Private Pension Plans

Private pension plans are also called registered pension plans: they are registered with CRA but as separate from RRSPs.

There are several types of private pension plans


* full-time employees with 2+ years of continuous service
* part-time employees with 2+ years of continuous service an annual salary of at least 35% of the Year's Maximum Pensionable Earnings (YMPE)


  • employer are contributions tax-deductible if paid within 120 days after the end of the fiscal year
  • employee contributions are tax deductible if made by December 31
  • employees aren’t taxed on employer contributions
  • pension income is taxed to the plan member as regular income ($1,000 may be exempted by pension income credit)

Pension Funding

  • plan cost = benefit cost + administration cost - investment earnings
  • future costs change as planned matures and employees qualify for pension benefits


  • can keep contributions made by the previous employer when switching jobs after two years of employment

Locked-In Plans

The Federal Pension Benefits Standards Act restricts the cash out of pension benefits by members of pension plans. The goal is to ensure income for life. So funds in a locked-in plan can be used for

  • locking-in
    • vested money is locked into an RRSP, LIRA or LIF until
      • the employee retires, or
      • a date specified in the plan
    • must start bringing locked-in funds into income no later than the year following the year age 69 is reached, or if rolled into another registered pension plan to continue deferral, must make minimum withdrawals


When changing employers, you can

  1. keep vested funds in the previous pension plan until retirement
  2. transfer vested funds to a Locked In Retirement Account (LIRA)
  3. transfer vested funds to your new employer’s pension plan
  4. buy a life annuity

Survivor’s Benefit

  • 50+% of pension upon death of the pensioner, unless renounced in writing
  • options: guaranteed, joint and last survivor @ 50%-100%

Pension Funding

Plan Cost = Benefit Cost + Administrative Cost - Investment Earnings



  • employee and employee contributions are tax deductible
    • maximum may apply
    • employee contributions: by December 31
    • employer contributions: 120 days following the end of the taxation year

Pension Income

  • taxed as regular income
  • pension income credit after age 65 may exempt $1,000 a year

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