DC Pension Plan Contributions

KNOWLEDGE EXPECTED OF: QAFP® Professionals

Highest Knowledge Level: Application

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Explain the types of contribution formulas associated with a defined contribution pension plan, such as: 
    • Percentage of pensionable earnings
    • Fixed-dollar amount based on years of service or hours worked
    • Flat benefit
  • Identify the maximum contributions that can be made to a defined contribution pension plan.
    • By the employer
    • By the employee
  • Identify that the employee retains decision-making authority for how contributions to the pension plan are invested. 
  • Identify the contributions made by a defined contribution pension plan member for a pension plan. 
  • Estimate the contribution made by the employer of a defined contribution pension plan member for a pension plan.
  • Determine the impact of a contribution to a defined benefit contribution plan on registered retirement savings plan contribution room.
  • Determine the tax impact of contributing to a defined contribution pension plan.
  • Estimate the tax impact of contributing to a defined contribution pension plan.

KNOWLEDGE EXPECTED OF: CFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Explain the types of contribution formulas associated with a defined contribution pension plan, such as: 
    • Percentage of pensionable earnings
    • Fixed-dollar amount based on years of service or hours worked
    • Flat benefit
  • Identify the maximum contributions that can be made to a defined contribution pension plan.
    • By the employer
    • By the employee
  • Identify that the employee retains decision-making authority for how contributions to the pension plan are invested. 
  • Identify the contributions made by a defined contribution pension plan member for a pension plan. 
  • Estimate the contribution made by the employer of a defined contribution pension plan member for a pension plan.
  • Determine the impact of a contribution to a defined benefit contribution plan on registered retirement savings plan contribution room.
  • Determine the tax impact of contributing to a defined contribution pension plan.
  • Estimate the tax impact of contributing to a defined contribution pension plan.
Additional Knowledge Expected of CFP Professionals
  • Determine how each of these factors may impact the suitability of contributing to a defined contribution pension plan:
    • Risk tolerance
    • Effect on current cash flow
    • Effect on future cash flow (impact on value of future pension benefit)
    • Effect on current net worth
    • Effect on future net worth
    • Fiscal discipline of individual
    • Psychological impact from decision
    • Impact on pension adjustment
    • Expected tax rate at time of receipt of pension benefit
    • Impact of future receipt of pension benefits on government benefits
  • Evaluate how each of the factors may impact the suitability of contributing to a defined contribution pension plan.
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