Company pension plans have traditionally been something that employers provide on a voluntary basis. Under new rules in force since 2002, however, employees have a right to have part of their earnings paid into a company pension plan under a deferred compensation arrangement.
Contributions to a company pension plan can be paid by the employer alone, the employee alone, or jointly by both employer and employee.
In a growing number of sectors, unions and employers have opted to include deferred compensation in collective agreements. This means employees can choose to set aside part of their agreed pay for a company pension. Many collective agreements also require employers to pay towards these pensions. Although conventional employer-funded pensions will still easily make up the largest share of company pensions, they will be supplemented more and more frequently by deferred compensation arrangements.
Employers can choose between five different ways of providing company pensions.