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Pension Plans

Pension plans are another form of helping employees save for retirement. Instead of building savings for retirement, providing savings for retirement. By building a pension plan, you are adding to your total compensation package and supporting your employee’s future.

Types of Plans

It’s important to put a plan in place. Ask the question “do you want to help your employees to retire,” or “how can you support them in this process”.

Defined Contribution
Pension Plan

Promises a specific retirement income based on salary and years of service.

Defined Benefits
Pension Plan

Employer and Employee contribute both a fixed amount. Payout will then depend on investment performance.

Where We Fit In

Leave the financial planning for plan members to a Certified Financial Planner (CFP). We handle the plan.

  • Set up and implement the plan.
  • Manage the day-to-day of the plan.
  • Support with plan member enrollments
  • Run yearly plan check-ins to keep things on track.
  • Review governance and plan operations every year.
  • Discuss member education sessions – for employees to feel confident choosing their own investments.
  • Ensure you (the employer) are following the appropriate guidelines
  • Provide ongoing support, such as being the connector between the employer and the provider, handling withdrawals, transfers and member service issues, reviewing the market during both good & bad times.

Pensions Vs. Retirement Savings Plans

We build the plan around each employer’s philosophy and goals, so the plan truly fits what you need.

Understanding the difference between Pensions versus Retirement Savings Plans

Pension Plans

  • Pensions provide retirement income.
  • Pensions are employer-sponsored.
  • Pensions are heavily restricted and regulated.
  • Pensions require mandatory employer Contributions.
  • Pensions fall under pension legislation.
  • Pensions are locked-in until retirement.

Retirement Savings Plans

  • Retirement Savings Plans help you accumulate enough savings for retirement.
  • RSPs can be employer or individually sponsored (i.e. matching contributions).
  • RSPs are super flexible.
  • RSP contributions can vary – however, we don’t suggest this.
  • RSPs fall under general tax legislation.
  • RSP withdrawals are possible.

Key Difference: Pension Plans carry very heavy regulatory requirements, so advisory oversight is important.

Individual Pension Plan

They are a defined benefits pension plan set up for one person. This is usually the business owner, an incorporated professional, or executive. The individual must be earning T4 income through a corporation, who wants to save more for retirement than just an RRSP.

Purpose

  • Large Tax-Deferred Savings – Contribution grows with age and can exceed RRSP limits in your 50s and 60s.
  • Guaranteed retirement income – Payout formula is locked in based on salary and years of service (not performance).

Benefits to the Business

  • Contributions are tax-deductible to the corporation. If the investments underperform, the company can top it up as a tax deduction.
Let’s Build a Better Benefits Experience, Together.
Trying to understand the difference and not sure what plan best fits for your needs. Let’s find out together.
BOOK A CONSULTATION

or call us at 604.531.7979