The Saskatchewan Pension Plan (SPP) is a voluntary defined contribution pension plan established by the Government of Saskatchewan in 1986. Currently, the SPP allows annual contributions of up to $600. SPP contributions are deductible where a contributor has available Registered Retirement Savings Plan (RRSP) room, and reduce the contributor’s RRSP deduction limit accordingly.
Income tax proposals released December 8th include draft legislation to accommodate an increase in the annual limit for tax-deductible SPP contributions to $2,500, subject to an individual’s available RRSP contribution room.
Further, the draft legislation includes amendments that bring the treatment of the SPP in line with that of Registered Pension Plans (RPPs) and RRSPs. Specifically:
- Transfers from RPPs and RRSPs to the SPP will be permitted within existing limits on such transfers under the RPP/RRSP rules, subject to any additional limits imposed by the SPP;
- SPP annuity payments will be eligible for the pension income credit and pension income splitting;
- Rollovers of SPP funds on death to the RRSP or Registered Disability Savings Plan of a financially dependent infirm child or grandchild will be permitted;
- SPP contributions will be taken into account in determining RRSP over-contributions; and
- SPP savings will be subject to the same income attribution rules as RRSPs
With the increased contribution levels, the SPP becomes a more interesting retirement savings vehicle for Canadians across the country with RRSP contribution room, whether or not they currently belong to an employer-sponsored retirement savings plan.
Provincial/federal finance ministers meeting again on December 20th are currently zeroing in on either privately-sponsored industry/other/association group plans or an enhanced CPP. However, the the Alberta / British Columbia Joint Expert Panel on Pension Standards saw the SPP as a possible model when they when they recommended the establishment of the “ABC Plan” plan which would be available to any employer, employee or self-employed person at
a reasonable cost, enabling them to take advantage of the economies of scale.