The following are some words and expressions that are used in the Pension Industry:
The Department of the Canadian Government responsible for the collection of taxes. It was formerly known as Revenue Canada and is responsible for approving the organizations which can accept contributions to RRSP's.
The Department of the British Government responsible for the collection of taxes. It must approve of the organization to which a pension is being transferred.
A fund or "scheme" where monies contributed by employers and/or employees are invested, usually free of certain taxes, to accumulate income and capital gains to provide income for the beneficiary on retirement. There are usually conditions concerning withdrawal of the funds. It is sometimes possible to "commute" a part of the pension on retirement so that a lump sum is withdrawn, tax free, and the remainder used to provide retirement income - often by the purchase of an annuity.
A scheme established by an employer where employers and/or employees make contributions to a fund which will make pension payments to a beneficiary when he or she retires. These schemes can be Defined Contribution ot Defined Benefit (see below).
An Occupational Pension plan where the scheme rules define the benefits independently of the contributions made and benefits are not directly related to the investments of the scheme. The benefits usually relate to the years of service and salary in final years and this can vary from scheme to scheme. Until now, this has been the most common type of pension scheme and often provided two thirds of final salary as a pension to beneficiaries who have completed a long service.
An Occupational Pension plan where the benefits are related to the contributions made and the investment return on those contributions. Benefits are not linked to final salary.
Often managed by Insurance Companies, these plans are tailored for individual beneficiaries. Employers may or may not have made contribution. Personal plans are a type of Money Purchase Scheme where, like Defined Contribution plans, the benefits are related to contributions and the investment returns thereon.
An independent company or group of people entrusted with overseeing the operations of a Pension Scheme.
A Registered Retirement Savings Plan. RRSP's may be established by Canadian taxpayers in order to save for their retirement. Annual contributions may be made, and in certain situations such as the transfer of a U.K. pension, lump sum contributions may be made. There is no income or capital gains taxes on the investments in the funds but the funds are taxed if they are withdrawn. Many Canadians continue to tax shelter their retirement funds by transferring them to a RRIF.
A Registered Retirement Income Fund which is established by making a transfer from an RRSP. RRIF's may be established by Canadian taxpayers in order to provide income to supplement a pension. There are strict rules on withdrawals from the RRIF but the income and capital gains earned on the investments in the fund are not subject to taxes.