Digital Brain
digital brain
digital brain

Ontario’s Pooled Registered Pension Plans Act Takes Effect

November 2016 Employment and Labour Bulletin 2 minute read

On November 8, 2016, Ontario Pooled Registered Pension Plans Act, 2015 (“PRPP Act”) and its regulations came into force. We previously commented on this anticipated legislation here.

The new Act establishes the Pooled Registered Pension Plan (“PRPP”) as another tool for Ontario workers – both employees and self-employed – to save for retirement. As a voluntary and relatively low-cost scheme, PRPPs may also be a helpful option for small and medium-sized businesses, for whom the operation of a full pension plan may be too onerous.

PRPPs are a form of defined contribution pension plan that are administered by an approved financial institution – typically banks and insurance companies.  Once an employee has a PRPP account, all contributions are credited to the employee’s account. The funds in the employee’s account are pooled with the other funds in the same PRPP.

The employer’s obligation is limited to enrolling in a given PRPP and making contributions, if any, once enrolled. An employer’s contract with the PRPP administrator must specify the amounts of employee and employer contributions, if any, along with the frequency of those contributions. Unlike typical pension plans, employers have no role in managing PRPPs; PRPPs are, instead, managed by an administrator appointed by the financial institution that set them up.

Contributions made by both the employer and employee are deductible in calculating their respective incomes under the Income Tax Act.

The Ontario PRPP Act and regulations largely incorporate by reference the federal Act of the same name and its regulations, which were established in 2012. The Ontario legislation does have, however, its own appeal and enforcement framework.

The province has also signalled its intention to work multilaterally with the federal government and other provinces on a single framework for the administration and supervision of PRPPs across the country.

As indicated above, PRPPs could become a useful vehicle for Ontario employers that want to offer competitive retirement benefit options to current or future employees.

by Kyle Lambert and Lyndsay Wasser

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2016

Insights (5 Posts)

Featured Insight

Corporate Counsel Webinar | Beyond the Basics: Tools and Strategies to Create a More Inclusive Legal Work Environment

Join our guest speaker, Jodie Glean-Mitchell, Executive Director of Equity, Diversity and Inclusion, from the University of Toronto as we invite participants to dive deeper into the intricacies of intersectional identities and experiences with (micro)aggressions and their implications for the legal work environment.

Details
Tuesday, December 13, 2022
Featured Insight

The Exclusion of Intrusion Upon Seclusion: Ontario Court of Appeal definitively determines that “Database Defendants” cannot be held liable for intrusions committed by third-party hackers

The Court of Appeal for Ontario released a trio of decisions that materially impact the viability of class actions following a data breach.

Read More
Dec 1, 2022
Featured Insight

20 More Years of Copyright Protection Starting December 30, 2022

The extension of general copyright protections from 50 years to 70 years after the life of the author shall come into force on December 30, 2022.

Read More
Nov 30, 2022
Featured Insight

Canada Embraces the Indo-Pacific: New Canadian Strategy Expands Opportunities for Two-way Trade and Investment

Canada announces new Indo-Pacific Strategy, applies to join Indo-Pacific Economic Framework, and what it all means for Canadian businesses.

Read More
Nov 30, 2022
Featured Insight

Reporting Issuers Need to be Factual and Balanced, Striving for Accurate and Comprehensive ESG reporting

The CSA cautions issuers against overly promotional "greenwashing" language in continuous disclosure in its biennial report - Staff Notice 51-364.

Read More
Nov 30, 2022