Registered Pension Plan (RPP)

What Is a Registered Pension Plan (RPP)?

A registered pension plan is a type of trust that provides pension benefits for an employee of a company upon retirement. Registered with the Canada Revenue Agency, RPPs are retirement plans where employees and employers or employers alone contribute to the entity until the pension recipient leaves the company or reaches retirement age.

Most RPPs are subject to legislative benefits standards handed down by federal or provincial governance bodies. These edicts delineate the minimum standard of benefits that RPPS must avail to plan constituents.

Understanding Registered Pension Plans

Contributions to RPPs are tax-deductible for both the employee and the employer. Contributions to the plan and gains on underlying assets are tax-deferred, so the funds are taxed when they are withdrawn from the plan.

Single-Employer Registered Pension Plans 

With a single employer pension plan (SEPP), a stand-alone employer, or a cluster of employers housed under the same corporate banner engage in and contribute to the same pension plan. Either availed to employees on a company-wide basis or presented to a narrow category of employees, SEPPs are traditionally administered by plan sponsors, who may solicit feedback from a plan's members.

While contributions to SEPPs are customarily made by employers, certain contributory SEPPs require employees to likewise pay into the plan. A SEPP may be structured as a defined contribution plan, a defined benefit plan, or as a hybrid of both styles. Employers are mandated to make contributions to the plan, which provides pension benefits. They must also cover any shortfalls.

Multi-Employer Registered Pension Plans 

With multi-employer pension plans (MEPPs), two or more autonomous employers contribute to the same pension fund, which may either be a defined contribution plan, a defined benefit plan, or a hybrid model.

When calculating benefits, defined benefit MEPPs acknowledge the years of membership with the existing employer. Time spent with previous employers may also factor into the calculations.

With some MEPPs, benefits may be shaved down in instances where an employer's contributions do not adequately cover expected payouts. Such non-fixed plans are sometimes dubbed "target benefit" plans.

RPPs by the Numbers

As the name suggests, jointly-sponsored pension plan (JSPPs) employ a model by which plan members and employers both make contributions.

According to the most recent statistics, in 2017, registered pension plans were enjoyed by more than 6.3 million members. This represents a modest 1% increase from 2016, when the plans at large boasted 62,800 fewer constituents.

Broken down by gender, the growth of new female members has outpaced that of male members. In fact, in 2017, for the second straight year, female members hit a record high, reaching 3.2 million. This is an uptick of 36,700 women, spiking the overall portion of female members to 50.5%.

Male membership also grew in 2017, but only by 26,100. Interestingly, this gain follows a 35,000 drop in male members, from the year prior.