PRPPs: Additional information

From: Financial Consumer Agency of Canada

PRPP information for employers

PRPP administration	PRPPs will be administered by licensed third-party administrators, such as banks or insurance companies. The administrator may offer plan members a maximum of six investment options, including a default option. Employers are not liable for acts or omissions of the administrator.
Employer responsibilities	Employers who want to offer PRPPs to employees have to choose a licensed PRPP administrator. Employers must provide at least 30 days advance notice to their employees before entering into a contract with an administrator to provide a PRPP. If an employer chooses to offer a PRPP to a class of employees, all eligible employees in that class will be enrolled in the plan. The employer or the administrator must notify employees, in writing, of their right to opt out of the plan by notifying the employer within 60 days of receiving the notice. Employers will deduct and remit member contributions to the administrator and will remit employer contributions, if any.
Employer contributions	Employers may make contributions to a PRPP but are not required to do so. For example, employers can match an employee’s contributions. Employer contributions are tax-deductible. All contributions, including employer contributions (if any), are locked in.

PRPP information for employees

PRPP administration	PRPPs will be administered by licensed third-party administrators such as banks or insurance companies.
Employee enrolment/ participation	If your employer offers a PRPP to employees in your class and you are a full-time employee, you will be automatically enrolled in the PRPP. Part-time employees in an eligible class of employees must be automatically enrolled after 24 months of continuous employment, but may be enrolled before then. The administrator or your employer must notify you, in writing, that there is a 60-day period to opt out of the plan if you do not want to be a member. If you do not opt out within 60 days, contributions will begin to be automatically deducted from your pay. If you are employed in the Yukon, the Northwest Territories or Nunavut, you may join a plan on your own.
PRPP investment choices	PRPP administrators may provide up to six investment options for members to choose from, including a default option. The default option will be a balanced fund or a portfolio of investments that take into account a member’s age, such as a life-cycle fund. If you do not choose one of the available investment options, your funds will be invested in the default option.
Employee contributions	Your contribution limit depends on your available RRSP contribution limit. Your contributions will be deducted from your pay. Your contributions are tax-deductible and grow tax-free until you withdraw them. Contribution rates for members are set by the administrator. The administrator may provide a choice of different contribution rates. You can set your contribution rate at 0% if it has been 12 months since you began contributing to the PRPP. All contributions, including employer contributions (if any), are locked in.
Transferring PRPP savings	You can transfer your PRPP savings out of a PRPP if: you are no longer employed by an employer participating in a PRPP the PRPP in which you participated is terminated a member of a PRPP dies and you are the surviving spouse or common-law partner you join a PRPP on your own and you decide to terminate your membership in the PRPP.

PRPP information for self-employed

PRPP administration/ enrolment	PRPPs will be administered by licensed third-party administrators such as banks or insurance companies. You can join a PRPP on your own if you are self-employed in the Yukon, the Northwest Territories or Nunavut. You must choose a licensed PRPP administrator. You may terminate your membership in the plan by notifying the administrator.
PRPP investment choices	PRPP administrators must provide no more than six investment options, including a default option. The default option will be a balanced fund or a portfolio of investments that take into account a member’s age, such as a life-cycle fund. If you do not choose one of the available investment options, your funds will be invested in the default option.
Contributions	Contribution rates are set by the administrator. The administrator may provide a choice of different contribution rates. You can set your contribution rate at 0% if it has been 12 months since you began contributing to the PRPP. Your contributions are tax-deductible and grow tax-free until withdrawn. All the funds in the members’ account are locked in unless special circumstances apply (specified in the Regulations). Your contribution limit depends on your available RRSP contribution limit for the year.
Transferring PRPP savings	You can transfer your PRPP savings out of a PRPP if: the PRPP to which you participated is terminated a member of a PRPP dies and you are the surviving spouse or common-law partner you terminate your membership in the plan.

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Date modified:: 2024-01-17