Defined Contribution Plans: Money In, Money Invested


Next, is a Defined Contribution (DC) pension plan which is based on the contributions made into the plan during your employment at the company. These are made either by your employer alone, or by both you and your employer. The idea with a DC plan is that as a member, you’re given an individual pension account that accumulates your retirement income.

As the name suggest, it’s the contributions put into a DC plan that are defined. DC plans are easier to understand. When you have a DC plan, you can see exactly what’s in your account. The disadvantage of DC plans is that they don’t guarantee a pension for life, or in many cases, a pension that’s “enough” for you. Employers are moving more to DC plans rather than other DB plans, as this shifts the liability from the employer to the employee.

Some may have a combination of DB and DC plans. According to the AON/Hewitt 2011 Global Pension Risk survey, 39 per cent of Canadian plan sponsors have closed their defined-benefit plans to new entrants in recent years — and that figure is close to 80 per cent in Britain and the United States.


Defined Benefit PlanDefined Contribution PlanMulti-employer Pension PlanIndividual Pension Plan

Disclaimer: The information contained herein is for ON residents only and does not constitute an offer to sell or solicit sales in any other Canadian or foreign jurisdictions.