By Content Writer–February 17, 2026–3 min read
If you’re new to the workforce—or new to Canada—you might be hearing about pension plans, savings plans, and something called the Canada Pension Plan. It can be confusing at first, but understanding how these plans work can help you make smart choices for your future.
The Canada Pension Plan (CPP) is a public pension program run by the federal government. If you work in Canada, you likely contribute to CPP automatically through your paycheque. Your employer matches your contributions.
When you retire, CPP gives you a monthly taxable income. It’s not meant to cover all your expenses—it should be just one part of your retirement plan.
In New Brunswick, there are different types of registered pension plans. The most common registered pension plans are:
Defined benefit plans (DB plans)
Defined contribution plans (DC plans)
Shared risk plans (SRPs)
All these plans have one goal: to provide members with a retirement income.
Here are a few key things to know about workplace pension plans:
Joining a workplace pension plan may be optional or mandatory for employees.
The plan may be contributory (you and your employer contribute to the plan), or non-contributory (only your employer contributes to the plan).
The formula under a DB plan or an SRP determines the benefit (amount of income) you will receive in retirement. Under a DC plan, the amount of contributions and investment earnings will determine the amount of retirement income you will receive.
Contributions made to a registered pension plan are tax deductible and the benefit (money) only becomes taxable when it is received.
Workplace pension plans are specifically meant to provide you with a retirement income. You may begin to receive this income after a certain age, typically from age 55 onward. If you leave your employment and end your membership in a pension plan before retirement, you will be informed of the options available to you. Typically, the funds will remain locked-in to provide you with a future retirement income.
Some organizations offer savings plans as an employee benefit instead of, or in addition to, pension plans. Employers will often match the amount you contribute to the savings plan, up to a certain percentage or amount. However, unlike a pension plan, employers may not be required to contribute to the savings plan.
There are a few key things to know about a workplace savings plan:
Contributing to a workplace savings plan may be optional for both the employer and the employee.
Contributions to a savings plan may be used for anything – not just retirement.
Typically, you can access funds in your savings plan at any age; however, this may vary based on the plan terms.
Savings plans may be federally regulated plans such as:
A registered retirement savings plan (RRSP)
A tax-free savings account (TFSA)
A registered education savings plan (RESP)
Savings plans are subject to different taxation rules than workplace pension plans. It’s important to understand how your savings plan works and any tax implications that may apply.
Think of it like building a retirement toolkit:
CPP is your foundation—it’s automatic and available to most Canadians who contribute through their working years.
Pension plans add structure and long-term income specifically designed to provide a retirement income.
Savings plans give you flexibility and control over how and when you use your money.
Together, they can help you build a retirement that fits your lifestyle and goals.
Retirement might seem far away, but the earlier you start planning, the better prepared you’ll be. If your workplace doesn’t offer a pension or savings plan, you can still open your own RRSP, TFSA, or other investment account.
A financial advisor can help you build a plan that fits your life. Visit Choosing a Financial Advisor to learn more.