Under this type of arrangement, both the employer and employee contributions are defined. Contrary to a group RRSP, the employer contributions are deposited directly into the plan and allocated to the plan member’s account.

Contributions accrue with investment income until retirement and the ultimate account value is used to provide an income on retirement.

Defined Contribution Pension Plans must be registered with the provincial authority in the province where the majority of the organization empoyees reside as well as with the Canada Revenue Agency.

Income at retirement may be in the form of an annuity or a life income fund.