March 23 - Ch 14 (Retirement Savings Planning)

Old age secuirty

a federal program funded by income tax and other tax revenues that makes payments to you upon retirement

Canadian Pension Plan (CPP)

a Canadian government system in which you pay a percentage of your earnings to a fund that provides income when you retire

OAS program

- Your monthly benefit amount is reduced if your income exceeds a threshold income

- You must apply to receive benefits

- The allowance benefits are adjusted for inflation

- The OAS pension is a taxable benefit

CPP benefit amount

the amount of CPP benefit you are eligible to receive is based on the number of months you contribute to the plan and your average pensionable earnings

Contributory period

the number of months that you work between 18 and 65

Pensionable earnings

The amount of income you earn between the year's basic exemption (YBE) and the year's maximum pensionable earnings (YMPE)

Pension sharing

when a married or common-law couple decides to share their CPP retirment pensions to reduce their income taxes

Employer-sponsored retirement plans

Four common types of employer-sponsored plans: defined benefit pension plans (DBPPs), defined contribution pension plans (DCPPs), deferred profit-sharing plans (DPSPs), and group RRSPs → DBPPs and DCPPs are registered pension plans (RPPs)

Vesting

when employees have a claim to the money that has been reserved for them upon retirement

Defined Benefit Pension Plan

Employer-sponsored retirement plans that guarantee you a specific amount of income at retirement based on a pension formula

Accrual rate

the rate at which you earn a pension benefit

Defined Contribution Pension Plans

Aka money purchase plans, are employer-sponsored retirement plans in which the contribution rate is guaranteed

Deferred Profit-sharing plans

Employer-sponsored retirement plans in which the employer contributes a portion of their profits to a tax-deferred registered account for the benefit of their employees

Group RRSPs

Employer-sponsored retirement plans in which each employee is provided an individual registered retirement savings account that is administered through one employer or association

Registered Retirement Savings Plans

A type of private pension that enables you to saave for your retirement on a tax-deferred basis

Individual RRSP

you can invest your money in the investment instructions offered only by the financial institution you opened the account with

Self-directed RRSP

you can hold a variety of investments within one plan

Lifelong learning plan

available to full-time students who would like to use an RRSP temporarily to finance their education

Locked-in Retirement Account (LIRA)

A private pension plan that is created when an individual transfers vested money from an employer-sponsored pension plan