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 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
* creditor-proof - to the extent provided for under applicable legislation, pension plan contributions cannot be seized by creditors