# Defined Benefit Pension and RRSP



## Aolis (Nov 26, 2009)

How do you approach balancing retirement incomes between married couple when one has a defined benefit pension plan? The person without contributes to an RRSP.

For the person with the plan, I'm guessing a TFSA is a better idea but how much should we put in compared to the benefits they receive? We are a young couple so it is hard to know what the eventual benefits will be.


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## Sampson (Apr 3, 2009)

This is the situation my wife and I are in, but she's also got a DCP.

I think it ultimately depends on the numbers pertaining to your specific situation. Obviously its hard to predict, but that's why your 'plan' needs to be revisited every so often. You'll have to determine if the DBP will give you enough to live on, because if not, then the holder should continue RRSP contributions.

The TFSA vs. RRSP debate will produce many responses, but I think this ultimately depends on (i) whether you predict you'll need access to the money, and (ii) your current income vs. retirement income.

For a young couple, the TFSA allows much more flexibility, and unless you are in one of the top two tax brackets, probably a better bet from this regard (i.e. your RRSP contribution refund will not be too significant).

Its quite tedious the first time you do it, but I think its best to run some numbers, project your retirement age, income etc, then see what 'additional' funds you may WANT to contribute towards retirement. Keep in mind you're young only once, so don't get too carried away with a strict plan.


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## OhGreatGuru (May 24, 2009)

It's a little difficult to say without some relative numbers of what you expect each persons' retirement income to be. The recently introduced ability to split pension income between spouses on your tax returns has also considerably lessened the need to equalize retirement incomes. 

But assuming you expect the spouse with the DB pension to have a significantly higher retirement income, that spouse can use what RRSP room he/she has left (after their pension adjustment) to put money into a Spousal RRSP. The contributions are deductible from the DB pension holder's income, but when withdrawals are made they will be taxed in the hands of the other spouse.


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## gwcanuck (Apr 27, 2009)

I have a DC plan, my wife has never had one. We fully fund her RRSP contributions, and all of my contributions are to a spousal RRSP. We also contribute to TFSA's equally.

Not much else is easily available to the middle class.


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## Aolis (Nov 26, 2009)

Thanks for the feedback.


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