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Defined contribution pension plan

Retirement income from you and your employer

Save for retirement and turn it into income with a defined contribution pension plan.

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  • Tax-deductible contributions

    The money you contribute is tax-deductible, so you’ll keep more of your income.

  • Tax-deferred investments

    You won’t pay tax on your investment earnings until you withdraw them.

  • Employer contributions

    Your employer or sponsor doesn’t just set up an RPP – they also contribute to it.

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What is a defined contribution pension plan?

A pension plan is a way for you and your employer to set aside money for your retirement. A defined contribution plan is the most common type of pension.

Both you and your employer contribute a percent of your salary over the time that you’re working, and when you retire you can convert that money into your retirement income. The amount that you receive depends on how much has been contributed and how well the investments have done.

How does it work?

Your employer:

  • Sets up a pension plan
  • Chooses how much they’ll contribute (maximum 18% of your income)
  • Decides whether you’re required to contribute and whether they’ll match your contributions, and facilitates payroll deductions


  • Can usually decide to contribute more, up to an annual limit
  • Can often have input into how your money is invested

Already have a defined contribution plan through Canada Life?

Manage your pension or workplace savings plan using your online account. Check your balance, make account changes, create a retirement plan and more.

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What’s the difference between a defined contribution plan and a defined benefits plan?

Canada Life only offers defined contribution plans, but you may have a defined benefits plan from another provider or an older plan.

Defined contribution plan    

Defined benefits plan


You know how much is going into the plan

You know how much you’re going to get out of the plan

How is your retirement income determined?

Depends on the market and how much your investments have earned when you retire

Determined by a formula, based on how long you’ve worked and your average earnings in your best years

What do you contribute?

Usually a percent of your income (maximum 18%)

You may or may not contribute – if you do, you’re usually required to pay less than half of the benefits

What does your employer contribute?

Usually a percent of the employee’s income (maximum 18%)

Employer must usually contribute at least half of the benefits

How do taxes work?

The money you contribute is tax-deductible

The money you earn from investments won’t be taxed until you withdraw it

The money you contribute is tax-deductible

The money you earn from investments won’t be taxed until you withdraw it

Learn more about defined benefits plans