Canada mulls plan for pooled pensions

Thu Dec 16, 2010 4:14pm EST
 
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By Louise Egan

OTTAWA (Reuters) - The government aims to create a new type of private pension plan within a year that would boost retirement savings for the self-employed and workers in small business, Finance Minister Jim Flaherty said on Thursday.

Flaherty needs the endorsement of his provincial counterparts to implement the "pooled registered pension plans", or PRPPs, and expects to get it at a meeting with them on Monday in the Rocky Mountain resort of Kananaskis, Alberta.

The plan may set back efforts to expand benefits under the public pension system, the Canada Pension Plan, which has been the focus of the opposition Liberal and New Democratic parties.

The new option would pool contributions from workers across multiple companies, or independent workers who would otherwise not have access to a private defined-contribution pension plan. Multiple employer plans exist in Canada already, but are restricted to employers within the same industry.

The funds would likely be managed by insurance companies. The employers offering such a plan would not have to make contributions.

"The gap we're trying to address in pension reform in Canada is in some 20- and 30- and 40-year-old Canadians. It's a minority but it's a significant minority. They're saving but they're not saving enough for their retirement," Flaherty told reporters.

"We think the pooled pension plans will make a serious dent in that savings failure."

Existing options are the public Canada Pension Plan (CPP), plans offered by employers, and individuals' own registered retirement saving plans (RRSPs).   Continued...

 
<p>Finance Minister Jim Flaherty speaks during Question Period in the House of Commons on Parliament Hill in Ottawa December 13, 2010. REUTERS/Blair Gable</p>