Glossary of pension terms
ancillary benefits – additional benefits which may be provided by a pension plan. This may include: disability benefits, supplementary benefits, certain death benefits, and certain early retirement benefits.
defined benefit (DB) plan – a pension plan that defines the ultimate pension benefit to be provided in accordance with a formula, usually based on years of service, earnings, on a flat rate, etc. A DB plan may be a contributory or non-contributory plan.
defined contribution (DC) plan (or money purchase plan) – a pension plan that defines the amount of contributions (including required member contributions, if any) to the pension plan. The member's pension benefits are based on contributions from the member and employer, plus investment income on these contributions. At retirement, the amount of pension that can be bought is based on the accumulated contributions and investment return in the member's account. A DC plan may be a contributory or non-contributory plan.
pension benefit – the total monthly, annual or other periodic amounts that start being paid to a member at retirement and that continue for the rest of his or her life. When the member dies, these payments would be made to any other person who may be entitled to receive them.
Pension Benefits Act (PBA) – the Ontario legislation that establishes minimum standards for registered pension plans in Ontario.
registered pension plan – a plan that is organized and administered to provide pensions for employees, and to which an employer is required to make contributions, that is registered with FSCO in accordance with the Pension Benefits Act . It does not include government programs such as the Canada Pension Plan (CPP) , or the Old Age Security (OAS) Program . Every employer who establishes a pension plan that is subject to Ontario's Pension Benefits Act must register the pension plan with FSCO.
wound up/wind up (or partial wind up) – the termination or discontinuation of all (full wind up) or part (partial wind up) of a pension plan, usually at the decision of the employer. This often results from bankruptcy, corporate restructuring, or downsizing.