Update on PRPPs: New bills in Alberta and in Quebec

You are here

May 01, 2013

Alberta introduced legislation on April 18, 2013, for Pooled Registered Pension Plans (PRPPs), following Saskatchewan and BC,1 as reported in our News & Views of April 2013. 

Unlike the Bills in Saskatchewan and BC, which simply adopted large parts of the federal legislation, Alberta’s Bill 18, entitled the “Pooled Registered Pension Plans Act (“Alberta PRPP Act”), provides stand-alone legislation for PRPPs. However, the key features of the Alberta PRPP Act are similar to the federal legislation.

Like the federal legislation, employers in Alberta will not be required to offer a PRPP. However, if the employer does offer a PRPP in Alberta, employees will be automatically enrolled unless they opt out. Employer contributions will be optional under the Alberta PRPP Act. One minor difference is that the federal legislation requires PRPPs to be “low-cost”, while the Alberta PRPP Act simply states that a PRPP is intended to provide “a means of saving for retirement income on a pooled low-cost basis”. In a Questions & Answers document, Alberta Finance says that PRPPs will likely be available in Alberta by 2015.

In Quebec, the government introduced on May 8, 2013, a Bill entitled “An Act respecting voluntary retirement savings plans”, similar to the one introduced by the previous government. In its April report, the D’Amours expert committee recommended that these plans be introduced quickly.

As recommended by this committee, employers (with five or more employees who have at least one year of continuous service) will not be required to offer a Voluntary Retirement Savings Plan (VRSP) if they have set up a group tax-free savings account (TFSA) to which employees can contribute by payroll deductions. This exception was not in the Bill tabled by the previous government. The other exceptions concern employers (with five or more employees with at least one year of continuous service) who allow their employees to contribute to a registered retirement savings plan (RRSP) or a registered pension plan (RPP) through payroll deductions. In the new Bill, the requirement (from the previous Bill) that an RPP be contributory seems to have been removed. Thus, an employer that offers a strictly non-contributory defined benefit pension plan would not be required to set up a VRSP.

According to the Quebec government communiqué, the default employee contribution rate will be set at 2% on the plan’s effective date. Once the Bill is adopted, it will come into force on January 1, 2014, and employers will have until December 31, 2015 to comply with the obligation to provide a VRSP.

1 Note that in BC, the PRPP Bill was not adopted before the election call, so the next government will need to determine whether new legislation should be introduced.

News & Views - May 2013