Defined Contribution Pension Plan (DCPP)
If you want to enter a Defined Contribution Pension Plan (DCPP) for your client, you can do so on the Assets page under the Financial Assets table.
There are 2 steps to the data entry:
- 1
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Enter the DCPP account details under Financial Assets
Select Scenario Setup -> Assets.
Under the Financial Assets section, under the Assets tab, click Add Financial Asset.
Fill in the details for this DCPP. Each column heading has a question mark that can be clicked for further information on the required fields. The description of the DCPP will be used as the column title for this account on the Planning page. The value of the asset is considered to be the value as of January 1 in the first year of the projections. Select the Type of DCPP/LIRA/LIF and be sure to allocate a percentage of the account to Cash, Fixed Income, and Equity and adjust the rates of return for each as desired.
- 2
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Enter the employer and employee contribution details under Employer Matching
Select the Employer Matching tab above the table.
Under the Employment Income column, select the appropriate income to link the contributions to. Enter the annual Employee Contribution and Employer Contribution as a percentage of that employment income. Note that you will not be able to enter these percentages until you have linked the employment income.
On the Planning page, the DCPP shows the automatic employee and employer contributions as a percentage of Employment Income. Note that the contributions are not editable on the Planning page. To edit the contribution amounts, go back to Scenario Setup -> Assets -> Employer Matching.
Additional Notes:
- Snap will automatically reduce the RRSP contribution room based on DCPP contributions by the employee and employer from the previous year. Note that in the first year of projections and in the absence of the client's most recent NOA, you may need to manually reduce the RRSP contribution amount to account for any previous year's DCPP contributions which are unknown to Snap.
- Since DCPPs convert into LIFs, DCPP withdrawals start in the year following the Conversion Age for the account. By default, the withdrawals start at the Retirement Age but you can adjust this by selecting Scenario Setup -> Assets -> Financial Assets -> DCPP/LIRA/LIF tab. Automatic withdrawals are LIF minimum withdrawals by default unless the client's cash flow requires a higher withdrawal. You can edit the withdrawals on the Planning page to force up to the LIF maximum withdrawals.
- The taxable income will be reduced by the employee DCPP contributions each year (but not by the employer contributions). The taxable income will be increased by DCPP/LIRA withdrawals each year (as with RRSP withdrawals).
- The total contribution percentage for employee and employer contributions cannot exceed 18% of the employee's employment income.