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The Pooled Registered Pension Plan (PRPP) and the Quebec Pension Plan (QPP) are both retirement savings plans, but there are some differences between them:
Coverage: PRPPs are available to employees of any employer, including self-employed individuals, while the QPP is only available to residents of Quebec.
Plan Type: PRPPs are a type of defined contribution pension plan, which means that the contributions made by the employee and/or employer are invested, and the eventual retirement benefit will depend on the investment returns earned on those contributions. On the other hand, the QPP is a mandatory, government-administered, defined benefit pension plan, where the amount of the retirement benefit is determined by a formula that takes into account the employee's earnings history and the number of years of contributions to the plan.
Contribution Limits: In PRPPs, there are no specific contribution limits, but the total contributions made by the employee and employer cannot exceed the individual's RRSP contribution limit. In the QPP, there is a maximum pensionable earnings limit each year, and contributions are based on a percentage of those earnings.
Portability: PRPPs are designed to be portable, meaning that employees can transfer their funds from one PRPP to another or to an RRSP, without penalty. The QPP also offers some portability options, but they are more limited.
Administration: PRPPs are administered by private sector financial institutions, while the QPP is administered by the government of Quebec.
Benefit Payments: In a PRPP, the retirement benefit is typically paid out as a lump sum or as periodic payments, while in the QPP, the benefit is paid out as a monthly pension for life.
Overall, the PRPP is a flexible retirement savings option that is available to all Canadians, while the QPP is a mandatory, government-administered pension plan that is only available to residents of Quebec.
2023-03-07 15:36:22
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