Defined Contribution (DC) pension plans define the amount of required contributions to the pension plan. A member’s pension benefits are based on contributions from the member (if the plan is contributory) and the employer. At retirement, the amount of pension that can be provided is based on accumulated contributions and investment returns.  Since members will not know how much they will save by retirement, it is important for those involved in the administration of DC plans to help members have a better understanding of plan terms, investment choices and retirement income options.

What DC Plan sponsors need to know


Variable Benefits (Retirement Income Option)

The variable benefit provisions of the Ontario Pension Benefits Act (PBA) and the Regulations, came into force on January 1, 2020. The Variable Benefit Regulations are made up of three Regulations:

Retirement income payments can now be paid directly from a DC plan if plan terms provide or are amended to provide for it. They are considered ‘variable’ because a retired member can direct how much income is to be paid annually out of their variable benefit account, subject to the minimum amount required to be withdrawn by the federal Income Tax Act (ITA) and the maximum amount as set out in the Variable Benefit Regulations – just like a Life Income Fund (LIF).

The plan sponsor and administrator must ensure that legislative and regulatory requirements are met. In addition, the plan administrator must use the forms approved by FSRA (Variable Benefit Forms) in the circumstances outlined in the PBA and the Variable Benefit Regulations.


Other information:

Legislative and regulatory changes: