Defined Contribution Registered Pension Plan (RPP DC)
A registered pension plan with defined contributions is a traditional savings plan. Contributions are pre-determined and correspond to a percentage of the salary, or a fixed amount.
In most cases, both employer and employee contribute to the plan. Contributions are tax deductible, and grow free of taxes. Furthermore, for as long as tax limitations are respected, employees may also voluntarily contribute additional amounts.
The benefits of a defined contribution registered pension plan for employers
- Contributions and administration fees are tax deductible for employers;
- In an RPP with defined contributions, both employer and employee contributions are locked-in;
- Minimum mandatory contributions by the employer attest of the employer’s interest toward members’ future.
The benefits of a defined contribution registered pension plan for employees
- Since employer participation is mandatory and known, RPPs with defined contributions are a very valuable aspect of a company’s range of social benefits;
- In the event of personal bankruptcy or insolvency, the employee is protected from its creditors, as stated by the Supplemental Pension Plans Act.