On top of the benefits you receive from Canada’s public pension system,
some Canadians will also receive benefits from employer-sponsored pension
plans.
The two main types of employer pension plans include:
Defined benefit pension plan (DBP)
Defined contribution pension plan (DCP)
Defined benefit pension plans are where the employer promises to pay a
certain amount of money each year after retirement. Employees do not
always make contributions in addition to their employer’s contribution. How
much you receive depends on a formula based on your income and years
worked.
Defined contribution pension plans are where you and your employer
contribute an established amount to your pension each year. Your
contribution is usually a percentage of your pay. The value of the pension is
based on the performance of the investments.
Both DCPs and DBPs have advantages and disadvantages. What is most
important is that you fully understand how your pension plan works.
Employer Pension Plan
Your pension will likely be a base of your retirement income, so if you don’t
know how your pension works, be sure to speak to your human resources
staff member, union representative or pension plan manager to find out.
For more information about employer pension plans go to:
http://www.fcac-acfc.gc.ca/Eng/forConsumers/lifeEvents/
planningRetirement/Pages/CompanyP-Rgimesde.aspx
If you’re eligible for a pension from a current or previous employer, be
sure to let them know in advance when you want to start receiving your
pension. You will probably have to fill out several forms, and it may take
a while to start receiving your pension.
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