Retirement

Workplace Pensions

Workplace pension plans provide retirement income through employer-sponsored arrangements. Defined benefit and defined contribution plans promise different things.

4 min

Retirement 101 • 07

A workplace pension is retirement income connected to an employer plan.

You, your employer or both may contribute during your working years.

The two main types make different promises.

Defined benefit plans focus on the pension formula. Defined contribution plans focus on the contributions placed into the plan.

Workplace plans can differ by

01Who contributes02How benefits are calculated03Investment responsibility04Vesting and locking-in rules05Inflation protection06Options when you leave the employer

Defined benefit and defined contribution are not the same.

01

Defined benefit

Promises a retirement income calculated using the plan formula.

02

Defined contribution

Builds an account whose eventual value depends on contributions and investment performance.

The uncertainty sits in a different place.

DB planBenefit formula is central
DC planAccount value is central
Employer roleVaries by plan
Your choicesCan also vary

A workplace pension can be one of your most valuable employment benefits.

Its long-term value may not be obvious from the amount deducted from each paycheque.

Learn your plan by checking

01Plan type02Your contribution rate03Employer contribution04Retirement formula or account balance05What happens if you change jobs

Remember this

Know whether your pension promises an income or builds an account.

That distinction changes how much investment and retirement risk you personally carry.

Lesson complete

Reviewed 2026-08-18

Sources

Financial Consumer Agency of CanadaEmployer pension plans ↗
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