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 em​ployees

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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