Defined Benefit Pension Plan
The majority of the pension funds invested through BCI are defined benefit pension plans. This type of plan uses a specific formula that considers your individual salary and years of employment to determine the amount of benefits available to you once you retire.
Throughout your employment, a portion of your salary goes directly into the pension plan, and at the same time, your employer contributes a given amount. These funds are then pooled with the pension contributions of thousands of other employees and invested and managed by BCI.
The amount that you and your employer contribute varies per pension plan. To determine how much and how often you pay into your pension see below:
- BC Railway Company
- *As of July 14, 2004, BCRC no longer offers a pension plan to its employees. Employees who started prior to this date and are eligible will still receive their plan benefit.
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Defined Contribution Pension Plan
The University of Victoria’s Money Purchase Pension Plan and UBC’s Faculty Pension Plan use a defined contribution pension plan. In this case, both you and your employer contribute to the pension fund. These funds are then pooled with other employees’ pension contributions and are then invested and managed by BCI.
However, unlike a defined benefit pension plan, the total amount of available benefits cannot be determined in advance as the ultimate value is determined by contributions and growth meaning it is subject to market volatility.
The amount that you and your employer contribute varies per pension plan. To determine how much and how often you pay into your pension see below:
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Hybrid Pension Plan
The University of Victoria’s Combination Pension Plan operates in a manner that incorporates elements from defined benefit plans and contribution plans to produce a hybrid model. For more information on this unique approach and to determine how much you are contributing click here.
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Target Benefit Pension Plan
UBC’s Staff Pension Plan uses a target benefit plan. In this case, both you and your employer contribute a fixed amount and the total benefit you receive once you retire is subject to the plan’s ability to pay. For more information on this unique approach and to determine how much you are contributing click here.
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Sources:
https://www.fidelity.ca/en/investor/investorinsights/definedbenefitvsdefinedcontribution/
https://www.investopedia.com/terms/d/definedbenefitpensionplan.asp
https://www.investopedia.com/terms/d/definedcontributionplan.asp