CLHIA-ACCAP

Investing in Canada's Health and Prosperity 3 HELPING MORE CANADIANS TO SAVE FOR RETIREMENT INTRODUCTION The future of retirement savings and pensions is an extremely important public policy issue facing Canadians. Canada has one of the best retirement savings systems in the world, but it needs updating and enhancement to improve access to savings vehicles by more Canadians. The fact is that millions of Canadian workers do not have workplace retirement plans: only 50% of private sector workers have access to any kind of plan. Saving at the workplace through the convenience of a payroll deduction is the most effective way to save, yet employers shy away from offering plans due to their costs and complexity. PENSION INNOVATION THAT MAKES PENSIONS ACCESSIBLE TO ALL WORKERS We congratulate federal and provincial policymakers for embracing the concept of Pooled Registered Pension Plans as a significant tool in providing access to well‐regulated, low‐cost workplace pension plans for virtually all working Canadians and, in so doing, improving their retirement savings prospects. PRPPs provide a pooled option, available to employers and the self‐employed alike, at low costs currently only realized by large pension plans. They incorporate behavioural nudges like automatic enrolment (with a simple opt‐out provision) to encourage workers to get into the savings habit. They are essentially costless for employers to offer; they provide the option of employer contributions, but don't require it. And they leverage the expertise of Canada's financial services industry which has earned respect worldwide. The federal government and Quebec have implemented PRPP legislation. In October, Ottawa announced that the licensing process had been completed for the first five PRPP providers, all of whom are life and health insurers. In Quebec, employers have started signing up to plans. British Columbia, Alberta and Saskatchewan have passed legislation and are working towards an early 2015 PRPP launch. Nova Scotia introduced PRPP legislation in October 2014. Ontario, meanwhile, committed to doing so in its July 2014 budget. We are urging other jurisdictions to follow suit, and would urge all jurisdictions to consider a "universal access" approach such as Quebec has done, under which all employers, or at least those over a certain size, would be required to provide access to some form of workplace retirement plan. In our view, it's not unreasonable to require employers to offer some form of retirement savings plan when there are options to do so at no cost to employers. This would not only greatly improve the access of workers to a workplace plan; it would also mean lower costs resulting from greater economies of scale. Life and health insurance companies are acting quickly to make PRPPs a reality. The industry already administers about two‐ thirds of Defined Contribution plans which gives it the necessary infrastructure.

• Cover