Under a Defined Contribution or "Money Purchase" Registered Pension Plan (DC-RPP), the contributions of plan members and plan sponsors are invested towards the funding of a retirement income. The contribution going into the plan is known, while the final benefit is not known. The amount of retirement income, which a plan member will receive, is based on:
>> contributions made.
>> investment selection.
>> investment return.
>> annuity rates or economic conditions at the time the employee retires.

Sponsor advantages
>> Plan design flexibility.
>> Contributions and plan expenses payable and paid by the sponsor are tax deductible.
>> Contributions are exempt of payroll taxes.
>> Cost control – contributions are often set as a percentage of payroll.

Member advantages
>> Sponsor contributions towards retirement income.
>> Early investment yields more investment income.
>> Immediate tax reductions.
>> Dollar cost averaging reduces investment risk.
>> Group buying power – higher interest rates and favourable investment management fees.
>> By naming a beneficiary, any death benefit is paid directly to the beneficiary with no need for probate.
>> Creditor-proof – to the extent provided for under applicable legislation, pension plan contributions and benefits cannot be seized by creditors