Skip to content

Pension Primer: Pooled Registered Pension Plans (“PRPPs”) in Nova Scotia

By Level Chan and Dante Manna

Pooled Registered Pension Plans (“PRPPs”) are closer to becoming a reality for Nova Scotian employers. PRPPs were established by the Federal government in an effort to address the lack of retirement savings options for moderate income employees of small or medium sized employers in Canada. Several provinces have since followed suit with their own versions of the legislation, using the Federal model as a guide. Nova Scotia was the first and so far the only Atlantic Canadian province to join the ‘pool party’ when it passed Bill No. 38, Pooled Registered Pension Plans Act (“PRPP Act”) in October 2014. While not yet in force, we recap the major features of the PRPP Act and profile new portability options that were added in December 2015 under Nova Scotia Bill No. 126.

Purpose of PRPPs

The purpose of PRPPs is to provide a low-cost, regulated pension option that is available to workers who are not currently under a pension plan or are self-employed. This legislation was developed by the Federal government in 2012 to provide another source of retirement income for Canadians (in addition to OAS/GIS, CPP/QPP, and RPPs/RRSPs). Pooling is intended to make pensions available to smaller employers while keeping the costs of administration low.

Nova Scotia PRPP Harmonization

The PRPP Act largely incorporates the Federal Pooled Registered Pension Plans Act (Canada), with minor modifications for the province. This is similar to what the legislatures in British Columbia, Ontario, and Saskatchewan have done.1 The main differences between the Nova Scotia and Federal Acts are procedural matters regarding withdrawal and transfer of funds and division of assets upon breakdown of a spousal relationship. Hence the Nova Scotia PRPPs will match the major facets of those other jurisdictions’ regimes.

Key Features of PRPPs 

The PRPP Act adopts the following key PRPP features of the Federal Act:

  • Employer participation is voluntary. Employers are not required to set up a PRPP.
  • PRPPs are defined contribution plans.
  • Administrative duties are carried out by licensed third party administrators rather than employers.
  • Licensed administrators must provide the pension for “low cost”.
  • An employer joins or sets up a plan by entering into a contract with an administrator that sets the amounts and frequency of employer and employee contributions.
  • Employer contributions are voluntary and may be set at zero.
  • Employees may also set their contribution rate to zero, or they can opt out entirely by notifying the employer within 60 days of receiving notice of their membership in the plan.

The Nova Scotia PRPP Act is similar to Saskatchewan, British Columbia and Ontario’s Pooled Registered Pension Plans Act. Like those acts, the Nova Scotia PRPP Act will apply to provincial employees, federal employees in the province who are not covered by a federally-governed PRPP, and the self-employed.

Multilateral Agreement

On July 15, 2015, Finance Canada published its proposal for the Multilateral Agreement Respecting Pooled Registered Pension Plans, an agreement designed to streamline administration and supervision of PRPPs, particularly those which operate in multiple jurisdictions. Any province that has passed PRPP legislation, including Nova Scotia, may become a signatory.

Under the terms of the proposed agreement, all signatory provinces would agree as follows:

  • Federally licensed administrators are exempt from having to be licensed in the province or provinces in which they operate.
  • Licensed administrators of VRSPs (the Quebec version of PRPPs) would not be required to obtain federal administration licenses.
  • The Federal Office of the Superintendent of Financial Institutions (OSFI) is the regulatory authority for federally licensed administrators and all federally regulated PRPPs.
  • The Federal PRPP Act applies to federally registered PRPPs that operate in the province, subject to minor exceptions in matters such as definition of spouse and death benefits.

The proposed agreement contains no provisions for federal or interprovincial recognition of provincially licensed PRPP administrators.

The release date of the Multilateral Agreement signaled the start of a 45-day public comment period. It has yet to be released in final form.

Transfers from PRPPs

In mid-November of 2015, amendments to the Nova Scotia PRPP Act were introduced (Bill 126). This Bill received Royal Assent on December 18, 2015 (S.N.S. 2015, c. 48). The amendments introduced two new transfer options to the PRPP Act:

  • Funds in PRPPs can be transferred to retirement savings arrangements that are prescribed under the Pension Benefits Act. This makes it possible for funds to be transferred from a PRPP to a locked-in vehicle, such as a locked-in retirement account.
  • A process was established for transferring funds as a result of division of assets (for example as the result of a relationship breakdown) from the PRPP to the plan of the member’s spouse upon division of asset funds in the member’s account. They may be transferred to a PRPP account of that person’s spouse, to the spouse’s pension plan, to a prescribed retirement savings arrangement for the spouse, or to purchase a life annuity for the spouse.

