What is a PRPP exactly, and why should you care? There are enough accronyms for Canadian Financial Products out there already, aren't there? There are RRSP's, CPP, LIRA's, DBPP, DCPP and now PRPP's!

PRPP's or "Pooled Retirement Pension Plans" are the newest addition to Canadian Savings Vehicle landscape. While not yet available to participate in, the reasoning behind creating it is so that Canadians have yet one more CRA registered savings program, and the Government doesn't need to increase CPP payments for businesses and individuals.

The  main target audience of this new savings vehicle as proposed by the government would be small business owners and self employed persons.

PRPP's though are very different than a Group RRSP which may be offered through an employer or small business. The main difference is in the flexibility of your program. Generally your Group RRSP's are available to you if you ran into a financial hardship, whereas a PRPP will be a locked in retirement vehicle that you may only drip money out of in the future.

Group RRSP's also give you the ability to use the funds in a new home purchase, whereas there would be no option for that type of withdrawal inside a PRPP.

Group RRSP's like the proposed PRPP's are generally a pooled fund offered through a Bank or Insurance company, with very minimal cost as compared to an Individual RRSP's management fees. Most companies that offer group RRSP's have no front or back end fees so the money invested inside, can be moved around to suit your investment objectives, and even transferred out to another financial institution if they do not meet your objectives.

The claim is that PRPP's will be easier for a small business to administer, as they will work directly with the company on behalf of the employees. This is the way we help our clients out as well. As the concierge of the groups RRSP, we handle all the application process, as well as the communication with the group, so implementing a Group RRSP should be no different than the intended benefits of a PRPP.

The government also touts the benefits of portability within the PRPP program, but any good Group RRSP can be transfered upon the employees departure, and can either be transferred into a personal RRSP or the new employers Group RRSP, through a simple industry standard transfer form.

So will a PRPP change your life? More than likely no. And although the framework has been set, it will more than likely be 1 or 2 years before a product is available to the general public.

Our recomendation would be to not waste your time waiting for a PRPP, and start investing in either a Group RRSP, or your own personal RRSP. Contact our office today to see how easy it is to set up.

Steffen deGraaf