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What is a pre-authorized contribution (PAC) plan?

December 14, 2020

Money Sense

Martha Harbell

Young couple at home, using laptop to learn more about pre-authorized payments

A pre-authorized contribution (PAC) plan transfers a pre-selected amount of money from one of your accounts and adds it to your investments or savings account on a regular basis. Sometimes known as an automated savings plan, this helps you earn more interest on your money and grow your savings faster - without any work on your part!

It’s simple:

  • Decide how often you want to add your contributions (weekly, bi-weekly, monthly, etc.)

  • Choose the amount of money you want to contribute at this interval

That’s it! That’s all you need to set up a PAC plan and enjoy all the benefits that come with it.


5 great reasons to set up a PAC plan

1. Reach your savings goals faster

PACs help you plan out your savings. You know how much you’re contributing, and when, so it’s easy to calculate how long it will take you to reach your savings goal. Do the math with our Savings Calculator.

Plus, PACs help your savings grow faster. When you contribute regularly, even if it’s just a little at a time, you’ll earn compound interest throughout the year (this means that you earn interest on your initial deposit and on the interest you’ve earned).

2. Stress-free saving

With a PAC plan you save automatically, without even thinking about it. Believe it or not, this has big mental health benefits! Money is a major source of stress for a lot of us, so having a plan in place to make automatic progress on your financial goals can help with your confidence and security.

Plus, you can use a PAC plan to contribute to your RRSP and TFSA. You won’t have to worry about coming up with a lump sum payment before the RRSP contribution deadline, or you can use it to meet your TFSA contribution limit faster.

3. Take control

Setting up a PAC plan is a fantastic way to stick to a budget. Ever heard the saying “pay yourself first”? It means that before you spend lots of money on non-essentials, you pay some to yourself by adding it to your savings. That way, you earn interest on money that you can use for your future plans or unexpected expenses. By transferring money to your savings or investments automatically, a PAC plan helps you resist spending that cash on something you don’t really need.

Also, you’re not locked-in to any kind of commitment - you can change your PAC settings any time. This means you can start small and increase your PAC later if it’s in your budget, or decrease your PAC if money’s tight.

4. Earn more with an early start

The longer you wait to start contributing to your investments and savings, the more you’ll have to add later in order to catch up to your goals - plus you lose out on earning more interest. That’s why some people call this the “cost of waiting.” Think of it this way - if you started contributing $100 each month when you’re 30, you would save almost twice as much as you would if you started contributing $100 each month when you’re 40.

Graph that what investing $100 per month could do for you. At age 30, $42,500 invested over 35 years equals $114,083 at age 65. At age 40, $30,000 invested over 25 years equals $59,799 at age 65. At age 50, $18,000 invested over 15 years equals $26,840 at age 65. Calculations assume a rate of return of 5%25 and yearly compounding. For illustrative purposes only.

5. Lower your investment costs

Setting up a PAC plan can help you lower your investment costs through dollar cost averaging. Investing fixed, regular amounts into the same stocks*, mutual funds* or ETFs*, is a strategic way to weather any ups and downs in the market.


Get started

It just takes a few minutes to set up a PAC in Meridian Online Banking.

Learn more about how to set up a PAC online

Not sure how well you're saving? See how you measure up by getting your Financial Resilience Score.


A great way to start saving

Check out our High Interest Savings Account - you earn interest plus you get easy access to your cash whenever you need it with no penalty fees. Start saving

A great way to start investing

Want to go over all your options with a friendly expert? Talk to one of our advisors

If you’re interested in managing your own investment portfolio with an easy-to-use online platform, check out Qtrade Direct Investing*


Learn more about saving

Six ways to add money to your RRSP
Four reasons to get a TFSA
What is financial wellness?


*Mutual funds are offered through Credential Asset Management Inc. Online brokerage services are offered through Qtrade Investor. Mutual funds and other securities are offered through Credential Securities. Qtrade Investor and Credential Securities are divisions of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.