Final answer:
A portable pension plan allows employees to transfer their pension's lump sum value to a locked-in RRSP or a new employer's pension plan, supporting the mobility of retirement funds and is often seen with defined contribution plans like 401(k)s and 403(b)s.
Step-by-step explanation:
A pension provision whereby employees who change jobs can transfer the lump sum value of the pension they have earned to a locked-in RRSP or their new employer's pension plan is known as a portable pension plan. This type of plan allows for the mobility of retirement funds so that individuals are not tied to one employer based on their pension funds. Typically, defined contribution plans such as 401(k)s and 403(b)s are portable, have tax deferred benefits, and the funds can be invested in a range of vehicles. In contrast, defined benefit plans are traditionally less flexible, but certain provisions may still allow for some portability. Additionally, employers that offer pensions contribute to the Pension Benefit Guarantee Corporation, providing insurance for pension benefits in case the company cannot pay its promised pensions.