The best pension plans in Canada provide more than just retirement income. Find out what features and benefits you need to consider when planning for retirement
Pensions are an essential part of retirement planning for many Canadians. These plans provide you with a source of income upon retirement, allowing you to live securely and comfortably for the rest of your life. Pensions are also tightly regulated to protect consumers, so you can calculate and map out your contributions accordingly to maximize your funds for retirement.
Pensions, however, come in various forms, making the decision of picking the plan that suits your financial goals a bit more complicated.
To help narrow down your choices, Benefits and Pensions Monitor lists the 10 best pension plans in Canada. We will discuss the key features and benefits to find out if they match your retirement needs. We will also touch on the fund managers and their assets under management (AUM) to get a picture of how attractive these plans may be to investors.
Read on and take your pick as we rank the top Canadian pension plans in this client education article. If you’re a retirement planning consultant, you can share this guide with your clients who may be searching for ways to secure their financial future.
What are the 10 best pension plans in Canada?
Pension plans are designed to set you up financially for retirement. Employers and employees may both contribute to the plan to ensure that enough funds are available when plan members retire. But the best pension plans in Canada offer more than just retirement income. They also provide families with financial assistance when the plan holder dies or become disabled, as well as opportunities for investment.
These are the top 10 pension plans in Canada. The list is arranged by assets under management based on their most recent annual report compiled by the BPM research team.
1. Canada Pension Plan (CPP)
Fund manager: Canada Pension Plan Investment Board (CPPIB)
AUM: $593.8 billion (March 2024)
Contributors and beneficiaries: More than 21 million
The Canada Pension Plan is one of the two major components of the country’s federal public retirement income system – the other being the Old Age Security (OAS). The CPP is a contributory, social earnings program that provides a partial replacement of income to contributors and their families in the event of retirement, death, or disability.
All Canadian employees over 18 years old and earning more than the minimum amount ($3,500 a year) are required to contribute to the CPP. Québec workers have their own public pension plan, the QPP, which we will discuss in more detail later.
The CPPIB manages the CPP’s pension funds. At the end of fiscal year 2024, the fund manager boasts almost $594 billion in assets under management. The CPPIB also ranks number one in the country and second in the world in the latest global pension transparency benchmark.
Find out more about how the CPP works, including more details on its key features and benefits in this guide to Canada Pension Plan.
2. Québec Pension Plan (QPP)
Fund manager: Caisse de dépôt et placement du Québec (CDPQ)
AUM: $434 billion (December 2023)
Contributors and beneficiaries: Around 6.4 million
The Québec Pension Plan is designed to provide all workers in the province with a basic retirement income. Just like the CPP, the QPP offers death and disability benefits. CPP and QPP rules and key benefits are almost exactly the same. Both rank among the best pension plans in Canada. The only difference is that the QPP is designed for employees in Québec. QPP contributions are made through Revenu Québec.
The CDQP acts as the fund manager for the QPP. However, QPP assets make up just 28% of CDQP’s assets under management. The Québec City-headquartered institutional investor also manages funds for public insurance plans and pension plans for public sector employees in the province.
3. Public Service Pension Plan (PSPP)
Fund manager: Public Sector Pension Investment Board (PSPIB)
AUM: $264.9 billion (March 2024)
Contributors and beneficiaries: More than 34 million members
The PSPP is the best pension plan in Canada for federal public sector employees. The plan provides workers with an income when they retire or become disabled. Their surviving spouses and eligible children also receive financial benefit at the time of their death. Apart from the PSPP, separate pension plans are provided for members of the Canadian Forces and the Royal Canadian Mounted Police (RCMP).
Plan holders also have different pension options, depending on when they leave the public service:
- immediate annuity: monthly pension payable immediately
- deferred annuity: monthly pension payable later
- annual allowance: permanently reduced monthly pension payable immediately
- transfer value: one-time lump-sum payment
- return of contributions: one-time lump-sum payment
The PSPIB is a non-agent Crown corporation that manages the assets of public sector pension plans. It is one of Canada’s largest investment managers and operates globally, with clients in Europe and the Asia-Pacific region.
4. British Columbia Public Service Pension Plan (BC Pension)
Fund manager: British Columbia Investment Management Corporation (BCIMC)
AUM: $250.4 billion (March 2024)
Contributors and beneficiaries: More than 2.7 million BC employees; 740,000 pension plan beneficiaries; 4 million Autoplan holders
The BC Pension Plan provides public sector employees in the province with a lifetime monthly pension when they retire. What makes it one of the best pension plans in Canada is that it also offers retirement health coverage and disability benefits if an employee is unable to work due to an illness or injury. The BC Pension Plan pays out a death benefit to a contributor’s family. Options for those leaving the public sector are likewise available.
The BCIMC provides investment services to British Columbia’s public service pension plans. In its 2024 fiscal report, the fund manager reveals that it is serving more than 2.7 million employees in the province, including around 740,000 pension plan holders.
5. Ontario Teachers' Pension Plan Board (OTPP)
Fund manager: Ontario Teachers' Pension Plan Board
AUM: $247.5 billion (December 2023)
Contributors and beneficiaries: Around 40,000 contributors; 310,000 active and retired members
One of the largest pension plans in Canada, the OTPP provides active and retired teachers in Ontario and their families lifetime pensions. It also offers benefits if the plan holder dies, becomes disabled, or permanently leaves teaching before retirement. The OTPP is a multi-employer plan jointly sponsored by the Ontario government and the Ontario Teachers’ Federation (OTF).
The OTPP’s board serves as the pension plan’s investment manager. The provincial government and the OTF appoint five members each to form the board, who then jointly select the chair. Board memberships are subject to term limits.
