Regulations Amending the Pooled Registered Pension Plans Regulations: SOR/2023-61

Canada Gazette, Part II, Volume 157, Number 8

Registration
SOR/2023-61 March 27, 2023

POOLED REGISTERED PENSION PLANS ACT

P.C. 2023-263 February 17, 2023

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed Regulations Amending the Pooled Registered Pension Plans Regulations under paragraphs 76(1)(b) and (u) of the Pooled Registered Pension Plans Act footnote a.

Regulations Amending the Pooled Registered Pension Plans Regulations

Amendments

1 Section 6.1 of the Pooled Registered Pension Plans Regulations footnote 1 is amended by adding the following after paragraph (b):

2 Section 6.2 of the Regulations is amended by adding the following after paragraph (b):

Coming into Force

3 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The Government of New Brunswick brought into force its Pooled Registered Pension Plans Act on January 1, 2023. The province would like to join the Multilateral Agreement Respecting Pooled Registered Pension Plans and Voluntary Retirement Savings Plans (the Agreement). Before the federal government can enter into such an agreement with New Brunswick, the province needs to be designated in the Pooled Registered Pension Plans Regulations (PRPP Regulations) as a province with which the Minister may, with the approval of the Governor in Council, enter into an agreement. New Brunswick’s pension supervisory authority has also been designated in the PRPP Regulations. This would improve the streamlining of registration, licensing, and supervision of PRPPs across jurisdictions. Without being designated in the PRPP Regulations, New Brunswick cannot be part of the Agreement, likely resulting in higher costs for PRPP administrators and duplicative work for pension plan regulators.

Background

The federal Pooled Registered Pension Plans Act (PRPP Act) applies to employees in industries that are federally regulated whose employers offer a PRPP, as well as self-employed individuals in Yukon, the Northwest Territories and Nunavut. PRPPs are intended to be an accessible, large-scale and low-cost pension option for employers, employees and the self-employed. A PRPP can be administered by a financial institution or another corporation that holds a PRPP administrator licence. The Office of the Superintendent of Financial Institutions (OSFI) is responsible for licensing and supervising PRPPs.

Individuals and employers in provincially regulated sectors may also join a PRPP if their respective province has PRPP legislation in place. Quebec has passed and brought into force its own version of PRPP legislation (referred to as voluntary retirement saving plans or VRSPs), and British Columbia, Saskatchewan, Manitoba, Ontario, and Nova Scotia have also passed and brought into force PRPP legislation similar to the federal PRPP Act.

In order to streamline the supervision of PRPPs, the federal PRPP Act allows the Minister of Finance, with the approval of the Governor in Council, to enter into a multilateral agreement with designated provinces that have passed similar legislation. Having similar legislation that is in force is the only eligibility requirement for designation. Regulatory amendments are required to designate the provinces that can be part of the Agreement and their supervisory authority. However, designating a province does not require the Minister to enter into an agreement with it. The PRPP legislation of the provinces includes similar provisions.

The PRPP Regulations were brought into force on December 14, 2012. Subsequently, the PRPP Regulations were amended on June 3, 2016, December 1, 2016, and October 5, 2017, to designate the provinces — and their respective pension supervisory authorities — that had PRPP legislation in force and with which the Minister could sign a multilateral agreement (i.e. British Columbia, Saskatchewan, Quebec and Nova Scotia in June 2016, Ontario in December 2016, and Manitoba in October 2017).

Effective June 15, 2016, the federal Minister of Finance entered into the Agreement with British Columbia, Saskatchewan, Quebec and Nova Scotia. Effective March 31, 2017, Ontario became a signatory province to the Agreement, and effective November 15, 2017, Manitoba became a signatory province. Other provinces that adopt PRPP legislation similar to the federal PRPP Act in the future will be able to join the Agreement and the PRPP Regulations will have to be amended to designate them and their pension supervisory authority.

