Pension plan choices: DB versus DC

By Patrick Longhurst
|Canadian HR Reporter|Last Updated: 06/18/2002

In the 1970s, plan sponsors and consultants used to talk about the relative merits of defined benefit (DB) plans and defined contribution (DC) plans and the choice was clear. Typically public-sector plans and the large private-sector plans had always been DB. Smaller, entrepreneurial companies had mostly DC plans or group RRSPs. (The box on page 26 highlights the features of each type of plan.)

Today, the situation is less clearcut:

•across Canada, major revisions to provincial legislation in the 1980s increased the challenges of compliance and blurred distinctions between the two types of plans. Ongoing practices of the regulatory authorities continue to exacerbate this situation;