Business Matters: Pooled Registered Retirement Plans (PRPPs)

Small-business owners and the self-employed now have a new pension plan alternative.

How the PRPP Works

Federal Pooled Registered Pension Plan legislation came into force in 2012. It is designed to provide a retirement savings option for the self-employed and businesses that do not have an employee pension plan. It is attractive for those companies that cannot afford the cost of administering an employer-sponsored plan or a company RRSP, and do not want the fiduciary liability that may accompany such a plan.

The contributed funds will be placed with a financial institution such as a bank or insurance company that will pool the small contribution amounts to be invested more efficiently and cheaper and obtain a better return on investment. This federal plan covers only employees in federally regulated industries, federal government employees and employees in the territories of Nunavut, Northwest Territories or the Yukon. Each province has the opportunity to pass its own “mirror” PRPP legislation or opt out.