# How exactly do employer contributions work?



## Time4earlyretirement (Feb 21, 2014)

My newest employer says that they will contribute 2% of income regardless of whether I contribute, as long as I enroll in their pension plan. They also said they will match 100% up to 4% of annual income. Does this mean it is only applicable to their company pension plan where I select from their fund selection? (Sun Life) 

Where does a self managed RRSP account fit in?


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## eljay (Mar 10, 2014)

It is only for their pension offered. It's called an RPP -registered pension plan.
They will usually open an account where you can go select from (probably a severely limited set of) investments that they offer.
Usually if you move on to another job, they can move the money from the employer sponsored RPP to a "locked -in" RSP that you can manage yourself but can't take out until you retire... or just leave it if you are happy with the service they offer.


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## RBull (Jan 20, 2013)

As above. The redemption rules for the RPP or locked in RSP-LIRA may vary based on how plan is registered- which province or federal. Ask your employer. 

Your self managed RRSP fits in with whatever contribution room you may have left to your 18%, after the company/employee registered pension contributions are considered.


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## Eclectic12 (Oct 20, 2010)

When the employer is contributing and the employee contributions are optional - then it's limited to whatever they've contracted for. I've heard of a few plans that will let one transfer the employee contributions to a self-managed RRSP after a holding period of a year.

The big thing is to get the details of the plan. For example, is it a defined benefit or a defined contribution pension?

Also - when leaving the company, the options will vary. For example, I was offered the chance to transfer to the new pension at the new company instead of a LIRA (locked-in RRSP). I was also allowed to transfer some of the total amount directly to my self-directed RRSP and some had to either go to a LIRA or pension.

Bottom line is that YMMV a lot, depending on the pension and if one moves to another company, what is offered there.


Cheers


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## Time4earlyretirement (Feb 21, 2014)

Eclectic12 said:


> When the employer is contributing and the employee contributions are optional - then it's limited to whatever they've contracted for. I've heard of a few plans that will let one transfer the employee contributions to a self-managed RRSP after a holding period of a year.
> 
> The big thing is to get the details of the plan. For example, is it a defined benefit or a defined contribution pension?
> 
> ...


If you leave a company and the investments are moved to a LIRA account, and say you have roughly 5+ jobs throughout your life time with different sponsors and investment platforms (i.e Sun Life, Manulife, etc...) how do you aggregate these when you retire? For example if I worked for 2 years at a company in my 20s, how would I access this when I retire? What if I forget or something lol.


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## Eclectic12 (Oct 20, 2010)

^^^^

Just became busy so I'll keep this to the point and add the details later.

First point - LIRAs are just like an RRSP or TFSA in terms of "in-kind" transfers. So unless you like the funds/costs you are in, you can transfer them anywhere else you can setup a LIRA. There might be fees for early redemption or similar so check before filling out the paperwork to initiate a transfer.

Second point, which is more to your question - the requirement is to have accounts locked-in under the rules the pension was created under. So when you initiate a transfer, as long as the receiving account is under the same rules - you can consolidate, now or later.

For example, I've only worked for companies whose pensions were under Ontario legislation. So for me, the 1st LIRA was created when I left the first company. When I left the 2nd company, I'd built up enough funds at a brokerage so it was a no-brainer to send the 2nd company pension into a brokerage LIRA. Then I filled out the paperwork to transfer the 1st LIRA into the brokerage LIRA. So now, I only have one LIRA that I control what is being invested in.


Cheers


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## CPA Candidate (Dec 15, 2013)

I also transferred a defined contribution plan to a LIRA after my employment ended and I now manage the money via Questrade.


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