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PRPP, A Confusing Acronym about Retirement Savings

Dec. 1, 2011
3 mins
A professional man looks at his tablet while leaning against a wall

The numbers for Canadians are scary.

Only, 1 in 3 have retirement savings, the median value of an RRSP in Canada for those over 55, is only $60,000. On top of this, a mere 1/3 can depend on a work pension after retirement.

What is the PRPP?

The Federal Government’s solution to this widening retirement gap is a new scheme called the Pooled Retirement Pension Plan or PRPP.  It targets those individuals who are self-employed or without a company managed pension.

In essence, it’s a great idea, a government-run plan that protects Canadians in their retirement years. But in reality, it’s avoiding the real problem, that is the current public pension plan, CPP and QPP (in Quebec), is underfunded.

The Issues

The major issue with the new PRPP is that’s its voluntary. Already, there’s evidence that shows Canadians aren’t contributing to their RRSPs because you have to opt-in to be part of it. Another voluntary plan will also affect the most vulnerable, like those in low-income families who are least likely to prepare for retirement. As well this group after 65 is most at risk to live in poverty. Canadians are not taking care of their retirement on their own. Beefing up the already existing plan is the only way to protect Canadians in their old age.

Right now, the maximum CPP retirement benefit for someone who retires at age 65 is $960 a month, but the average CPP pension is actually just $512. Cost of living in Canada is going up and Canadian household debt as a share of personal disposable income stood at 150.8% at the end of June.

Creating a new program is confusing and makes it harder for Canadians to make a decision that is right for their retirement. I have a few concerns. One, what are the qualifications for those contributing? Two, how much do they have to put in? Three, what if that person becomes unemployed? All of this creates a problem for those who will be handling that money for would-be-retirees.  And the money is still subject to fluctuation in the stock market, so the fund can be affected by huge swing like the ones we have recently experienced.

Every sign points to fewer and fewer Canadians being able to afford to put money away for the long term.  The chance of Canadians contributing to yet another confusing registered savings plan is unlikely. Canadians are still puzzled by how the TFSA works and it was launched more than three years ago.

The Solution

The Federal government needs to make retirement savings mandatory and force Canadians to put more into the public CPP to ensure there will be more money for seniors in retirement. Right now every working Canadian is eligible for CPP once they turn 65. It is that guarantee that will help seniors in their retirement and keep them out of poverty.

Rubina Ahmed-Haq

Rubina Ahmed-Haq is a financial journalist and personal finance expert with more than 15 years of experience. Her career spans three continents with appearances on TV, radio, print and online. She is the Finance Editor for HOMES Publishing. You can also read her columns in CondoLife and Active Life. Rubina runs the website She has also contributed on personal finance matters at The Toronto Star, The Globe and Mail, National Post, CTV Newschannel, Mississauga Life Magazine,, OurKidsMedia, CAA Magazine, South Asian Focus TV, ANOKHI Magazine, Bridal Fantasy Magazine, Canadian Running Magazine, FRESH JUICE magazine and NEWSTALK 1010.

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