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• Defined Contribution
• Defined Benefit
• Record Keeper Relationships
• FAQ

Frequently Asked Questions

What is a Defined Contribution Pension Plan?

There are many types of DCPPs but their ultimate purpose is to provide individuals with a vehicle to save for their retirement in a way that offers certain tax advantages.
DCPPs are also referred to as money-purchase plans and include Group RRSPs, Employee Stock Ownership Plans and Profit Sharing Plans.

What are the main features of a Defined Contribution Pension Plan?

Under a DCPP arrangement, the amount contributed to the Plan by the employee or, the employee and the employer, is predetermined by the individual’s salary. The level of benefit paid to the employee upon retirement is dependent on the amount contributed during their career and how successfully the assets were invested.

An advantage is that employees are typically offered a variety of investment options (stocks, bonds, money market and/or balanced funds), which allows them flexibility to build a personal plan that suits their long-term needs.

Contributions are tax deductible and accumulate on a tax-free basis. This allows the plan to benefit by compounding at a greater rate than if taxes were being paid each year.

DCPPs are not linked to a specific employer or the amount of time spent with an employer, rather, they remain with the employee even if they switch employers during their career.


What if my employer’s DCPP does not offer the fund that I am interested in?

Employers who are the sponsors of DCPPs will generally review their fund offerings to ensure that they reflect the needs of their employees while offering sufficient variety. We suggest you contact your employer regarding the addition of new funds.
 

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