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Defined benefit (DB) pension plans

Four things to know about defined benefit pension plans Add to ...

A defined benefit (DB) pension plan promises to pay you a certain amount of monthly retirement income for life.

4 things to know about DB plans

  1. The amount of your pension is based on a formula that usually takes into account your earnings and years of service with your employer.

  2. In most plans, both you and your employer contribute.

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  3. Your employer is responsible for investing the contributions to ensure there’s enough money to pay the future pensions for all plan members.

  4. If there’s a shortfall in the money needed, your employer must pay the difference.

Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca

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