TORONTO - The federal government is launching a cross-country tour to discuss the potential for pooled registered pension plans as another option to help Canadians save for retirement.
The plans would give small businesses and self-employed people more resources to set up retirement programs for employees by allowing employers to pool money with other employers.
Finance ministers first agreed to examine the potential for the plans, called PRPPs at a December 2009 meeting on pensions in Whitehorse, as part of a report that noted Canadians may not be saving enough for retirement.
The federal government has come under pressure to increase benefits because the global recession and resulting stock market fallout have taken a big chunk out of private retirement savings plans.
Both pooled pension plans and the prospect of expanding the public Canada Pension Plan have been bandied about as a potential solution as aging baby boomers leave the workforce and there are fewer workers to pay into the fund.
As a provincial fight about expansion of the CPP continues, Federal Finance Minister Jim Flaherty has suggested the PRPPs would be a good alternative to increasing public plan costs as the global economy remains fragile.
The large-scale, optional pooled plans would be managed by a regulated financial institution, which would decrease the cost and complexity for a small employer.
The plan would be a big boost for banks, insurance companies and other financial institutions, who stand to gain new business opportunities. Many of them have been proponents of the creation of such a private-sector solution.
But critics say pooled plans, administered by banks and insurance companies, would leave out too many people because contributions would be voluntary.
The government has said a high level of regulatory harmonization across federal and provincial governments will be required to increase the scale of such plans.
Potential tax changes to accommodate those plans would be developed and implemented by the federal government.
Quebec became the first province to introduce the new system in its 2011-2012 budget in March. The province has said that it wants its counterparts to follow its lead.
