Pension plans are designed solely to provide retirement income, so you can only receive income (or make withdrawals) from these plans during retirement, typically from age 55 onward.
Savings plans are more flexible. You may not be allowed to take money out while you are with your employer. But once you leave your employer, you can transfer your savings out of the plan to use for retirement or any other goal.
Pension plans can offer:
higher rates of employer contributions than savings plans (for many plans, but not all), and
built-in discipline to ensure that you have the income you need in retirement.
Savings plans can offer:
the ability to save for goals other than retirement, and
greater flexibility in how and when you use your savings.
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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