In addition to the Canada Pension Plan and Old Age Security, which provide a very minimal post-retirement
income, many Canadians rely on workplace pensions and retirement savings plans. In Ontario workplaces there
are four basic types.
Defined-benefit
This is the gold standard. Like all pension plans, both the employer and employee contribute. Defined-benefit
plans provide a guaranteed monthly income when you retire, and the risk for any shortfall is typically borne by
the employer, but can be shared in larger plans. Examples include the Ontario Municipal Employees Retirement
System (OMERS) and the Healthcare of Ontario Pension Plan (HOOPP). CUPE has representation on the boards of both these defined-benefit plans, and has long-term care or retirement home members enrolled in both plans.
Target-benefit
Like a defined-benefit plan, a target-benefit plan includes a formula specifying a benefit level paid in retirement,
for life. Unlike a defined-benefit plan, however, the precise level of the benefit is not legally guaranteed and
depends on the plan’s investments. Target-benefit plans are widely recognized as superior to defined-contribution
plans or RRSPs because, unlike those individual approaches, they involve a pooling of plan costs and
plan risks. The pooling makes a target-benefit plan more efficient and more secure than a defined-contribution
plan or RRSP. An example is the Nursing Homes and Related Industries Pension Plan (NHRIPP), maintained by
CUPE and SEIU, which is 100% fully funded and includes hundreds of very stable employers and more than 60,000
workers. NHRIPP investments earned 8.9% last year. The plan was created to provide an improvement for
workers who otherwise only had access to an individual approach defined-contribution plan or RRSP. CUPE has won NHRIPP for workers even on a first contract in the private, for-profit sector
Defined-contribution
A defined-contribution plan is the least reliable model. In a defined-contribution plan, you know what you are
paying monthly into your individual account, but there are no guarantees on what you will get back. It depends
entirely on how much you and the employer contribute and how the fund’s investments perform. The risks lie
entirely with the individual worker. That said, all pension plans tend to have much lower administration costs
than RRSPs, so any one of them should be better than a workplace RRSP plan. These are more common in construction, where workers may migrate from company to company more frequently. The biggest risk with a defined-contribution plan is outliving your pension. Also, during the COVID pandemic many workers with defined-contribution plans saw their retirement savings wiped out. By contrast, defined-benefit plans are guaranteed by employers, and target-benefit plans are pooled so that the plan can continue to pay benefits while rebuilding from a short-term drop.
RRSPs
RRSPs are not a pension but are an investment tool designed with retirement savings in mind. They have no
guarantees, the risk lies with the worker, and they have much higher fees than pension plans. As a result, the
return on investment is normally much lower than with any pension. These exist in workplaces where an
employer offers a matching program. This is more common in non-union workplaces where workers have not
been able to negotiate anything better.

Pensions are deferred wages. They belong to the worker, and CUPE will always fight for the best, most secure pension possible. Our members in long-term care are more likely to have a defined-benefit or target-benefit pension.