Royal Bank of Canada, Toronto, is eliminating its Canadian defined benefit pension plan for new employees effective Jan. 1, confirmed RBC spokeswoman Elyse Lalonde.
Employees hired on or after Jan. 1 will be enrolled in an “enhanced” defined contribution plan beginning July 1, which will include an automatic contribution from RBC, higher matching contributions and higher annual RBC contribution limits, Ms. Lalonde said in an e-mail.
Employees hired prior to Jan. 1 will be allowed to remain in the DB plan or given the option to switch to the new DC 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,” Ms. Lalonde wrote. “This will enable RBC to continue to provide retirement benefits that reflect current market trends.”
The DB plan was valued at C$7.9 billion (US$7.6 billion) as of Sept. 30, 2010, according to RBC's annual financial report.