A PRPP is a Pooled Retirement Pension Plan.
In June of this year, Bill C-25, an Act Relating to PRPPs, received Royal Assent.
Bill C-25, which applies to PRPPs, sets out the broad framework for the operation of these new vehicles for retirement savings. The basic structure is similar to a defined contribution pension plan, with the major difference being that PRPPs will be administered by third-party financial institutions rather than directly by employers.
Basically, the government is trying to force Canadians to save for their retirement. The way it’s supposed to work is that your employer sets up a plan and you are automatically enrolled in it. Your employer doesn’t have to contribute and, if you want out, you have to opt out.
I really don’t see the benefit of these things because they’re nothing more than a group RRSP. I also don’t see how this is going to help the average person; they still have to take all the investment risk and the institutions are still going to be charging fees (possibly excessive fees).
The benefit of a big pension vs. a group RRSP is that the money can be invested forever which gives the pension way more opportunities (for a great example, look at how the money in the Ontario Teachers Pension Plan is managed). This isn’t the case here. I think this is a big waste of time and if implemented, is going to line the coffers of the institutions that administer and sell them.