by Shinoah Young
The Legislative Building in Regina was swarming with media and onlookers Tuesday, March 20 as Hon. Ken Krawetz announced Saskatchewan’s 2013 budget report. The budget includes a new pension plan known as a Pooled Registered Pension Plan or PRPP.
“What we see in Saskatchewan is we have the Saskatchewan Pension Plan (SPP) for years, it’s going to be a little bit different than that. This is a pension plan that is voluntary for those who might be employees of a small business where there is no pension, there are no contributions by the employer,” said Krawetz.
Employees will have the option to sign into the plan, he added.
"The most important ones of course are the self-employed. Self-employed don’t have the ability to be in a pension plan unless they join a massive one so this will provide that opportunity," said Krawetz.
However, Saskatchewan Federation of Labour president Larry Hubich said, “They should have moved towards improving the Canada Pension Plan (CPP).”
"The changes are smoke and mirrors. The announcement of the PRPP is, in my humble opinion, a useless announcement. It accomplishes and achieves nothing and it is a way to obscure the fact that the provincial government has backed away from supporting real improvements to pensions in this country, which would be to improve the Canada Pension Plan," said Hubich.
"What the PRPP is, is simply a group RRSP. It’s not going to mean any new money at all in the system. It’s not going to do anything to improve people’s retirement income," said Hubich.
"In Canada there's already half a trillion dollars worth of unused RRSP room and so creating yet another modified RRSP will just add to that already existing problem," he said.
Hubich said the SFL would prefer improvements to CPP, which requires employers to match workers' contributions dollar for dollar.
"These PRPP's are only contributed to by individual workers, there’s no mandatory requirement that employers contribute," he said.
"A couple of provinces have been sucked into it. Unfortunately I had hoped Saskatchewan wouldn’t be sucked into that, but it appears that they now have," said Hubich.
Meanwhile, Krawetz said the PRPP will make people more aware of the need to save for retirement. "This is going to be another tool, another quiver, that will help people understand their financial literacy," he said.
"Having another savings account that you can put your money into doesn’t create any new money and that's what they’ve done," countered Hubich. "So instead of having this safety deposit box you now have two safety deposit boxes, you can pick which one you want to put your money into."