Group Retirement Benefits

    Working at an organization that offers a pension plan is one of the greatest financial advantages a Canadian can enjoy. Pension plans are designed to provide retirement income and help employees reach their retirement goals and for business owners- help retain key employees.

    Pension plans can offer:

    • Employer contributions

    • Forced retirement savings for employee

    There are 2 main types of pension plan:

    • Defined Benefit Plan

    • Defined Contribution Plan

    Defined Benefit Plan

    • Retirement income is guaranteed, contributions are not.

    • The pension amount is based on a formula that includes the employee’s earnings and years of service with the employer

    • Usually, contributions are made by the employee and employer

    • The employer is responsible for investing the contributions to ensure there’s enough money to pay the future pensions for all plan members.

    • If there’s a shortfall, the employer pays the difference.

    Defined Contribution Plan

    • Contributions are guaranteed, retirement income is not.

    • Usually, contributions are made by the employee and employer.

    • The employee is responsible for investing all contributions.

    • The amount available in retirement depends on how the investment performs including total contributions.

    • At retirement, the money in the account can be used to generate retirement income through purchasing an annuity or transferring the amount to a locked-in retirement income fund.

    In summary, a defined benefits plan guarantees you a retirement income and a defined contribution plan guarantees contributions but not retirement income.

    Talk to us, we can help.