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RPPs


An RPP (Registered Pension Plan) is a registered pension administered by either an employer or union, in this type of plan the employer or union supposedly contributes to the plan as well. Similar to an RRSP, there is no guarantee, and is looked after by a third party carrier who is often under regulated and uninsured.

The registered pension plan results in a taxable benefit, and is locked in until age 65, provided the fund doesn’t lose itself. If a person loses their job, or the place shuts down, the money is either gone, or tied up for as much as 40 years, with no opportunity to withdraw it in the case of a financial emergency.

If the participant actually lives until age 65, and has the opportunity to withdraw their money, it is treated for taxation purposes the same way an RRSP is treated. Credits are clawed back, income is taxed at often the highest personal tax rates, and a withholding tax is charged on the amount withdrawn. If the participant happens to die before age 65, the funds can often never be recouped by the participant. In this context an RPP is even worse than an RRSP. Insurance companies obviously love when this happens, and not surprisingly, they are the ones who came up with the idea of an RPP, and encourage employers and unions to enrol their workers and members into their schemes.

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