Defined benefit pension plans have the following benefits:
- Retirement income after age 50 or 55
- Lump sum payouts on early termination
- Survivor benefits
- Indexing of retirement income to inflation
- Disability benefits
- Ability to buy-back service during non-contributory periods, such as maternity leave
- Portability if you move to a similar employer
Advantages
- Assured income at retirement
- Best for older members
- Employees know how much income they will receive
- The payout on termination or retirement is significantly higher than if the member invested their contributions in a personal RRSP
Drawbacks
- High contribution rates
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