12/18/2012 05:42 EST | Updated 02/17/2013 05:12 EST

What You Should Know About Pooled Registered Pension Plans


Bad public policy ideas are like Jason Voorhees in those old Friday the 13thmovies: no matter how many times you think you've killed them, they keep coming back to cause trouble.

As the federal and provincial finance ministers get ready to discuss a number of issues, the country faces a very real problem: too few Canadians have begun to save for retirement.

In fact, nearly 80 per cent of small business owners don't have retirement plans in place for either themselves or their employees either because they simply can't afford them, or they find it difficult to access current retirement savings options.

The good news is that the federal government addressed the problem earlier this year by passing Bill C-25, an Act Relating to Pooled Registered Pension Plans. PRPPs aren't a panacea for all pension-related issues, but I believe they are part of the solution. PRPPs are voluntary, offer lower fees than current retirement savings tools, and exempt employer contributions from payroll taxes.

A recent survey from the Canadian Federation of Independent Business (CFIB) found that a third of small business owners said they would consider offering a PRPP in their business. Given the limited information about this new investment vehicle, I'd say that shows there's some real interest among hard-working entrepreneurs.

The bad news is that many provinces have yet to introduce enabling legislation to take advantage of this new option. Even worse, some provincial governments have said they wish to make the introduction of PRPPs conditional on raising Canada Pension Plan (CPP) premiums. That's the bad idea I mentioned earlier.

PRPPs are a worthwhile public policy initiative that will get more Canadians saving for retirement. Many small business owners have told me they're disappointed the introduction of PRPPs is being held up because of political horse-trading. PRPPs and the CPP are apples and oranges -- there's no connection between the two, and there shouldn't be any connection.

An even greater number of small business owners have said they can't afford to pay higher CPP premiums right now.

Payroll taxes have the biggest impact of any taxes on the growth of small and medium-size businesses. At a time when Federal Finance Minister Jim Flaherty has described the global recovery as "stubbornly fragile", why in the world would we want to make it more expensive to hire new employees or invest in the economy? Raising CPP premiums can only kill jobs.

With that in mind, CFIB recently sent a letter to every provincial finance minister in advance of their December 16-17 meeting. Our message is clear and direct: bring in PRPPs, and don't raise payroll taxes on small business owners. I sincerely hope the finance ministers listen to the folks who employ nearly five million Canadians and keep our economy moving.

In the meantime, I would like to wish all Canadians a happy holiday and a very Merry Christmas.

Dan Kelly is President of the Canadian Federation of Independent Business (CFIB). In this capacity, Dan is the lead spokesperson and advocate for the views of the Federation's 109,000 small and medium-sized member businesses across Canada. Follow Dan on Twitter @CFIB and learn more about CFIB at