Pension Plans

Employer-Sponsored Pension Plans are called registered pension plans (RPPs): These are set up by an employer, union or association to provide retirement benefits to their employees. There are two main types:

• Defined Benefit (DB) Pension Plans: In a DB pension plan, the employer guarantees a specific benefit amount based on factors like years of service, salary, and a predetermined formula. The responsibility for managing investments and ensuring the promised benefits lie with the employer or a pension fund.
• Defined Contribution (DC) Pension Plans: In a DC pension plan, both the employer and the employee make contributions to the plan. The final retirement benefit depends on the contributions made, investment performance, and the individual’s decisions regarding investments. The responsibility for managing investments and assuming investment risks typically lies with the individual.