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 payable and paid by the sponsor 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.
• By naming a beneficiary, any death benefit is paid directly to the beneficiary with no need for probate.
• Creditor-proof – to the extent provided for under applicable legislation, pension plan contributions and benefits cannot be seized by creditors.