The second and final tranche of regulatory proposals to address provisions of the federal Pooled Registered Pension Plans Act have come into force.
“This is the last package of regulations needed to complete the federal pooled registered pension plan (PRPP) framework, and it marks a significant milestone for Canada’s retirement income system,” said Minister of State (Finance) Ted Menzies. “With the federal framework now fully in force, our government's efforts can serve as a model for provinces to implement their respective sides of the framework. I encourage them to do so, so PRPPs will become available to the millions of Canadians without access to a workplace pension option.”
The provisions now in force include:
• Licensing conditions for potential plan administrators that provide an additional level of protection to individuals and employers seeking to join a PRPP.
• Investment rules that provide minimum safeguards to protect plan members’ interests, as well as flexibility to plan administrators regarding the investment and management of plan members’ funds.
• Investment choices that provide flexibility to plan administrators to offer members investment options of varying degrees of risk and expected return.
• Limits on inducements that plan administrators will be allowed to offer and employers will be allowed to accept.
• Low-cost criteria that provide a balance between flexibility, to ensure that competition and disclosure will drive down costs, and the provision of a transparent comparator to be used by administrators and the Superintendent of Financial Institutions to determine what constitutes low cost.
• The rights and obligations of plan members and plan administrators with respect to setting the contribution rate to zero per cent.
• Information that plan administrators must disclose to plan members, employers and the Superintendent of Financial Institutions in order to facilitate transparency and comparability across PRPPs and support informed decision making.
• The withdrawal of funds from a member’s PRPP account.
• Variable payments from the funds in a member’s PRPP account.
• Transfer options available to members and the conditions on the vehicles to which a member’s funds may be transferred.
• Electronic means to satisfy requirements under the act for communications with plan members.
• Other technical rules related to the implementation of the framework.
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