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Deferred Profit Sharing Plan (DPSP) - A savings plan defined under
section 147 of the ITA (Income Tax Act) where employer contributions are
made from profits or determined according to profits.
Defined Benefit Plan - A pension plan where a benefit formula
is used to calculate an employee’s pension entitlement. As the name
suggests, under a defined benefit plan, the benefits are defined but the
contributions are not. Benefit formulas vary according to plan. Some types
of defined benefit pension plans with different benefit formulas are:
• Final Average pension plan uses the final years average income
to calculate the pension benefit,
• Career Average pension plan uses an employee's average income over
the employee's career to calculate the pension benefit, and
• Flat Benefit pension plan uses a specific dollar amount for each
year of employee's pensionable service to calculate the pension benefit.
Defined Benefit Limit -
The lesser of:
• $1,722 x number of years of service (to a maximum of 35 years),
or
• 2% x the best 3 years consecutive salary x the number of years
of service (to a maximum of 35 years).
Defined Contribution Pension Plan - Also referred to as "money
purchase plan". A pension plan where the contributions made by an
employer or employee are defined in the plan.
Dollar Cost Averaging - An investment strategy designed to reduce
volatility in which mutual funds are purchased in fixed dollar amounts
at regular intervals, regardless of what direction the market is moving.
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