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Pensions

A pension plan is usually organized by an employer, industry or union to provide individuals with a retirement income in addition to that provided by the government, such as the Canada Pension Plan.

The employer, the employee, or both make regular contributions to fund the pension plan on behalf of the employee. The plan is usually administered by a third party, such as an insurance company. For most plans there will be one or more professional investment management firms investing the funds into which the contributions are made.

The two main types of pension plans are defined benefit, where the amount of the pension received by the employee is predetermined based on a formula, and defined contribution, where the amount to be contributed is known but the actual pension will depend on the amount contributed and the investment return generated during the years leading up to retirement.
 

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