PRPP Legislation Is Coming So Sail Ahead Of Your Competition While You Still Can With An Employee RRSP Plan
Providing tax and regulatory updates and advice is a vital part of the value we provide our clients. This is the strategic aspect of our role, so that our clients may act preemptively. In business we are always competing. Sometimes, everyone is ready to start when the gun goes off. More often than not, the race has already begun and the boats that should be competing are just circling the harbour. We are here to point you to the race that nobody knows has already begun and give you an unfair advantage as you sail out ahead of your competition.

PRPP Legislation is coming to BC and has already been implemented or approved in other Provinces. On June 28, 2012, the federal government made a recommendation to the provincial governments to implement a mandatory employer pension plan (The Pooled Registered Pension Plan Act). This federal recommendation was designed to address the growing retirement deficit most Canadians face. Its intent is to empower Canadians, but unfortunately, employers will be fed yet 
another challenging business expense.

​In Alberta, Saskatchewan, and Québec, it has already been approved. You can expect other provinces to implement these recommendations in the near future. In BC, the federal recommendation has not yet been approved, however, it was tabled before last year’s election so it will likely return for implementation before the next election. In February 2014, it was brought forward for 1st Reading by the Finance Minister. You can be sure that the Liberals will implement this soon to give them bragging rights over this during the next election.

Strategically, knowing that this legislation is likely to be implemented across Canada, we can act preemptively. For companies that have not yet implemented an employee RRSP plan, this provides an opportunity to strike first, and reap the benefits of such a plan. The benefits are improved employee attraction, retention, and satisfaction. But those slow to the game in implementing an employee RRSP plan when everyone else is already mandated to because of the PRPP legislation …. Well, that just loses the cachet of having such a program. At that point, you’re fighting to just catch up to the other boats that have already sailed away.

The beauty of the federal PRPP legislation is that it can be implemented with little or no cost to the employer directly. One of the biggest benefits of having an employee RRSP plan is how it will help younger employees buy their first home through the home-buyers plan(HBP). The HBP allows a person to withdraw up to $25,000 of their RRSP tax-free for buying their first home. One of the biggest assets for your employees is our financial planning team who can help them focus on their financial goals. Last year, we helped four employees from one company buy the first homes. The employer was ecstatic and proud of their employees. Most employers agree that employees with mortgages are much more stable than non-homeowners. A mortgage has a way of increasing a person’s financial responsibility and how they see themselves in the world.

We believe the upcoming PRPP legislation is not necessarily a bad thing. If applied strategically, companies may benefit from the plan.