Registered Pension Plans
There are two different types of Registered Pension Plans (RPP). First, the defined benefit plan guarantees a specific and predetermined amount of retirement income for the employee, which is calculated based on a flat amount per year of service or a percentage of the employee's earnings over a defined period. Generally speaking, the maximum defined benefit is calculated as 2% of the employee's income (an average of the highest income level for 3-7 years, multiplied by the number of years of service). In addition, the Money Purchase RPP provides the pension income that the contributed funds in the plan can purchase through the acquisition of an annuity. For 2013, the indexed amount regarding Money Purchase RPP for employee/ employer contributions is set at $24,270.
Author: Natalie Leung
