Members
Contributing to the Plan
The CSS Pension Plan – one of Canada’s largest and oldest defined contribution (DC) pension plans – can help you build savings for retirement through both yours and your employer’s matching contributions.
A DC Plan
In a DC pension plan, the amounts that you and your employer contribute toward your pension are defined – typically in terms of a percentage of your salary.
These contributions are deducted and invested each pay period so you can accumulate pension funds that will become your income when you retire.
A key characteristic of a DC plan is the investment decisions are yours to make – so it's up to you how you choose to allocate your contributions between the Plan's four investment funds. This gives you options so that you can invest according to your own risk tolerance.
Your contributions
Once you've joined the Plan, your employer will start deducting pension contributions from your salary each pay period.
How much your employer deducts depends on the matched contribution rate they set. The matched contribution rate is expressed as a percentage between 1% and 9% of your salary or compensation.
Your employer matches your required contributions, dollar for dollar. So if you contribute 6%, your employer will contribute 6% each pay period.
With matching contributions from your employer you have double the earning power – a key ingredient toward building a substantial retirement income stream.
To maximize growth, you have the option to make additional voluntary contributions (AVCs).
Like required contributions, your employer deducts AVCs from your salary each pay period. Employers do not match AVCs.
To set up AVCs, talk to your employer's payroll department.
If you are a member of the CSS Pension Plan, you can transfer-in locked-in registered funds from another pension plan or retirement savings plan.
Once you are an inactive member of the Plan (i.e., a member who is no longer contributing to the Plan), you are also able to transfer-in non-locked registered funds.
Contact a CSS Retirement and Pension Advisor for more information.
Income tax
Under a DC pension plan:
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Your investment earnings are sheltered from income tax. This means your contributions can grow more quickly.
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All contributions you make to the Plan are tax deductible, in turn reducing your income-tax payable (the amount of income that can be taxed by government).
Maximum contribution limit
The combined amount you and your employer are allowed to contribute to the Plan is limited by the Canada Revenue Agency (CRA).
The maximum contribution limit set by CRA is the lesser of:
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18% of your employment compensation for the current year, or
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The money purchase (MP) limit for the current year (see the CRA website for the most recent contribution maximums)
The total amount you and your employer contribute to the Plan each year cannot exceed this CRA limit.
Vesting
The contributions made by your employer become vested immediately – or owned by you.
This means that the total value of your pension funds always belongs to you.
Locking-in
Depending on how long your contributions are invested in the Plan, the rules that govern them can change.
The required contributions and investment earnings made by you and your employer become locked-in at some point.
Locked-in pension funds cannot be withdrawn as cash if you leave the Plan. These funds must be used to provide an income for your retirement.
Pension laws determine the rules for locking-in, so your access to your locked-in funds may be restricted.
Unlike locked-in funds, non-locked-in funds do not have to be used to provide retirement income.
So once you are no longer working for an employer member of the Plan, you can:
- Withdraw any non-locked-in funds as cash (subject to income tax), or
- Transfer any non-locked-in funds to an RRSP or RRIF
Any additional voluntary contributions you make and their investment earnings are not locked-in, but they may not be withdrawn until you terminate your employment.