Do you find it hard to attract and retain talented individuals to your business? When you’re searching for the same talent as other local mid to large size businesses, but don’t have the same employee benefits to attract them, it can be tough to build a loyal team. However, a new legislation is on its way to becoming law, which may offer some help.
The Pooled Registered Pension Plan (PRPP) Act
In 2012 the federal government passed the PRPP Act to help all Canadians save for retirement. Each province must pass its own PRPP legislations before it can be offered. Saskatchewan and Alberta have already passed their legislation and now it’s BC’s turn. On April 30, 2014 the reform passed its third and final reading and is now well on its way to becoming law.
When passed, the PRPP Act will enable you, as a B.C. employer, to offer a voluntary retirement savings plan. It provides a great opportunity for you to provide your employees with added future financial security, as well as boost employee morale and productivity.
What is a PRPP?
The PRPP is a straightforward retirement savings plan. It enables members (you and your employees) to benefit from lower administration costs and greater flexibility when managing their savings.
What are the Benefits for you as an Employer?
The PRPP is not like other pensions plans. Your role, as the employer, will be minimal and much easier than the traditional pension plans.
When you (as the employer) have decided to opt into a PRPP you must notify your employees of your intentions 30 days before any contracts are signed. This is because under the current plan, once you have decided to create an account, all employees are automatically enrolled, then given an option to opt out.
As an employer the benefits of the PRPP are focussed on administration. The process of setting up an account will be fast and easy, with little admin required on your part ongoing. Tasks like completing an annual information return, will not be your responsibility, freeing your time to concentrate on your business.
Contributions will be made through your regular payroll process from the employees’ earnings. Funds will be sent to an administrator (of the financial institution) for investment. All names and addresses will be made available to the administrator and you must keep the administrator up-to-date on any employees who join or more importantly leave the company.
The PRPP deductions will be seen as a salary expense for tax purposes, meaning that you will not have additional payroll taxes, and you will even receive tax benefits from paying out this extra money.
What if I Do Not Want to Join a PRPP?
If you (as the employer) decide that you do not want to participate in a PRPP you are not blocking that employee from creating a plan, they can simply set it up for themselves, directly with their chosen financial institution.
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