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