You decided to convert…now what?

Making the switch from a defined benefit to a defined contribution plan
By Lydia Maldonado
|Canadian HR Reporter|Last Updated: 09/18/2006

In the last few years, many organizations have considered converting from a defined benefit pension plan (DB) to a defined contribution (DC) plan. In doing so, it is crucial that plan sponsors understand what is involved — to ensure the conversion is understood and well received by members, and the process and associated costs are managed properly.

Type of conversion

The development, communication and implementation of a plan conversion depend on the type of conversion being contemplated. For the purpose of this article, we will assume all new hires will be entitled to join a DC pension plan only. In this case, the plan sponsor must decide what options to provide to its current active members: