P.E.I. should offer pooled pension plans for small businesses, CFIB says

The Canadian Federation of Independent Business on P.E.I. would like to see the province allow pooled pension plans for small businesses and people who are self-employed. 

Pooled plans operate similarly to regular pension plans offered by large companies, with both the employee and the employer contributing to a savings plan that then pays out a monthly sum when the employee retires. Employees who leave their companies do not leave the plan unless they want to.

The cost of running and administering a Pooled Registered Pension Plan (PRPPs) is spread out over many companies. This means lower setup and administration fees for smaller businesses, and therefore more opportunities to contribute to a registered savings plan for employees.

Federally regulated businesses, such as banks, are allowed to participate in PRPPs, but provinces have to legislate individually to allow businesses and employees access for provincially-regulated businesses.

Since being introduced in 2012, PRPPs have been adopted in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Nova Scotia, and New Brunswick tabled legislation in November.

Erin McGrath-Gaudet, director of CFIB P.E.I., said PRPPs were implemented as a way to avoid increases to the Canada Pension Plan, but that's now changed with the Liberal federal government increasing CPP contributions. She said some businesses might find it challenging to do both PRPPs and increased CPP payments.

"If you're self-employed or a very typical small business, there really is no product for you that is on the market for a pension plan and that's because they're expensive to administer," she said.

"So the idea was if you could create a pool of those small employers or those that are self-employed, you would get that economy of scale and you would be able to offer a true pension product but with much, much lower administration fees."

I'm certainly hoping that at some point we will be able to offer it.— Erin McGrath-Gaudet

The only option for P.E.I. employers and employees right now, she said, is a group RRSP. But she would like to see the provincial government introduce legislation eventually for both the benefits the plans offer and to match other provinces.

"I'm certainly hoping that at some point we will be able to offer it," she said. "This is still a very new product, I'm not surprised we haven't gotten there yet, but certainly the hope is that this will be available in P.E.I."

In a statement to CBC News, the P.E.I. government said there is currently no policy initiative for pooled pension plan legislation but the province is monitoring legislative developments in other provinces.

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