What is a Retirement Compensation Arrangement?
A retirement compensation arrangement (RCA) is a non-registered plan set up by an employer to provide benefits to an employee or group of key employees upon retirement, termination a change in service. For the employee, it is a supplemental pension – an opportunity for private business owners and executives to overcome the income gap they face in retirement. Pension consultants today suggest that an adequate pension should be approximately 70% of pre-retirement income. However, unless there are many years to contribute, along with consistently high investment returns, the amount of retirement income that can be generated from a registered retirement savings plan (RRSP) or a registered pension plan (RPP) is often less than what people really need for a comfortable retirement.