Defined Contribution Pension Plan

A Defined Contribution Pension Plan (DCPP) is a tax deferred savings vehicle that allows contributions to accumulate tax-free for use as retirement income. Earnings remain tax free until the employee retires and retirement income depends on the amount of money contributed and the investments options chosen by the member.

Who is eligible?

  • Eligibility is usually up to the employer or determined based on applicable pension plan legislation.
  • Employee eligibility is determined based on specified amount of time worked at the company or have received a salary greater than or equal to the maximum amount of pensionable earnings in a given period.

What are typical contributions? Are there contribution limits?

  • Optional or mandatory contributions are at the discretion of the plan sponsor.
  • Employer determines the contribution amounts of both employer and employee to a minimum contribution limit of 1% employee earnings.
  • Minimum employer contribution is 1% of the employee earnings.
  • Voluntary contributions are permitted.

Who is responsible for investments?

  • Employer provides the fund line-up and employees invest from the list of funds.

Are there any withdrawal restrictions?

  • Employees may only withdraw voluntary contributions.

 

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