Defined Contribution Registered Pension Plan

Under a Defined Contribution or "Money Purchase" Registered Pension Plan (DC-RPP), the contributions of plan members and Plan Sponsors are invested towards the funding of a retirement income. The contribution going into the plan is known, while the final benefit is not known. The amount of retirement income which a plan member will receive is based on:

  • Contributions made
  • Investment selection
  • Investment return
  • Annuity rates or economic conditions at the time the employee retires.

Sponsor advantages

  • Plan design flexibility
  • Contributions and plan expenses are tax deductible
  • Contributions are exempt of payroll taxes
  • Cost control - contributions are often set as a percentage of payroll

Member advantages

  • Sponsor contributions towards retirement income
  • Early investment yields more investment income
  • Immediate tax reductions
  • Dollar cost averaging reduces investment risk
  • Group buying power - higher interest rates and favourable investment management fees
  • Creditor-proof - to the extent provided for under applicable legislation, pension plan contributions cannot be seized by creditors