LLQP Segregated Funds & Annuities · Component 2.4 · 30% of the exam
An employer asks whether to offer a group RRSP or a DC pension. Key differences include:
- ANone of substance, since both plans hold the same funds and provide the same tax deferral and protection to members
- BGroup RRSPs are locked-in under pension legislation, while DC plan balances can be withdrawn on request
- CDC plans allow withdrawals freely while employed, whereas group RRSPs restrict them until termination
- Pension plans require registration, locking-in, vesting and governance; group RRSPs are simpler with less protection
Correct answer: D) Pension plans require registration, locking-in, vesting and governance; group RRSPs are simpler with less protection
The trade-off is protection and structure versus simplicity. Many small employers choose group RRSP plus DPSP.
Why the other options are wrong
- AThe differences are substantial.
- BGroup RRSPs are not locked-in.
- CDC pensions are locked-in.
Exam tip
DC pension: protection + administration. Group RRSP: simplicity + flexibility.
Common mistake
Recommending a DC pension to an employer who wants minimal administration without explaining the burden.
What this tests
CISRO competency component 2.4 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.