Pensions

Under a Defined Contribution Pension Plan (also called a "Money Purchase" Pension Plan), the contributions of plan members and plan sponsors are invested towards the funding of a retirement income. The maximum combined contribution is the leaser of 18% of earned income to the maximum contribution limit. Typically, the contribution going into the plan is known, while the final benefit is not known. The employer's contributions are a tax deductible expense and are not a taxable benefit to the plan member. The amount of gross retirement income which a plan member will receive is based on: Future salary or wage levels and the resulting contributions made; Investment selection; Investment return; Annuity and/or interest rates at the time the plan member retires. Employer contributions are credited to the account of the employee, but are kept separate from the employee contributions for investment purposes. The employer's contributions generally "vest" with the employee after a period of time (two years in many provinces). In other words, after a certain period of time, the employee obtains the right to the employer's contributions. Employer's can allow employees to make the investment decisions for the employer contributions, or the decision may be left to the employer. Employees usually make the investment decisions for their own contributions. The investment options available to the employees are generally determined by the employer. There is considerable choice of investment options. These may include: Guaranteed Interest Annuities, and Mutual funds.