In Canada, the terms Pension Plan and Registered Pension Plan tend to be used interchangeably. The terminology used by the Canada Revenue Agency (CRA) includes the following:
- A registered pension plan is a pension plan that has been registered by the Minister for the purposes of the Income Tax Act and not had its registration revoked.
- A pension plan is a definite arrangement established as a continuing contract by an employer or group of employers or by a union with employers to provide a lifetime income to retired employees for the service they have provided. This must be the primary purpose of the plan for it to qualify for registration under the Act.
Pension plans must also conform to Pension Benefits Standards Regulations, 1985.
Types of pension plans
The Canada Pension Plan (CPP) is a contributory, earnings-related social insurance program. It ensures a measure of protection to a contributor and his or her family against the loss of income due to retirement, disability and death. The Canada Pension Plan operates throughout Canada, although the province of Quebec has its own similar program, the Québec Pension Plan (QPP). The Canada Pension Plan and the Québec Pension Plan work together to ensure that all contributors are protected.
There are a number of types of pension plan recognized in Canada, defined benefit pension plan or DB pension plan, a defined contribution pension plan or DC pension plan (also known as a money purchase plan), Combination plan, Multi-employer plan (MEP), Specified multi-employer plan (SMEP), Simplified pension plan (SPP), Designated plan and Flexible pension plan.
There are significant differences in how these plans work, for most Canadians they will dealing with DC versus DB pensions.
Formal pension coverage is on the decline in Canada. According to the Association of Canadian Pension Management, only 26% of private-sector workers are enrolled in a registered pension plan. In the public sector, 84% of workers are covered. Overall coverage has declined from 46.2% of workers in 1977 to 38.5% in 2005.
Pension plan regulation and supervision
Pension plans are regulated by various agencies, depending on where the pension plan is registered. Federally regulated industries such as banks and airlines are governed by Pension Benefits Standards Regulations, 1985. Most other pension plans are governed by the province in which the employment takes place; for example, an Ontario resident working in Quebec would be subject to Quebec pension legislation.
- British Columbia: FICOM - Responsibilities | Pension Plans | Overview
- Alberta: Alberta Pensions Services Corporation
- Saskatchewan: Pension Plan Members - Saskatchewan Financial Services Commission - Government of Saskatchewan
- Manitoba: Office of the Superintendent - Pension Commission | Province of Manitoba
- Ontario: Pensions - Financial Services Commission of Ontario
- Quebec: RRQ - The pension plan administrator
- New Brunswick: Department of Justice - Office of the Superintendent of Pensions
- Nova Scotia: Home Page | Labour and Advanced Education | Government of Nova Scotia
- Prince Edward Island: Prince Edward Island: Pension Plan Provisions
- Newfoundland & Labrador: Pensions Administration Division | Finance
- Cohen, Bruce and Fitzgerald, Brian The Pension Puzzle, ISBN 978-0470839539
- Milevsky, Moshe A. and Macqueen, Alexandra C., What is a pension, exactly? (And why should you care?), March 2010
- T4099 - Registered Pension Plan Guide, viewed February 6, 2012.
- General Information About The Canada Pension Plan, viewed July 17, 2012
- Association of Canadian Pension Management, Delivering the Potential of DC Retirement Savings Plan, May 2008, p. 3.
- TaxTips.ca - Registered pension plan regulators and legislation
- Financial Services Commission of Ontario (FSCO), Types of Registered Pension Plans and Benefits
- Financial Services Commission of Ontario (FSCO), Vesting and Locking-in of Pension Benefits
- MoneySense, Income that lasts a lifetime, April 2, 2012: “Your pension could be your most valuable asset. Here’s how to make the most of it”.