PRPPs: A Primer for Small Businesses

Canadian small business owners are the focus of new legislation that could change the way many people plan and save for their retirement. A recent survey by CFIB recognizes that most small business owners will likely work long past the age at which their counterparts in the public service will retire. Only eight per cent of business owners expect to retire between 55 and 59, whereas sixty-five per cent of small-business owners expect to retire at age 65 or older.
In late 2012, the Canadian federal government passed Bill C-45, which included legislation for Pooled Registered Pension Plans (PPRPs.) Since that time, individual provincial legislation has progressed at varying speeds: Alberta and Saskatchewan have enacted PRPP legislation, and Quebec has passed similar legislation called the Voluntary Retirement Savings Plan. BC enacted the legislation in February of 2014.
PPRPPs are intended to be a broad-based, low-cost, defined pension contribution vehicle that will be available to all employees, employers and self-employed individuals. The PRPP offers these individuals the benefits of participating in a large pension plan like the defined contribution plans many large companies offer, and allows employers to offer retirement savings without the cost of setting up a pension plan and administering it. Removing the administrative burden of pension plans makes offering a pension plan more attractive and affordable for employers.