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Pensions

Types of Pension Plans in Canada: Public, Workplace and Personal

Canada's retirement system has three layers: public pensions (CPP or QPP and Old Age Security), workplace registered pension plans (defined benefit, defined contribution or a mix), and personal savings like RRSPs, TFSAs and pooled plans such as PRPPs and the Saskatchewan Pension Plan.

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1. Public pensions

The Canada Pension Plan (or Quebec Pension Plan) and Old Age Security. See benefits for seniors.

2. Workplace registered pension plans

  • Defined benefit: pays a pension set by a formula (flat benefit, career average or final/best average earnings).
  • Defined contribution (money purchase): your pension depends on contributions and investment returns. See defined contribution plans.
  • Combination plans: part defined benefit, part money purchase.
  • Multi-employer plans: sponsored by a group of employers, common in unionized industries and sectors such as universities.
  • Target benefit plans: benefits can be adjusted based on the plan's financial position.
  • Individual pension plans (IPPs): a defined benefit plan with fewer than four members, at least one related to the employer.

3. Personal and pooled savings

  • RRSPs and TFSAs.
  • Pooled registered pension plans (PRPPs): retirement savings plans that you, your employer or both can contribute to.
  • Saskatchewan Pension Plan: a voluntary plan open to Canadian residents aged 18 to 71 with RRSP room.

Related

Defined Contribution Pension Plans in Canada Explained In a defined contribution (money purchase) pension plan, you and usually your employer put money into your own account, and your retirement income depends on how much goes in and how the investments perform. The pension amount isn't known until you retire, unlike a defined benefit plan, which promises a set formula. RRSP and Your Taxes: Deductions, Withdrawals and Withholding Tax RRSP contributions reduce your taxable income, up to your deduction limit shown on your notice of assessment. Withdrawals are taxable, and your bank withholds 10% (up to $5,000), 20% ($5,000 to $15,000) or 30% (over $15,000) outside Quebec. The Home Buyers' Plan and Lifelong Learning Plan let you withdraw without paying tax if you repay. CPP Calculator: How to Estimate Your CPP Pension Your personal CPP estimate is in My Service Canada Account under "View my benefit estimates". The government's Canadian Retirement Income Calculator combines CPP, OAS and your savings and shows estimates at ages 60, 65 and 70. The maximum CPP at 65 for January 2026 is $1,507.65 a month.

Sources

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