Manitoba is One Step Closer to a Pooled Retirement Pension Plan (PRPP)

New provincial rules were finalized earlier this month governing the use of Pooled Retirement Pension Plans in Manitoba. 

While the Pooled Registered Pension Plans (Manitoba) Act and regulations came into force on Aug. 1, 2017, PRPPs will not be available to Manitoba residents until later this fall when several provinces are expected to sign a multilateral agreement with the federal government. Other provinces that have enacted legislation but have yet to make PRPPs available include Saskatchewan, British Columbia and Ontario.

The federal government introduced PRPPs back in 2011, but the federal legislation applies only to federally regulated industries. Other workers will only have access to PRPPs once their provincial governments enact legislation and activate them.

Pooled Registered Pension Plans were designed to allow smaller employers to offer a registered pension plan (RPP) to their employees. The costs of setting up and administering a Registered Pension Plan are often too high to be practical for small employers. By pooling the administration costs with other employers under a PRPP, more smaller companies will be able to afford such plans for their employees. In addition, self-employed taxpayers may also be able to afford to participate in a PRPP.

The contribution limits for a PRPP are the same as for an RRSP and contributions made to a PRPP by either the employer or the employee reduce RRSP contribution room. For 2017, the RRSP/PRPP contribution limit is the lesser of 18% of the taxpayer’s earned income in 2016 and $26,230.

Withdrawals from a PRPP are subject to provincial legislation (except in federally regulated industries) and, in most provinces, you can expect that PRPP withdrawal limits to be similar to limits set for other pension plans. Once a pension is payable from a PRPP, the income will be eligible pension income regardless of the age of the recipient. Eligible pension income may be split between spouses in accordance with pension income splitting rules, and recipients of eligible pension income may claim the pension income amount.

©2017 Knowledge Bureau Inc. All Rights Reserved.

Refer a Friend	Research	Calculators	Course Trials