6. Alberta Public Service Pension Plan
Fund manager: Alberta Investment Management Corp. (AIMCo)
AUM: $160.6 billion (December 2023)
Contributors and beneficiaries: Around 375,000 active and retired members
Alberta’s PSPP provides retirement income to employees of the provincial government, corporations, colleges, and universities. Death and disability benefits are also available to the plan holders and their families.
The AIMCo, a Crown corporation and institutional investor, was established to manage public funds and pensions, including retirement plans and endowments. Apart from PSPP, AIMCo manages the pension funds for the following public pension plans in the province:
- Alberta Teachers’ Retirement Fund (ATRF)
- Local Authorities Pension Plan (LAPP)
- Management Employees Pension Plan (MEPP)
- Management Supplementary Retirement (MSRP)
- Provincial Judges & Applications Judges Registered Pension Plan (JRPP)
- Provincial Judges & Applications Judges Unregistered Pension Plan (JUPP)
- Special Forces Pension Plan (SFPP)
- Universities Academic Pension Plan (UAPP)
AIMCo serves more than 375,000 active and retired members across Alberta.
7. Ontario Municipal Employees Retirement System (OMERS)
Fund manager: In-house investment professionals
AUM: $128.6 billion (December 2023)
Contributors and beneficiaries: More than 1,000 participating employers; 500,000 active and retired members
OMERS is among the largest defined benefit pension plans and fund managers in the country. The OMERS Primary Pension Plan, which provides retirement benefits to local government workers in Ontario, is considered one of the best pension plans in Canada. It is accessible to employees of the province’s municipalities, local boards, and public utilities, as well as non-teaching school board staff. The Primary Plan can also be combined with the Canada Pension Plan.
A retirement compensation arrangement (RCA) is accessible to Primary Plan holders whose earnings exceed the maximum pension allowed. OMERS also offers supplemental pension plans for the police, firefighters, and paramedics.
8. Healthcare of Ontario Pension Plan (HOOPP)
Fund manager: In-house investment professionals
AUM: $112.6 billion (December 2023)
Contributors and beneficiaries: More than 670 participating employers; 460,000 active and retired members
HOOPP is a multi-employer defined benefit pension plan catering to Ontario’s healthcare sector. It is one of the best pension plans in Canada for healthcare employees and retirees. More than 670 employers in the province are participating in the plan. Over 460,000 active and retired hospital staff, family health teams, foundations, community health centres, and healthcare organizations and service providers are benefiting from the plan.
Plan holders can access early retirement options, survivor benefits, and inflation protection at no extra cost. Member contributions are invested in the HOOPP Fund, which is managed by an in-house team of investment experts. For every dollar a member receives in pension, 80 cents come from investment returns and the rest from member and employer contributions.
9. Ontario Public Service Pension Plan
Fund manager: Ontario Pension Board (OPB)
AUM: $31.7 billion (December 2023)
Contributors and beneficiaries: Around 41,000 active members
Just like other public service pension plans, Ontario’s PSPP provides retirement income to employees of the provincial government and its agencies, boards, and commissions. Members and their families can also access disability and death benefits. Early retirement options and inflation protection are likewise available for the plan holders. Ontario PSPP integrates with the Canada Pension Plan.
The OPB administers the pension funds of certain public sector retirees and former employees.
10. OPSEU Pension Plan
Fund manager: OPSEU Pension Trust (OPTrust)
AUM: $25 billion (December 2023)
Contributors and beneficiaries: Around 106,000 active and retired members
The OPSEU Pension Plan is a defined benefit plan designed to provide retirement benefits for Ontario employees in bargaining units represented by OPSEU and other eligible members. The plan integrates with the CPP. OPTrust manages the pension funds of one of the best pension plans in Canada.
How do pension plans work in Canada?
In a nutshell, pension plans are designed to give you a source of income when you retire. If you’re an employee, chances are that your employer has enrolled you in a workplace pension plan as part of your compensation. Employers are required to contribute to the plan. Some even offer a matching program, where an employer matches the amount an employee contributes. You can also receive income from pension plans when you retire, usually from age 60 onwards.
In general, there are two types of pension plans:
1. Defined benefit pension plans (DBPP)
In a DBPP, both you and your employer contribute to the plan. Employee contributions are made through payroll deductions. The contributions are then invested in capital markets, which make up the pension funds. When you retire, a defined benefit plan will provide you with a guaranteed retirement income based on your years of service and salary.
2. Defined contribution pension plans (DCPP)
Unlike in a DBPP, your retirement income in a defined contribution plan is not set in advance. The amount you will receive depends on:
- how much you contributed to the plan
- how much your employer contributed on your behalf
- how much the funds grew over time
This means that the higher the contributions, the higher the income you receive upon retirement. Another major difference from the DBPP is that in a DCPP, you can choose where your money is invested.
As an employee, you can also access a group registered retirement saving plan (RRSP) or a pooled registered pension plan (PRPP). You can find out more about these plans by checking out our client education guides.
How can you make the most out of your pension?
Your pension plan plays a vital role in your financial security during retirement. That’s why it’s important for you to have a deep understanding of its key features, so you can maximize your benefits. An experienced pensions consultant can guide you in finding the best pension plans in Canada.
If you’re looking for the country’s top retirement planning specialists to help you prepare for your financial future, our Best in Pensions and Benefits Special Reports page is the place to go. Recently, we unveiled our five-star awardees for the Top Pension and Group Benefits Consultants in Canada. Find out how these industry experts can assist you in preparing for a secure and comfortable retirement in this special report.
What’s your pick in our list of the best pension plans in Canada? Let us know in the comments.
