How To Fix The Flaws In Ottawa’s Design For Pooled Registered Pension Plans

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Page Title:How To Fix The Flaws In Ottawa’s Design For Pooled Registered Pension Plans – C.D. Howe Institute
Article Title:How To Fix The Flaws In Ottawa’s Design For Pooled Registered Pension Plans
URL:https://cdhowe.org/publication/how-fix-flaws-ottawas-design-pooled-registered-pension-plans/
Published Date:December 15, 2011
Accessed Date:February 18, 2025

Dec. 15, 2011 – The federal government’s design for Pooled Registered Pension Plans (PRPPs), as proposed in Bill C-25, has flaws that need fixing to meet the needs of Canadians without a workplace pension plan, according to a report released today by the C.D. Howe Institute. In “Saving Pooled Registered Pension Plans: It’s Up To the Provinces,” authors Keith Ambachtsheer and Edward Waitzer say that in its current form, the design blueprint will fall short of its primary objective: to ensure that the majority of Canadians who do not have a workplace pension will have access to a well-regulated, low-cost, private-sector capital accumulation plan.

“PRPPs are an excellent way to shore the private component of Canada’s pension system,” commented Keith Ambachtsheer, “but they have to be designed right to fulfill their purpose. While the federal proposal is a good first step, improvements are needed.”  The authors argue that provincial leadership is required to breathe life into the federal legislation, by requiring employers to offer PRPPs to employees, and provide well-thought-out default options and an independent PRPP licensing system.

In its current form, the design for PRPPs does not address three key policy challenges posed by Canada’s pension coverage problem, say they authors:

  1. While the goal is maximizing PRPP participation,  voluntary employer PRPP participation, as envisioned in the bill, will result in minimal actual PRPP uptake;
  2. A well-designed default option design for participants is crucial, yet Bill C-25 is virtually silent on this important question;
  3. Fiduciary oversight is also essential, but the bill leaves oversight to current, cumbersome regulatory processes.

“Now it’s up to the provinces,” says Edward Waitzer, “to inform the regulations with appropriate features.” In the authors’ view, those features should include: requiring employers to enroll their employees in a PRPP, as is the case with the CPP/Quebec pension plans; defining minimum requirements for default options; and  creating an independent, expert PRPP licensing body to ensure  administrators are offering participants “value for money.”

Click here for the full report.

For more information contact:

  • Keith Ambachtsheer, Director of the Rotman International Centre for Pension Management, University of Toronto;
  • Edward Waitzer, Professor at Osgoode Hall Law School and the Schulich School of Business, Director of the  Hennick Centre for Business and Law, York University, and senior partner of Stikeman Elliott LLP.

Call C.D. Howe Institute: 416-865-1904, email: cdhowe@cdhowe.org

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