DCPP (Defined Contribution Pension Plan)

A Defined Contribution Pension Plan (DCPP) is a kind of registered pension plan (RPA) . The employer and the employees make tax-deductible contributions into the plan, and this amount grows on a tax-deferred basis. Assets in the plan are locked in and can only be withdrawn as an annuity or a life income fund (LIF) upon retirement.

This type of plan is a good choice for employers who want to help their employees build retirement income.

Advantages of a DCPP

• Provides retirement income over and above government pension benefits (CPP/QPP)
• Can be combined with other plans, such as a group Registered Retirement Savings Plan (RRSP), a group Tax-Free Savings Account (TFSA) or a Deferred Profit Sharing Plan (DPSP), to help employers attract and retain talented employees
• Offers employees a tax benefit, as employer contributions are not considered salary
• Protects the RRSP by preventing cash withdrawals, locking in contributions and requiring the participant to purchase a joint and survivor annuity upon retirement

Features of a DCPP

• Governed by the applicable pension plan legislation and administered accordingly
• Must be registered with the government of the province where most employees work or, depending on the company's activities, with the federal government

The Simplified Pension Plan (SPP), a variation on the DCPP

In Quebec, Desjardins Financial Security also offers a simplified pension plan (SPP). It's a defined contribution plan established on behalf of the employer and administered by a financial institution. The financial institution assumes the responsibilities usually performed by the employer and pension committee.

Advantages of a SPP

A SPP offers the same advantages as a DCPP, and also:

• Provides the employer with greater flexibility to set up a plan that meets their needs and the needs of their employees, particularly in terms of the types of contributions that can be made and locked in as a result of the special provision under Quebec'sSupplemental Pension Plans Act.
• May permit employee contributions to be withdrawn during employment
• Enables the employer to make supplementary contributions, similar to those made to a DPSP.

What type of pension plan is right for you? See the Retirement savings plans table.

Le présent texte a été rédigé à titre explicatif. L'ensemble des conditions, exclusions et restrictions se trouve dans le contrat .