Multi-employer DB pension plans

Some defined benefitBenefit Money, goods, or services that you get from your workplace or from a government program such as the Canada Pension Plan.+ read full definition (DB) plans are sponsored by many employers, not just one. These are called multi-employer plans and they allow employees who frequently switch employers within the same industry to continuously maintain their pensionPension A steady income you get after you retire. Some pensions pay you a fixed amount for life. Others save up money for you while you are working. You use that money to create income after you retire.+ read full definition coverage.

For example, individuals working in a construction tradeTrade The process where one person or party buys an investment from another.+ read full definition – who frequently move from project to project and employer to employer – might be covered by a single multi-employer pension plan that covers all trades. A portion of their hourly wageHourly wage The fixed amount you earn per hour.+ read full definition is automatically contributed to the plan.

Plans can vary

Some multi-employer plans have relatively straightforward plan formulas and operate much like single-employer DB plans. Others are complex, with elements of both DB and defined contributionContribution Money that you put into a savings or investment plan.+ read full definition plans – these are often called target benefit plans.

Target benefit plans

These plans guarantee a pension, but provide a “target” amount for the benefit. The actual benefit received could be higher or lower than the target, depending on the investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition performance of the pension plan.

Key point

Multi-employer plans let you keep your pension under a single plan if you switch between different participating employers.