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In Brief

The MSPP was created by the Canadian Union of Public Employees and the Service Employees International Union in 2002. It is a way to build contributions and investment income over a lifetime so as to provide retirement income.

The goal of the Multi Sector Pension Plan is to provide you with a regular income throughout your retirement. As such, the pension benefits you receive will be based on the total amount of contributions remitted to the Plan on your behalf, the level of investment income earned by the MSPP (less the MSPP's expenses), the type of pension benefit (including the method of payment) you select, and your age at retirement.

The MSPP is not a defined benefit plan. In a defined benefit plan, surpluses may belong to the employer, or, in some cases, may be shared between the employer and the employees. In the MSPP, all surpluses stay in the plan and are used to provide member benefits. On the other hand, benefits in the MSPP may be reduced if the Plan does not have sufficient assets to pay all targeted benefits.

In addition to providing a regular income to you, the Plan also has a number of features designated to provide your Spouse or Beneficiary with a benefit in the event of your death.

The Plan is superior to an RRSP or a defined contribution plan, which are often the only retirement alternatives available to employees, for several key reasons. First, the fact that it is a target benefit plan means retirement incomes are quite predictable. The MSPP has a formula to calculate retirement pensions, and members can calculate their pension at any time. There is a risk in any target benefit plan that benefits will be reduced if the target plan does not have sufficient funds, but the MSPP uses professional investment advisors and is able to secure much lower cost investment options compared to RRSPs. In RRSPs and defined contribution plans, members typically make their own investment decisions, often with poor results and at high costs. Secondly, it is possible to make improvements to the pension benefits. Funding for these improvements can come from negotiating increased contributions from the employer and/or use of surplus funds.

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