Retirement savings plans were a key topic of conversation at a finance meeting in Kananaskis last week.
"This new private-sector retirement savings vehicle will improve the range of retirement savings options available to Canadians by providing a low-cost retirement savings opportunity for employees - with or without a participating employer - and the self-employed," said federal Finance Minister Jim Flaherty, in a statement.
"PRPPs will be a major breakthrough for the Canadian pension market. They will make well-regulated, low-cost, private-sector pension plans accessible to millions of Canadians who have up to now not had access to such plans," he said.
"In fact, many employees of small- and medium-sized businesses and self-employed workers will now have access to a private pension plan for the very first time."
According to a proposed framework, the plan will enable more people to benefit from the lower investment management costs that result from membership in a large, pooled pension plan.
Regulated financial institutions will act as administrators of the plans on behalf of businesses and will be responsible for performing all of the required management and operational functions of a plan operating as a PRPP.
Businesses owners will be responsible for choosing a plan that best fits their needs and for enrolling employees in the plan.
Alberta Finance Minister Ted Morton said he was in favour of the plan, calling it the "type of targeted solution Alberta has been advocating to address concerns that many middle-income Canadians are not saving enough for their retirement," in a statement released last week.
Flaherty said finance ministers also reviewed work done on a range of options for expanding the Canada Pension Plan during their meeting last week.
Previously, Morton said he was not in favour of expanding the CPP because it would not benefit the significant majority who are not saving enough for retirement.
"That's great for a guy coming from an income of about $200,000 a year. I don't think he knows what he's talking about. I don't think he's realistic at all," said Dick Tansey, chair of the St. Albert chapter of Seniors United Now (SUN).
Tansey said he supports expanding the CPP.
"For 2010, I think the increase was 0.4 per cent, compared to what other people are getting for wage increases, I don't think anybody is getting less than three per cent and they're raising the CPP benefit 0.4 so that's pretty meagre," he told the Gazette.
Last week, both the Alberta Federation of Labour and the Alberta Union of Provincial Employees condemned Morton for his stance on CPP expansion.
"I wish they would get on with it. There are enough people that are in need. When you look at our property taxes going up 2.79 per cent and those that are just living on CPP benefits and OAS (Old Age Security), it's a struggle," Tansey said.
"It is to the benefit to the people coming behind us too."
St. Albert Gazette, Sat Dec 25 2010
Byline: Lauren Den Hartog