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TORONTO—The Royal Bank of Canada is eliminating its Canadian defined benefit pension plan for new employees effective Jan. 1, 2012, an RBC spokeswoman said.
Employees hired on or after Jan. 1, 2012, will be enrolled in an “enhanced” defined contribution plan beginning July 1, 2012, which will include an automatic contribution from Toronto-based RBC, higher matching contributions and higher annual RBC contribution limits, the spokeswoman wrote in an email.
Under the new defined contribution plan, employees can contribute up to 6% of their salary, which will be matched at 50% by RBC, according to the email.
Employees hired prior to Jan. 1, 2012, will be allowed to remain in the defined benefit plan or given the option to switch to the new defined contribution plan on July 1, 2012.
“The changes are a responsible way for RBC to better manage the retirement program by ensuring more predictable pension costs in the future,” according to the spokeswoman. “This will enable RBC to continue to provide retirement benefits that reflect current market trends.”
The defined benefit plan was valued at $7.9 billion Canadian ($7.6 billion) as of Sept. 30, 2010, according to RBC's annual financial report.
Timothy Inklebarger is a reporter for Pensions & Investments, a sister publication of Business Insurance.