What is an RPP?
A registered pension plan (RPP) is a plan set up by your employer to help you save money for retirement. You can contribute to this plan through payroll deductions. When you do this, your employer may match your contributions by a specific amount. For example, if you contribute up to 3% of every paycheque to an RPP, in most cases your employer will match that 3% — essentially giving you free money.
RPP contributions
You and your employer can contribute to an RPP only until you leave the company or retire .
RPP withdrawals
You can access or withdraw funds from your RPP only when you reach a certain age – for most provinces and territories, this is age 55.
2 types of RPPs
There are two different types of RPPs in Canada: defined contribution pension plans (DCPP) and defined benefit pension plans (DB). At Sun Life, we only offer defined contribution pension plans.
Defined Contribution Pension Plan (DCPP)
You’ll get:
- A source of retirement income based on how well the investments in your pension perform.
- Tax-deferred savings, so you won’t have to pay taxes on contributions and investment growth until you withdraw funds.
- Employer-matching (up to a certain percentage) on your contributions; this is free money for you.
Defined Benefit Pension Plan (DB)
You’ll get:
- Fixed-monthly payments from your employer after you retire from the company. These payments are set and aren’t impacted by stock market performance.
- Pension payments based on the length of time you worked for your employer and how much money you earned over your career.
Benefits of an RPP
Money for retirement
Your employer is required to match all your contributions, up to a certain percentage.
Tax-deferred savings
You won’t have to pay taxes on your pension until you withdraw funds.
Tax-deductible contributions
You can deduct your contributions from your taxable income. This lowers your overall tax bill.
Plan for your future
Find an advisor
A Sun Life advisor can help you figure out how an RPP can impact your overall retirement plan. They can also answer any questions you have.
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Leaving your employer?
Sun Life Choices offers exclusive investments and retirement savings when you change jobs or retire.
Call Sun Life Choices at 1-877-893-9893.
Frequently Asked Questions
Is an RPP the same as an RRSP?
No, they’re different plans. The main difference is that an RPP is a pension plan from your employer, whereas an individual RRSP is an account you can set up through a financial institution to save money and manage your investments.
Some employers also offer group RRSPs. Like an RPP, a group RRSP lets you make contributions directly from payroll deductions and receive matching contributions from your employer up to a certain limit.
When can I withdraw from an RPP?
For most Canadian provinces and territories, the earliest you can withdraw money from your pension plan is usually age 55. Some provinces and territories only allow you to withdraw a certain amount. Some pension regulators allow a one-time withdrawal of up to 50% of the RPP's commuted value, if you're at least age 55, and qualify under the plan's rules for a hardship withdrawal.
Please note you’ll have to pay tax anytime you make an RPP withdrawal. Connect with an advisor for more detailed information.
Can I unlock my RPP early or in an emergency?
Pensions funds, like the ones in an RPP, are usually “locked-in” meaning you can’t take money out of it until you reach a specific age (usually age 55). There are also certain rules involved depending on the province or territory your pension is registered in or whether your employer is federally regulated (e.g. banks, airlines, railways).
However, you may be able to withdraw funds (before age 55) from an RPP if you’ve transferred those funds into a LIRA or a locked-in RRSP. In which case, depending on your province or territory, you may withdraw funds early if you find yourself in any of these circumstances. or a
- You have a low income,
- Your home is being repossessed,
- Your being evicted because you can’t pay rent,
- You have high health-care bills, or
- You have a reduced life expectancy.
Please note you’ll have to pay tax every time you make an RPP withdrawal.
Connect with an advisor for more detailed information.
Last updated: December 1, 2023