About Pooled Registered Pension Plans (PRPPs)
PRPPs are professionally administered, defined contribution style pension plans targeted to employees and self-employed persons who do not have access to a workplace pension plan. PRPPs may pool the funds in the accounts of participating employees and self-employed persons (i.e. members) to achieve low costs in relation to investment management and plan administration. PRPPs are designed to include features which will remove traditional barriers that might have kept small and medium-sized businesses from offering workplace pension plans to their employees. In particular, the fiduciary obligations related to the management of the plan on behalf of plan members will be shifted from the employer to licensed administrators. In addition, responsibilities related to the professional administration of the plan will be borne by the licensed administrator.
The Income Tax Act provides deductions in respect of both employee and employer contributions. Contributions and investment earnings are tax-exempt until such time as benefits commence to be paid.
PRPPs are subject to federal and/or provincial PRPP standards legislation. This legislation generally ensures that contributions made by and on behalf of members are protected and are used to provide retirement income. For more information, go to Pension supervisory authorities.
In order for PRPPs to be available to all employers, employees, and the self-employed across Canada, PRPP standards legislation must be implemented in each jurisdiction.
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