In addition, Bill 126 features ancillary amendments to allow for the process of transferring funds from one account to another.

The PRPP Act is sparsely drafted, leaving many aspects of PRPPs in Nova Scotia to be prescribed by regulations. Draft PRPP Act regulations were published for an open comment period between September 9 and October 15, 2015, but have yet to be finalized. Like the PRPP Act, the draft regulation is closely harmonized to its federal counterpart. For more details, see our previous update. The finalization of those regulations will open the door to Nova Scotia employers to offer PRPPs to employees. The bottom line – Nova Scotia is getting closer but is not (quite) there.


1 The provinces of Alberta and Quebec, by contrast, have introduced stand-alone legislation. In Quebec, enrollment in VRSPs (that province’s PRPPs) is mandatory for certain employers. Alberta generally follows the Federal scheme but with its own legislation.

SHARE

Archive

Search Archive


Generic filters

 
 

The Prince Edward Island Labour Relations Board carves out a group of firefighters from an existing bargaining unit

July 31, 2019

Hilary Foster Earlier this year, the Prince Edward Island Labour Relations Board (“Board”) issued a decision¹ wherein it certified the Charlottetown Professional Firefighters Association (“Association”) as bargaining agent for: All employees of the City of…

Read More

The New Brunswick Labour and Employment Board affirms longstanding practice against piecemeal certification of bargaining units

July 8, 2019

Bryan Mills and John Morse On May 21, 2019, the New Brunswick Labour and Employment Board (”Board”) dismissed an application by the New Brunswick Union of Public and Private Employees (“Union”) seeking certification as bargaining…

Read More

Carbon pricing: Ontario Court of Appeal delivers constitutional endorsement

July 5, 2019

Jonathan Coady and Justin Milne The Ontario Court of Appeal has found that the Greenhouse Gas Pollution Pricing Act¹ is valid federal legislation.² The Act implements national minimum pricing standards to reduce greenhouse gas (“GHG”) emissions.…

Read More

A Charter right to testamentary freedom? The NSSC decision in Lawen Estate

July 2, 2019

Richard Niedermayer, TEP, Jennifer Taylor and Bhreagh Ross, summer student There is a right to testamentary freedom under section 7 of the Charter, according to a recent decision of the Nova Scotia Supreme Court. In…

Read More

Hydro-Quebec now subject to annual energy cap, but not a monthly cap, under much-disputed 1969 power contract: Churchill Falls (Labrador) Corp. v Hydro-Quebec, 2019 QCCA 1072

June 24, 2019

John Samms Introduction Much ink has been spilled on the controversial 1969 power contract between Hydro-Quebec and CFLCo (the contract) and last week the Quebec Court of Appeal added to the pile with its decision…

Read More

Final cannabis edibles, topicals and extracts regulations released

June 17, 2019

Kevin Landry On June 14, 2019, Health Canada announced the release of the final version of amendments to the Cannabis Regulations, which will permit for the production and sale of edibles, extracts and topicals. The…

Read More

Trademark changes

June 17, 2019

Daniela Bassan and Divya Subramanian The Canadian Trade-marks Act will be amended effective June 17, 2019. As a result, the Act will undergo a complete overhaul on various aspects of trademark prosecution, registration, and enforcement.…

Read More

Discovery: Atlantic Education & the Law – issue 04

June 12, 2019

We are pleased to present the fourth issue of Discovery, our very own legal publication targeted to educational institutions in Atlantic Canada. While springtime for universities and colleges signal the culmination of classes, new graduates…

Read More

How employers can protect themselves with respect to social media

May 29, 2019

Grant Machum and Richard Jordan   In an earlier article, we considered an employer’s options when an employee departs and takes with them the social media contacts they have obtained during the course of their…

Read More

Canada’s Digital Charter – a principled foundation for a digital future?

May 28, 2019

Matthew Jacobs and Daniel Roth (summer student)   “… we cannot be a Blockbuster government serving a Netflix society.” – The Hon. Minister Navdeep Bains paraphrasing the Hon. Scott Brison (May 2019, at the Empire…

Read More

Search Archive


Generic filters

Scroll To Top