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​​Contribution rate review

Expected income replacement ratios declining

There are many factors that can affect the level of retirement income you will receive from a defined contribution (DC) pension plan like the CSS Pension Plan. These include:

  • the number of years you contribute
  • the total contributions you and your employer make
  • the investment returns earned as your pension funds accumulate
  • the age at which you hope to retire
  • the length of your retirement
  • interest rates and investment returns during retirement

Some of these factors are beyond your control. For example, investment returns and interest rates could each have a significant impact on the level of retirement income you receive. With both trending lower recently, your expected level of retirement income will also trend lower.

There are other factors, however, over which you do have some control. These include the age you plan to retire and the amount you contribute to your CSS Pension Plan account during your working years.

If your employer’s matched contribution rate is significantly lower than the Plan’s recommended rate, your CSS Pension funds will only provide part of your retirement income. In this case you could make additional voluntary contributions to the Plan to increase your expected income replacement ratio.

To help members assess their situations, we’ve modelled expected income replacement ratios (i.e. the percentage of your pre-retirement earnings that will be “replaced” by CSS and CPP pensions in retirement) using different contribution rates and Balanced Fund returns.

Read more about the results of the income replacement modelling in the fall issue of TimeWise​ to see if you’re on track.​