If you are approaching retirement age or simply planning for your financial future, it is important to understand the various pension plans available in Canada. Pensions are retirement savings plans offered by the government or employers to help individuals save for their retirement years. In Canada, there are three main types of pension plans that you should be aware of: the Canada Pension Plan (CPP), Old Age Security (OAS), and employer-sponsored plans.
The Canada Pension Plan is a government-run pension plan that provides retirement, disability, and survivor benefits to most working Canadians. Contributions to the CPP are automatically deducted from your paycheck and are based on your income. Upon retirement, you will receive a monthly pension based on the amount of contributions you have made over your working years. Old Age Security, also provided by the government, is a basic pension available to most Canadians over the age of 65. Eligibility for the OAS is based on residency and years of residency in Canada.
Finally, many employers offer pension plans as part of their employee benefits package. These plans can be either defined contribution or defined benefit plans. In a defined contribution plan, the employer and employee make contributions to a fund which is then invested. The amount of retirement income you receive depends on how well the investments perform. A defined benefit plan, on the other hand, guarantees a certain level of retirement income based on your salary
