Registered Pension Plans
Group RRSPs
DPSPs
As noted earlier, Revenue Canada requires that DPSP be trusted in order for registration to be granted. The trustees of the plan can then direct the plan monies to the investments that are chosen by the plan sponsor and perhaps its employees, subject to the investment guidelines that apply to DPSPs. Specifically, no part of the trust's funds may be invested in:
- notes, bonds, debentures or similar obligations of an employer making payments under the plan or of a corporation with which it does not deal at arm's length, or
- the shares of a corporation at least 50% of the property of which consists of the property described in "a"
The trust that holds the DPSP assets must invest in "qualified" investments. These include:
- money that is legal tender in Canada and deposits (with the meaning of the CDIC Act or with a bank.)
- bonds, debentures, notes or similar obligations of a corporation, the shares of which are listed on a prescribed stock exchange in Canada (subject to the restrictions noted above relating to securities issued by the employer or a corporation who does not deal with the employer at arms' length.)
- shares listed on a prescribed stock exchange in Canada
- equity shares of a corporation. If the shares are not restricted in transferability then the corporation must have paid a dividend in each share of at least 4% of the cost of the share, of earnings attributed to that class of shares of not less than 4% of the cost per share multiplied by the number of shares outstanding. These dividends or earnings must have been paid or earned in 4 of the most recent 5 taxation years.
- GIC's issued by a Canadian trust company
- investment contracts approved by Government in Council
- shares listed in prescribed stock exchanges in other countries
- such other investments as may be prescribed by regulations by Government in Council.
