The big flaw in PRPPs

Audio: Malcolm Hamilton on why Pooled Registered Pension Plans won’t work.



Online only.


Below is the fourth audio clip from my recent interview with Mercer principal Malcolm Hamilton. The federal government is going ahead with its plans to establish Pooled Registered Pension Plans for Canadians without employer-sponsored pensions.

In principal, PRPPs are a great idea with the potential to help workers in small and medium-sized businesses save for retirement. By pooling resources with other smaller firms, there should be economies of scale that would cut investment management costs.

However, PRPPs are not the same as the traditional Defined Benefit pensions that many employers are jettisoning in favor of Defined Contribution plans. PRPPs are more like DC pensions, meaning that — as with RRSPs — investment risk is being shouldered by the worker/investor rather than their employers.

At least in their preliminary incarnation, Hamilton believes PRPPs are flawed. He thinks they’d be a lot more useful if they were designed to work with the TFSA structure rather than the traditional RRSP model.

Q: Why do you think PRPPs may not fill the pension gap as much as the government hopes?

A: Press play to hear Hamilton’s response:

      Is_the_PPRP_doomed2.mp3|titles=Why the PRPP is doomed

2 comments on “The big flaw in PRPPs

  1. This appears more to be a government make-work project. There is nothing in these plans that doesn't already exist. What a waste.


  2. Personally and professional I believe many vested interests are chiming in on Pooled Registered Pension Plans with very narrow criticisms that fail to take into account the full range of benefits and implications.

    This podcast is but one example and granted, the not intended to be definitive and comprehensive thinking of Hamilton or Mercer.

    I believe the public debate and discourse on PRPPs has been very fragmented, lacking a broader simultaneous discussion of the range of benefits, impacts and possible consequences short and longterm on investors, employers, retirement outcomes, industry (fees, delivery channels, market share, product cannibalization , investment fees), economy, social programs, tax design choices/opportunities


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