It is retroactive in the sense that future policies will cost less per city, including cities founded before Representation.
It is not retroactive in the sense that you will still have paid more per city for policies up to that point, and you aren't refunded that culture in any sense, so if you buy it 20th in one game and 10th in another, in the game where you buy it 20th you will need to pay more total culture for a given number of policies. That is, while your 21st policy will cost the same amount for either game, your total cost for 21 policies will be higher the later you take Representation.