Financial Planning -> Pensions -> Registered Pension Plans (RPPs) -> Defined Benefit Pension Plan Characteristics
Characteristics of Defined Benefit Pension Plans
 | Pensionable age is specified by the pension plan and can vary from plan to plan. |
| Pension payments cannot be split between spouses, except in the case of a court ordered split, due to separation or divorce. Due to pension income splitting, this is less important. |
| The pension adjustment (PA, reported on the T4) reduces the amount that the employee can contribute to an RRSP. |
| Employer contributions are not taxable to employees. |
| Pension benefits will be paid out (usually in monthly payments) over the lifetime of the employee after retirement. |
| If there is a spouse, then the plan must be set up to continue payments to the spouse upon death of the member, unless the spouse has signed a waiver. |
| The employee knows in advance approximately the amount of retirement income that will be paid. |
| The maximum amount of pension payable is restricted by the Income Tax Act (Regulations S. 8504). |
| Contributions to the plan by the employer are determined by actuarial evaluations. |
| The plan may or may not be set up for employees to make contributions. |
| Employee contributions are tax deductible. |
| Employees have no control over how the pension funds are invested. |
| Retirement benefits can be reduced in contract negotiations. |
| Defined benefit plans are rarely 100% funded, so if the company becomes insolvent, the employees can lose a portion of their pension. |
Revised: January 03, 2025