Registered pension plan (RPP)

The Canada Revenue Agency describes an RPP as an arrangement by an employer or a union to provide pensions to retired employees in the form of periodic payments, and the Income Tax Act provides deductions for both employee and employer contributions. A buyer meets one when the target company sponsors a plan. See also what happens to the pension or benefits plan on a sale.

Who regulates it

The CRA refers to the federal Pension Benefits Standards Act, 1985 or a similar provincial law that a plan is subject to, and says pension standards legislation generally requires plans to be registered with the regulator that has jurisdiction, though certain plans, such as plans for connected persons, might not have to be. It names harmonized filing agreements with several provinces and with the Office of the Superintendent of Financial Institutions for federally regulated plans. In Ontario, the Pension Benefits Act applies. Section 69 allows the Chief Executive Officer to order a wind up where all or substantially all of the business or its assets are sold, assigned or otherwise disposed of and the buyer does not provide a pension plan for members who become its employees. Other provinces’ laws differ.

What to ask

• Which regulator oversees the plan, and who is the administrator.
• Whether it is a defined benefit or a money purchase plan.
• Whether the buyer is meant to take the plan on or provide its own.