Financial Planning -> Pensions -> Registered Pension Plans (RPPs) -> Defined Contribution Pension Plan Characteristics
Characteristics of Defined Contribution Pension Plans (Money Purchase RPPs)
 | 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 the pension income splitting available on the tax return, this is less important. |
| The pension adjustment (PA, reported on the T4) reduces the amount that the employee can contribute to an RRSP. |
| Employer or plan sponsor 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 amounts to be contributed to the plan are specified in the plan contract. |
| The retirement income of the employee will depend upon how much has been contributed to the plan, and how well the investments in the plan have done. |
| The maximum amount of contributions to the plan for each employee is restricted by the Income Tax Act. |
| Employee contributions are tax deductible. |
| Many plans allow members to choose their own investments. |
| Contract negotiations could reduce future contributions, but won't change the amount already in the plan for each employee. |
Revised: January 03, 2025