Under the Agreement, with the exception of Quebec, the signatory provinces fully delegate to OSFI all aspects of the supervision of PRPPs as it relates to plan members working in provincially regulated sectors. Quebec is a signatory to the sections of the Agreement that relate to the recognition of PRPP administrator licences. OSFI recognizes a licence issued by the Autorité des marchés financiers (AMF), while the AMF issues a VRSP licence to a PRPP licence holder subject to a few conditions (i.e. that the applicant be a regulated financial institution, that they pay the licensing fee to the AMF, that they provide financial information and a business plan, and that they obtain liability insurance). The AMF registers and supervises VRSPs. The Agreement streamlines supervision by ensuring that plan administrators only need to deal with one supervisor (i.e. OSFI) for the administrator licensing, plan registration, and ongoing plan supervision. For OSFI, it already licenses and supervises any PRPP that has at least one member that falls under federal jurisdiction. The Agreement does not change this. For provincial supervisors, the Agreement eliminates the need to license PRPPs and to supervise them with respect to the powers that it has delegated to OSFI through the Agreement. For PRPPs, the Agreement removes the need to be licensed and supervised by the pension supervisors of each jurisdiction with PRPP legislation.

Objective

The objectives of the Regulations Amending the Pooled Registered Pension Plan Regulations (the Regulations) are to designate New Brunswick as a province with which the Minister may, with the approval of the Governor in Council, sign an agreement which will allow New Brunswick to join the Multilateral Agreement Respecting Pooled Registered Pension Plans and voluntary retirement savings plans.

Description

The Regulations add New Brunswick as a designated province and its pension supervisory authority as a prescribed supervisory authority, under sections 6.1 and 6.2 of the PRPP Regulations for the purposes of section 6 of the PRPP Act, which sets out the requirements for multilateral agreements.

The amendments are needed to allow the Minister, with the approval of the Governor in Council, to enter into an agreement with New Brunswick under the PRPP Act. However, the amendments would not require the Minister to enter into such an agreement. The Agreement streamlines the process for PRPPs by ensuring that plan administrators only need to deal with one supervisor (i.e. OSFI) for the administrator licensing, plan registration, and ongoing plan supervision.

Regulatory development

Consultation

The financial sector, which includes licensed PRPP administrators, has been a strong advocate of a harmonized PRPP supervisory framework across Canada. There are currently five federal PRPP administrators licensed by OSFI who could benefit from New Brunswick joining the Agreement. In general, while the regulatory amendments are technical in nature, the financial sector would be supportive of any measures that expand the number of provinces involved in a supervisory agreement between the federal government and the provinces.

The provincial governments involved in the Agreement discussions are supportive of these amendments that would enable New Brunswick to join the Agreement. Additional provinces joining the Agreement will help facilitate the creation of large PRPPs with members across multiple jurisdictions, thereby increasing the number of Canadians with workplace pension plans and generating economies of scale and reducing costs. Saskatchewan is also issuing similar regulatory amendments to designate New Brunswick. The other provinces which are party to the Agreement incorporate by reference in their PRPP regulations the federal PRPP regulations regarding designated provinces and supervisory authorities.

The current signatory provinces and OSFI are aware of these amendments and support them, as it will allow New Brunswick to join the Agreement. Finance Canada officials have been and are in contact with provincial counterparts as the details of the updated Agreement are being developed. No concerns have been expressed.

The Regulations have been exempted from prepublication in the Canada Gazette, Part I, as the amendments would simply allow the Minister of Finance to enter into the Multilateral Agreement Respecting Pooled Registered Pension Plans and voluntary retirement savings plans with New Brunswick. It would have no impact on individuals or businesses. It would have no impact on the content of the Agreement itself. Similar amendments were made to designate all of the current provincial signatories to the Agreement: British Columbia, Saskatchewan, Quebec, Nova Scotia, Ontario and Manitoba.

Modern treaty obligations and Indigenous engagement and consultation

The amendments would only affect Indigenous peoples to the extent that employed or self-employed Indigenous peoples in New Brunswick would have the option to join a PRPP. The PRPP Regulations are not expected to have any differential impacts on Indigenous people or implications for modern treaties, as per the Government of Canada obligations in relation to rights protected by section 35 of the Constitution Act, 1982, modern treaties, and international human rights obligations.

Instrument choice

New Brunswick brought into force their PRPP legislation on January 1, 2023. The Agreement streamlines the licensing, registration, and supervision of PRPPs. Existing PRPPs operate under the Agreement in the jurisdictions of the signatories. The PRPP Regulations are required for the Minister to be able to enter into the Agreement with New Brunswick. As a result, no other instruments were considered.

