Registered Pension Plans (RPPs)

Generally speaking, with a Defined Contribution Registered Pension Plan, once the client has an idea of the amount of funding they are willing to contribute in order to establish such a plan, they also have to decide at whatlevel the employee should contribute. 

Registered Pension Plan Versus Group RRSP

Compared to a Group RRSP, there are definitely some pros and cons of establishing a Pension Plan. These differences include:

Advantages

• Employer has more control, i.e. ensures plan is operated as a true retirement plan
• Employees are protected by the laws governing R.P.P.'s
• Vesting schedule - maximum 2 years plan membership (this is subject to change based on recent proposed leglislation. The government has proposed that Pension Contributions vest immediately 100% to the employee.)
• No in-service withdrawals of monies by employees
• Death benefits for spousal beneficiaries can be rolled to an RRSP
• Monies are creditorproof

Disadvantages

• Legislation can be viewed as restrictive, i.e. maximum eligibility 2 years service, part-time employees must be allowed to join, all members within the same employee classification must receive the same contributions, etc.
• Locking-in of monies upon 2 years of plan membership
• Increased government reporting - i.e. annual information return, investment policy statement, auditor's report
• More costly to administer - "reflected in interest rates or expenses"
• Employer contributions must be remitted monthly
• Employer must contribute a minimum of 1% of salary
• Employees are allowed to form an advisory committee
• Pension adjustment reporting needs to be completed by the plan sponsor