OSPC: Information for Industry & Plan Sponsors

Simplified Money Purchase Plan Explained

Small business employers have had few options when choosing a retirement plan for their employees. Employers found traditional plans to be complex, expensive and difficult to explain. While other types of arrangements provided flexibility and inexpensive administration, they did not offer the security of a guaranteed retirement income or the protection of provincial pension legislation.

The Simplified Money Purchase Pension Plan (SMPPP) bridges the gap and offers small business employers a viable solution to their retirement plan dilemma. This provides a brief description of the Plan's features and benefits. More information is available by contacting the Office of the Superintendent - Pension Commission (OSPC).

The SMPPP invites participation by small business because of its uncomplicated approach to providing retirement income for employees. A SMPPP is:

  • Best suited for Manitoba-based companies with 250 or fewer employees,
  • Less expensive because there are no registration or annual fees,
  • Administered by financial institutions with minimal employer involvement,
  • Easy to operate and simple for employees to understand,
  • Offered with the support and resources of the staff of the OSPC.

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Employer Advantages

Employers interested in offering a SMPPP to employees rather than another type of plan can look forward to a number of advantages:

Cost Effectiveness
  • With fewer legal requirements, and no fees for filing, SMPPPs are less expensive to operate than existing traditional plans.
  • Unlike Group RRSPs, no Canada Pension Plan, Employment Insurance premiums, or Workers Compensation premiums are paid on employer contributions.
  • An employer's minimum contribution requirement is 1% of an employee's salary. Since employers decide how much to contribute to a SMPPP, their costs are up front and easily identified.
  • Registration is easy and hassle-free. Employers just call any financial institution offering a SMPPP for registration and further information. There are no forms for employers to fill out -and no on-going reporting with the OSPC.
Flexibility Employers may choose to:
  • make membership voluntary for any group (identified by occupation),
  • vary the levels of contributions for any group (identified by occupation), and
  • offer employees a choice of investment options.
  • Only certain financial institutions- life insurers and trust companies-are allowed to sell SMPPPs to small employers.
  • Under a SMPPP, employee and employer contributions are immediately vested and locked-in. Employees are not allowed to withdraw contributions while employed.
  • Employers may be confident that contributions are used to provide a retirement income for employees.
Employee Advantages
  • Employees will appreciate the availability of an accessible, flexible and secure method of saving through their employer and a recognized financial institution.
  • Employees can look forward to a minimum 1% employer contribution in addition to their own contributions for a future retirement income.
  • Employee contributions are immediately vested with employer contributions, and benefits are locked-in providing increased retirement income.
  • As with a traditional plan, employees can rely on the built-in creditor protection of their retirement income in case of financial difficulty. This is not the case for many Group RRSP products.

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Key Provisions of a SMPPP

Although some of the requirements of The Pension Benefits Act (PBA) remain in place for the SMPPP, there are significant differences in key areas of legislation.


Under a SMPPP, employers may make participation voluntary for a particular group of employees (identified by occupation). The employer is free to determine which class of employees is eligible to join and the eligibility period for membership (up to the 24 month maximum set by legislation).


The employer maintains control over both the employee and employer contribution level with a 1% employer minimum contribution requirement. Voluntary additional contributions are allowed and are not locked-in.

Vesting and Lock-In

Required contributions to a SMPPP are immediately vested and locked-in.


Employees who terminate their membership have the option of transferring funds to either a LIRA or purchasing a life annuity.

To speed up the transfer process, employees may waive their right to receive a termination or retirement statement, and choose the transfer option immediately upon termination of employment.

Converting a Registered Pension Plan to a SMPPP

Existing pension plans may convert to a SMPPP. To simplify administration, only active employees participating in the existing plan will be allowed to participate in the SMPPP. All employees' existing benefits will be vested immediately.

Disclosure by the Financial Institution

The financial institution administering the SMPPP is responsible for providing an annual member statement, and statements upon death, retirement, and termination. Also, the institution must provide new employees with a description of the SMPPP.

A Plan for the Future

Employees are beginning to see how the changing times are affecting the future guarantee of their retirement income. Now more than ever, employees need help to save for a secure financial future.

With a SMPPP, small employers have an opportunity to work in partnership with employees. The cost-saving, simplicity, flexibility and income guarantee of a SMPPP make it an attractive retirement program for both employees and small employers.

For more information about SMPPPs and the financial institutions offering a SMPPP please contact us.

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