Some companies offer other, more complex company savings and pension plans, including:
- Deferred Profit Sharing Plans (DPSPs)
- Employee Stock Purchase Plans (ESPPs)
- Individual Pension Plans (IPPs)
- Retirement Compensation Arrangements (RCAs)
Unlike defined benefit and defined contribution pension plans, these plans are not registered. They don’t follow the same rules.
For example, there are regulations that can limit the level of pension that an employee earns when they retire. This level may be well below the income that a senior, highly paid employee of the company may be used to. Through a plan such as an RCA, a company can offer these employees a higher income at retirement.
These alternative plans are often linked to how well the company you work for performs. This can make it harder to tell what the plan will be worth to you years from now, when you retire. Find out as much as you can about how it works before you join.
If your company offers stock option plans, make sure you understand how they are taxed.
Learn more about four more complex savings and pension plans.