On November 14, 2017, Bill 22, also known as the proposed Pooled Registered Pension Plan Act (the "NB Act"), was introduced in the New Brunswick Legislature. If passed, New Brunswick would join other provinces, including Nova Scotia, in enacting legislation similar to the Federal Act bearing the same name which was introduced in 2012. Like the Federal Act, which covers federally regulated employees, the NB Act would potentially provide access to Pooled Registered Pension Plans ("PRPPs") to New Brunswick employees.
In general, PRPPs are seen as a means of filling in gaps for employers that do not provide employment pension plans, by pooling contributions and distributing the associated costs across sectors. The regulatory framework enables third-party companies to seek licenses to provide PRPPs to multiple employers with investment and administrative management of the funds. Employer participation is voluntary and is open to smaller employers and the self-employed.
PRPPs must be provided to members for "low cost", which according to the Federal definition means the cost of a defined contribution plan with at least 500 employees. The proposed NB Act leaves the definition of "low cost" to be determined by regulation.
Like other provincial PRPP legislation, the proposed NB Act aligns very closely with the Federal PRPP scheme, with the main differences being mostly procedural in nature. The NB Act also deals at length with the entitlement to pension funds of former spouses or common law partners on the breakdown of a marriage or partnership.
Given the close adherence of the proposed NB Act to the Federal model, it seems possible that New Brunswick will subscribe to the Multilateral Agreement Respecting Pooled Registered Pension Plans and Voluntary Retirement Savings Plans ("Multilateral Agreement") once its legislation is passed. Currently, all provinces with PRPP legislation in effect are signatories. The signatory provinces effectively delegate responsibility for licensing, registering and supervising PRPPs to the Federal Office of the Superintendent of Financial Institutions ("OSFI"). This coordination further enables multi-jurisdictional PRPPs by streamlining and centralizing the regulatory regime. It remains to be seen whether steps will be taken to join the other signatory provinces and make OSFI-regulated PRPPs immediately available in New Brunswick as well.
The proposed NB Act also follows other provinces to enact PRPP legislation in leaving a broad spectrum of matters to be determined by regulations, which are yet to come. For example, such important matters as frequency of employer contributions, when an employer's contribution rate may be set to 0, and the criteria for determining whether a PRPP is "low cost", are left to be provided in the regulations. In Nova Scotia, PRPP regulations were released for consultation prior to being passed.
If passed, the NB Act should be viewed as a positive step towards offering New Brunswickers another option in saving for their retirement.
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