Pooled Registered Pension Plans

By Shauna Blackburn-Cook, BCom, The Nakamun Group, Edmonton

In an effort to further encourage Canadians to save for retirement, the Federal Government passed Bill C-25, which sets the legal framework for the establishment of Pooled Registered Pension Plans (PRPP). The objective of PRPP is to provide universal access to a pooled retirement plan for self-employed and employed Canadians who do not have an employer retirement plan. Employees will participate voluntarily and employers will administer the plans, but will not be required to contribute.

The PRPP will not increase an individual’s tax-free savings room beyond existing levels.

But, Don’t Hold Your Breath

For now, Bill C-25 applies only to industries governed by federal pension jurisdiction, such as telecommunication and transportation. In addition, amendments to the Income Tax Act are still required before PRPP will be approved.

For industries not governed by federal pension jurisdiction – which encompasses the majority of industries – even after amendments to the Income Tax Act are completed, further provincial review will be required, and each province will amend their respective provincial pension legislation before PRPP become more widely available. All of this could take years.

As the PRPP comes closer to being a reality, we will provide further information.

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