Canada: The First Wave of Federal PRPP Regulations

Last Updated: August 22 2012
Article by Lorraine Allard and Mark Firman

Most Read Contributor in Canada, September 2018

Draft Pooled Registered Pension Plan Regulations and an accompanying Regulatory Impact Analysis Statement were released for public comment on August 10, 2012. This package of regulations covers only some of those areas for which regulations supporting Bill C-25, the federal government's recently passed Pooled Registered Pension Plans Act (Act), are required. Another package of regulations is due to follow. The following are some of the most interesting aspects of the draft regulations.


In order to be granted a licence to administer a pooled registered pension plan (PRPP), a would-be administrator will have to be a corporation, and it will have to file with the Office of the Superintendent of Financial Institutions Canada a five-year business plan explaining why it believes that the PRPPs it proposes to administer would be sustainable over that period; how many PRPPs it intends to register; how it intends to meet the Act's "low cost" requirement (more on that below); what it estimates member fees and charges will be; that it has the financial resources to administer PRPPs and risk management procedures in place; and, interestingly, that its "officers and directors are of good character." How "character" will be assessed in this context is not clear from the draft regulations.

Zero-Rated Member Contributions

For those employees who do not or are not able to opt out of PRPP membership on religious grounds, and who otherwise fail to terminate their membership in a PRPP within the 60-day opt-out window following notification of the provision of the PRPP, they will instead be able to set their contribution rate at zero for anywhere between three to 60 months after the first 12 months of membership. Thereafter, they will be able to repeat this election as often as they wish. This "zero rating" procedure will undoubtedly be burdensome. It is likely to lead to increased costs for administrators of PRPPs with a number of chronic zero-rated members, each holding a relatively small account balance.

Investment Options

As concerns the investment of PRPP assets, a PRPP administrator may offer no more than six investment options, including a default option. The default option must be either a balanced fund or a fund tailored to a member's age (e.g., a life cycle fund). The administrator must offer the same default option in all of its PRPPs. Therefore, even where a PRPP administrator establishes several PRPPs, each with varying investment option lineups, these PRPPs will have the same default fund in common. It appears from the draft regulations to be difficult for the administrator to change the type of default fund after a PRPP is established.

Investment Restrictions

Also, it will come as no surprise that the draft regulations contain investment restrictions very similar to those applicable to registered pension plans, with a few notable exceptions. For example, the "10% Rule," which prohibits registered pension plans from investing more than 10% of the book value of the pension fund in the same "person" or associated or affiliated persons appears in the draft regulations, with some modifications. The PRPP-specific version of the 10% Rule exempts investments in index funds, as well as contracts pursuant to which the investment return is based on a widely recognized index or a broad class of traded securities. (Interestingly, the draft regulations' version of the rule against related party transactions exempts only investments in index funds but not contracts based on an index. This omission could be an oversight.) The PRPP-specific version of the 10% Rule also calculates the 10% threshold based on market, rather than book, value — a basis announced, but never implemented, for registered pension plans.

"Low Cost" Requirement

Some may find anticlimactic the draft regulations' answer to one of the Act's most anticipated questions: What constitutes "low cost," and how will it apply? "Low cost" is defined as costs at or below those incurred by members of defined contribution plans that provide investment options to groups of 500 or more members. The cost must be the same for all members of the PRPP. In other words, it appears that low cost will be by reference to market terms. It is clear, from both the low cost and the licensing requirements, that financial institutions already dealing with capital accumulation plans will have a definite advantage in this regard.

Permitted Inducements

Last but not least, there are only two categories of permissible inducements a PRPP administrator will be able to offer: the administrator may offer to pay the employer's transfer costs when switching from another PRPP; and the administrator may offer a product or service on more favourable terms and conditions than would otherwise be offered, "if the inducement is for the equal benefit of the employees of that employer." Given the regulations' requirement elsewhere that the same costs apply to all members of a PRPP, it would seem that an issuer will not be able to induce an employer to join a PRPP in which others participate with a cost lower than what the other members and employers enjoy. This may well lead to the creation of separate PRPPs.

Interested parties have 30 days to comment on the draft regulations.

The federal government separately announced that future regulations will address remaining open issues under the Act, including transfers from member accounts, the manner and frequency of remittances, the form and content of notices, locking-in rules, variable payments and electronic communications.

To view original article, please here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions