Working at an organization that offers a pension plan is one of the greatest financial advantages a Canadian can enjoy. Pension plans are designed to provide retirement income and help employees reach their retirement goals and for business owners- help retain key employees.
Pension plans can offer:
Forced retirement savings for employee
There are 2 main types of pension plan:
Defined Benefit Plan
Defined Contribution Plan
Defined Benefit Plan
Retirement income is guaranteed, contributions are not.
The pension amount is based on a formula that includes the employee’s earnings and years of service with the employer
Usually, contributions are made by the employee and employer
The employer is responsible for investing the contributions to ensure there’s enough money to pay the future pensions for all plan members.
If there’s a shortfall, the employer pays the difference.
Defined Contribution Plan
Contributions are guaranteed, retirement income is not.
Usually, contributions are made by the employee and employer.
The employee is responsible for investing all contributions.
The amount available in retirement depends on how the investment performs including total contributions.
At retirement, the money in the account can be used to generate retirement income through purchasing an annuity or transferring the amount to a locked-in retirement income fund.
In summary, a defined benefits plan guarantees you a retirement income and a defined contribution plan guarantees contributions but not retirement income.
Talk to us, we can help.
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We’ve put together a financial calendar for 2021. It contains all the dates you need to know to make the most of your government benefits and investment options. Whether you want to bookmark this or print it out and post it somewhere prominent, you’ll have everything you need to know in one place!
We’ve provided information on:
The dates when the government distributes payments for the Canada Child Benefit, the Canada Pension Plan (CPP) and Old Age Security (OAS).
When GST/HST credit payments are issued – usually on the fifth day of January, April, July and October.
All the dates the Bank of Canada makes an interest rate announcement. A change in this interest rate (up or down) can impact a bank’s prime interest rates. This can then affect anything from the interest rate charged on your mortgage and line of credit to how much the Canadian dollar is worth against other currencies.
When you can start contributing to your Tax Free Savings Account (TFSA) for 2021, the contribution limit for 2021 is $6,000.
March 1st is the last day for your 2020 Registered Retirement Savings Plan (RRSP).
December 31st , 2021 is the last day for 2021 charitable contributions.
December 31st is the deadlines for various investment savings vehicle contributions, including your Registered Disability Savings Plan (RDSP) and Registered Education Savings Plan (RESP), as well as your RRSP if you turned 71 in 2021.
Tax filing deadlines for personal income tax, terminal tax returns for someone who died in 2020, self-employed individuals
Knowing all of this information here can help you keep on top of your finances if you’re expecting any government benefits. It can also make sure you don’t miss any critical tax or investment deadlines!
Tax packages will be available starting February 2021 – reach out to your accountant to get started on your taxes!
If you have any questions on how we can help with your 2021 finances, please contact us.
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The Government of Canada will be providing help to vulnerable seniors by providing a one-time tax-free payment of $300 for seniors eligible for Old Age Security (OAS). For seniors eligible for the Guaranteed Income Supplement (GIS), they will receive an additional $200.
https://lssmith.ca/wp-content/uploads/2020/05/CESB_Starts_Friday@2x.png6401000L.S. Smith and Associateshttps://lssmith.ca/wp-content/uploads/2018/05/lsSmithLogo.jpgL.S. Smith and Associates2020-05-13 13:51:172020-05-13 14:15:10Apply starting Friday for Canada Emergency Student Benefit! Help on the way for seniors.