What’s the difference between DB and DC pension plans?

Audio: Malcolm Hamilton on the differences between defined-benefit and defined-contribution pension plans.



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Below is the next installment of my audio interview with Mercer principal Malcolm Hamilton, based on a long session conducted this summer. As noted in the earlier clip about PRPPs,  traditional defined-benefit pension plans are increasingly being replaced with defined-contribution plans for new hires. One of the highest profile examples of this is at the Royal Bank of Canada.

DC plans famously put more investment risk on the shoulders of employees rather than their employers. If markets cooperate this may be a good thing for investors inclined to do their homework and closely monitor the financial world but it does make it more challenging for the average worker who simply wishes to have an assured flow of retirement income in retirement.

Q: What are some other differences between DB and DC pension plans?

A: Press play to hear Hamilton’s response:

      DB-and-DC-pension-plan.mp3|titles=DB and DC pension plans

2 comments on “What’s the difference between DB and DC pension plans?

  1. Please abolish Bill C-27. Retirees deserve a liveable pension since they have put into their country (Canada). Please leave the Defined Benefit Pension alone. Leave it as it is.


  2. i paid in to the db plan for 35 years and was forced to do so at the time of my employement with cn rail and marine atlantic and everything was fine the companies didnt have to pay one red cent into it for 35 years and during that time the pension act made a stupid regulation that no fund could be funded more than 100percent . that was stupid with the fluctions in the marketplace the fund managers should be allowed to fund as much as possible so that the good times would look after the bad


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