Regulatory analysis

Benefits and costs

Without Governor in Council approval, New Brunswick will still be able to have PRPPs, but would not be able to be a part of the Agreement, making it more expensive as administrators would need multiple PRPP licenses and registrations if they operate in multiple jurisdictions.

The PRPP Regulations would not result in incremental costs to businesses, consumers, Canadians or the government. They would allow the Minister of Finance, with the approval of the Governor in Council, to sign an agreement with New Brunswick with respect to PRPPs. The regulatory amendments would not require the Minister to sign an agreement with New Brunswick. Allowing New Brunswick to become a signatory province would enable streamlined licensing, registration, and supervision of PRPPs in an additional province. This would result in cost reductions for businesses and the Government as it may facilitate the availability of low-cost pension plans in Canada.

OSFI already licenses and supervises any PRPP that has at least one member who falls under federal jurisdiction. The Agreement does not change this. OSFI also already has a supervision framework in place and operates on a cost-recovery basis. To the extent that the Agreement could encourage administrators to provide new PRPPs, this would result in marginally more resources required to oversee the plans, which would be handled by OSFI’s current capacity levels. The PRPP Regulations would reduce supervisory burden for provincial regulators to the extent that only OSFI would be responsible for licensing PRPPs and for supervising them with respect to the powers delegated through the Agreement. Under the Agreement, the federal act and regulator would cover plan-wide matters while provincial acts and regulators would continue to cover matters of provincial members’ individual benefits.

Small business lens

Analysis under the small business lens concluded that the PRPP Regulations would not result in cost impacts for Canadian small businesses. The amendments only include an additional jurisdiction in existing Regulations, which designates the provinces and pension supervisory authorities that can be party to the Agreement. Businesses, including small businesses, would be able to choose whether to participate in a PRPP and to make contributions.

Financial institutions would only need to register and get a licence once federally rather than needing them for every jurisdiction they would want to operate in. Practically, the uptake of PRPPs has been limited and the existing administrators are all large financial institutions.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden on business and no regulatory titles are being repealed or introduced.

The PRPP Regulations themselves do not reduce or impose costs, administrative burden, or obligations on businesses; they only include New Brunswick as an additional jurisdiction in existing regulations. However, it is worth noting that the Agreement itself streamlines the administration of PRPPs, reducing administrative costs and allowing for the creation of large PRPPs across jurisdictions which will provide Canadians and their employers with a low-cost savings option for retirement.

Regulatory cooperation and alignment

These amendments are not part of a formal regulatory cooperation initiative. The PRPP Regulations do not harmonize the federal and provincial regulatory frameworks per se, but will allow for an additional province to join the Multilateral Agreement Respecting Pooled Registered Pension Plans and voluntary retirement savings plans, which streamlines the licensing, registration, and supervision of multi-jurisdictional PRPPs.

For PRPPs with members outside Quebec, the Agreement streamlines supervision by ensuring that plan administrators only need to deal with one supervisor (i.e. OSFI) for the administrator licensing, plan registration, and ongoing plan supervision. The Agreement also streamlines the licensing process for administrators that want to offer PRPPs in Quebec and in other provinces by establishing that OSFI and the AMF recognize licences issued by each other.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus (GBA+)

The amendments would potentially benefit all employed or self-employed individuals in New Brunswick who would be able to choose to join a PRPP (individuals working in a federally regulated industry, individuals working in Nunavut, Yukon, or the Northwestern Territories, and individuals in provincially regulated industries if the province has PRPP legislation in force). The working age of the population of New Brunswick is broadly gender balanced.

Implementation, compliance and enforcement, and service standards

Implementation

The PRPP Regulations will come into force on the day on which they are registered.

The Governor in Council must first authorize the Minister to enter into the Multilateral Agreement Respecting Pooled Registered Pension Plans and voluntary retirement savings plans with New Brunswick. Once the Agreement has been signed with New Brunswick, the Minister is required to table the Agreement in each House of Parliament and in the Canada Gazette and make it accessible to the public on the Internet.

OSFI supervises federally regulated private pension plans and ensures they are in compliance with the PRPP Act and regulations made under the PRPP Act.

Contact

Kathleen Wrye
Director
Pensions Policy
Financial Crimes and Security Division
Department of Finance Canada
90 Elgin Street, 13th Floor
Ottawa, Ontario
K1A 0G5
Email: re-pension@fin.gc.ca