEO of the Canadian Chamber of Commerce, and Catherine Swift, president and CEO of the Canadian Federation of Independent Business—urges the government to reconsider its position taken in the recent budget and begin implementation of PRPPs for Ontario employees.

“We are writing to you, Minister, to encourage the Ontario government to proceed as quickly as possible with the establishment of PRPPs,” reads the letter. “PRPPs are pooled, low-cost, professionally-managed and transferable pension plans that provide opportunities for the millions of Canadian workers, including the self-employed, who do not currently have access to any type of pension plan at the workplace. In Ontario alone, it is estimated that over 1.2 million workers fall into this category.”

In its March 27 budget, the Ontario government voiced several concerns around PRPPs, including the following:

• that Canadians will refocus their retirement savings into PRPPs at the expense of other current vehicles;
• that the federal PRPP framework lacks clarity around whether mandatory employee contributions would be flexible enough to adapt to individuals’ changing financial conditions; and
• that the need for each province to establish its own licensing and regulatory regime around PRPPs would result in costs that would be passed along to plan members.

The budget did state that Ontario would continue to work with its provincial counterparts to examine how best to implement PRPPs. However, it reiterated the Dalton McGuinty-led government’s position that expansion of the CPP would be the better path to pension reform in Canada.

The three industry association heads urged Ontario to follow the lead on PRPPs taken by its neighbour to the east.

“Quebec announced a regime equivalent to PRPPs, called VRSPs, in their recent budget. It is time for Ontario now to step up to ensure that Ontario residents, particularly those who work for small and medium sized businesses, can reap the benefits of a low-cost, accessible pension plan,” concluded the letter.

This article originally appeared on BenefitsCanada.com.