Defined Contribution And Defined Benefit Flashcards
Vesting
Individuals right to receive pension benefits that have accrued to them over and above personal contributions they made
Who regulates federal pension plans
Pension benefits standards act
Who regulates majority of pensions in Canada
Provincial jurisdiction
Solvency ratio of pension plan measures
Assets over liabilities
What are considered assets of pension plan
Investment of employer and employee contributions over plans lifetime
What are considered liabilities of pension plan
Combination of obligations owed to current retirees, future retirees and estimate of current employees who will leave and take commuted value
What does it mean if a pension plan is non-contributory
The plan does not require employees to contribute
Maximum amount employee may contribute to a contributory defined benefit plan
Lesser of
- 9% employees annual income
- $1k plus 70% of employees pension adjustment for current year
Maximum legislated amount for combined employer/employee contributions to defined contribution
Lesser of
- 18% of earnings
- current money purchase contribution limit
What happens if pension plan is being wound up and employee does not exercise transfer rights by deadline
Annuity bought on their behalf
Who are the 4 parties involved in RPP
Plan members
Plan sponsor
Plan administrator
Plan committee
Who is the plan sponsor of a RPP
Employer
Who is typically the plan administrator of RPP
Employer, deducts contributions from payroll
Can also be committee, insurance company
Fiduciary position
Who is typically the committee on RPP
Active, retired members
10 - 15 people
Reviews and provide recommendations
Allowable contributions to DB
Actuarial calculation
Allowable contributions DC
18% of earned income or annual legislative * lowest
Vesting benefits fit DB
Based on formula
Vesting benefit for DC
Contributions by employer, employee and earnings
Organization that works to harmonize pension across Canada
Canadian association of pension supervisory authorities
CAPSA
Determining jurisdiction of RPP 3
Residence of employee
Jurisdiction where work completed
Jurisdiction where pension plan HO is
Who is eligible for federal pension
Full time after 2 years
Part time after 2 years and 35% years maximum pensionable earning for this 2 years
Who is eligible for Ontario pension
Full time with 2 years
Part time with 35% of YMPE for those 2 years
OR if worked 700 hours in 2 years
For pension plans, Are all provinces definition of early, normal and postponed retirement the same
No
Taxation of DB contributions
Deductible by employer, not taxable to employee
