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Defined Contribution Pension Plan

(Also known as a "DC Pension Plan")

In a defined contribution plan, you contribute a defined percentage of your salary from each pay. Often, your employer matches your contributions. Your employer must contribute at least one per cent of your salary. A defined contribution pension plan is also called a money purchase pension plan.

You will get a pension statement each year. It will show the balance of your contributions and your employer's contributions, along with the investment return. It will not show the amount of pension you will get on retirement.

In a defined contribution plan, you will not know in advance the amount of pension you will get on retirement. You will have a lump sum. This lump sum will earn investment income. The amount you get as a pension depends upon the investment performance of your individual account. In a defined contribution plan, you bear all of the investment risk.

Contributions to a defined contribution plan are tax deductible from your employment income and any investment earnings are tax sheltered.

Defined contribution plans are simpler to understand than defined benefit plans and less expensive to administer. They are also more portable when you change jobs.

You might be given the opportunity to control the investment of your funds in a defined contribution plan. For example, you might be asked to choose from a selection of mutual funds. When you retire, you can transfer your locked-in lump sum from the plan and either purchase an annuity from an insurance company or put it in a life income fund or locked-in retirement account.

Expected Income
If you had accumulated $100,000 in your pension plan when you retired at age 65, you would receive $7,200 in income that year if you transferred your money to a life income fund.



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Mailing Address:
Finance and Treasury Board
Pension Regulation Division
PO Box 2531
Halifax, NS  B3J 3N5

Phone: 902-424-8915, weekdays 8:30 - 4:30.
Fax: 902-424-5327
Email: 
novascotia.ca

Courier:
Finance and Treasury Board
Pension Regulation Division
1723 Hollis St, 4th Floor
Halifax, NS  B3J 1V9




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