Feds, provinces agree on private pension solution

Federal Finance Minister Jim Flaherty has managed to persuade his provincial counterparts to throw their support behind the creation of Pooled Registered Pension Plans, or PRPPs.

Under his proposal, small and medium-sized businesses and self-employed people will have access to private pension plans, which are very similar to RRSPs or Defined Contribution RPPs. The difference, however, is that they relieve employers of the administrative burden and shift it to a third-party administrator.

Most provincial governments had been pushing for an expanded CPP as the solution to Canada’s pension coverage woes. However, Alberta’s finance minister withheld the unanimity required to execute such reforms, arguing that they would threaten job creation and destabilize the economy.

Flaherty told reporters in Kananaskis Country that now is not the time to place additional burdens on employers while the economy is recovering from recession.