Pooled registered pension plan (PRPP)

A buyer meets a PRPP when diligence turns up the seller’s retirement arrangements. The federal Act states its purpose as a legal framework for a pension plan that is accessible to employees and self-employed persons and that pools members’ funds to achieve lower costs for investment management and plan administration. An employer takes part by entering into a contract with an administrator. See what happens to the pension or benefits plan on a sale.

What to check or ask

• Whether the seller has a contract with an administrator to provide a PRPP to a class of employees. Under the federal Act, an employer that has one must provide the plan to all the members of that class.
• Whether the plan is a PRPP or a registered pension plan. The CRA states that a PRPP is not a registered pension plan.
• What the contract says about a sale of the business, and who will hold it after closing.

Which law applies

The CRA says a PRPP is registered under the federal Act or a similar law of a province or territory. Ontario’s Pooled Registered Pension Plans Act, 2015 says the federal Act applies to PRPPs as if it had been enacted as part of the Ontario Act, subject to its own exceptions, and it sets out which members it covers. This entry covers the federal Act and Ontario only; check the rules where you are.