Employee Group Retirement & Savings

Help secure your employee's financial future for a happier and more productive workforce.

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What are Group Retirement and Savings Plans?

A Group Registered Retirement Savings Plan (RRSP) represents a consolidated arrangement of individual RRSPs, provided to employees as a collective benefit. These plans are managed collectively by the employer, typically serving as a complementary component to an Employee Group Benefits Plan. This structure not only streamlines retirement savings for employees but also reflects an employer's commitment to their financial well-being.

Group RRSPs have gained popularity as a preferred investment choice, especially when compared to traditional options like defined benefit or defined contribution retirement plans. Their appeal largely stems from a significantly reduced administrative load for both employers and employees. Additionally, these plans offer flexible investment options and can be tailored to meet the diverse financial goals and risk tolerances of individual employees, making them a versatile tool in retirement planning.

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Financial Security

Group RRSPs help employees build their retirement savings, offering them a sense of financial security for the future.

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Tax Advantages

Contributions to Group RRSPs are tax-deductible for the business and tax-deferred for employees, providing significant tax benefits.

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Flexible Contributions

Employers can tailor their contribution levels to Group RRSPs, offering flexibility to align with business capabilities and goals.

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Simplified Management

Group RRSPs typically involve lower administrative overhead compared to other pension plans, making them easier and more cost-effective to manage.

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Is an Employee Group Retirement Savings Plan Suitable for Your Business?

  • Enhancing Employee Attraction and Retention: Group RRSPs serve as an additional layer of compensation, designed to assist employees in their retirement savings journey. This benefit is often highly valued by both prospective and current employees, making it an effective tool for attracting and retaining top talent.

  • Tax Efficiency for Your Business: Contributions made by your business towards employee Group RRSPs are not only a gesture of support for your employees' future but also offer the advantage of being a tax-deductible business expense.

  • Customizable Contribution Structures: Flexibility is a key feature of Group RRSPs. You have the liberty to define a contribution formula that aligns with both your business objectives and the financial needs of your employees, ensuring a mutually beneficial arrangement.

  • Cost-Effectiveness: One of the appealing aspects of Group RRSPs is their affordability. These plans typically do not involve annual administration fees, and while employer contributions are common, they are not mandatory. This makes them a financially viable option for businesses of all sizes.
  • Simplified Plan Management: When compared to more traditional pension plans like defined benefit or defined contribution plans, Group RRSPs offer a significantly lower administrative burden. This ease of management allows you to focus more on your business operations while still providing a valuable employee benefit.
Group Retirement 101

Understanding the Mechanics of a Group Retirement Plan

Group Registered Retirement Savings Plans (RRSPs) operate like individual RRSPs but are managed by employers, simplifying the retirement saving process for employees. Contributions are made via pre-tax payroll deductions, with optional employee contributions often matched by employers up to 3-5% of earnings. Note that employer contributions are taxable for the employee. Group RRSPs may offer a narrower range of investment options than other plans, and withdrawal rules are set by the employer, providing a structured retirement savings framework.

Upon Plan Maturity (at age 71) the plan owner is presented with three options:

  • Convert to a Registered Retirement Income Fund (RRIF): RRIFs, like RRSPs, offer tax-deferred savings. The primary difference lies in their purpose: RRIFs are structured for income distribution, whereas RRSPs focus on asset accumulation.

  • Annuitize the Plan: This option involves converting the plan into a registered annuity, providing a steady income stream post-retirement.

  • Cash Out the Plan: The plan owner may choose to simply liquidate the plan, converting it into cash.

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Talk to an advisor who can understand your situation, answer your questions and help you build an insurance plan appropriate for your business.

Frequently asked questions

Answers to key questions about Employee Group Retirement & Savings

How does a Group Retirement Plan differ from a personal retirement plan?

Group Retirement Plans are set up by employers and often include contributions from both the employer and employee. Personal retirement plans, like RRSPs, are individually managed and funded solely by the individual.

Are employer contributions to a Group Retirement Plan mandatory in Canada?

Employer contributions are not mandatory in Canada, but many employers choose to contribute as a benefit to attract and retain employees. The structure of contributions varies by plan.

Can I manage my own investments within a Group Retirement Plan?

Yes, many plans offer a range of investment options and allow employees to choose how their contributions are invested, though the options are typically curated by the plan provider.

What happens to my Group Retirement Plan if an employee changes jobs?

The employee will have several options:

  1. Leave the funds in the current plan;
  2. Transfer them to a new employer's plan; or
  3. Move them to a personal retirement account, or withdraw the funds (which may have tax implications).
What tax benefits are associated with Group Retirement Plans?

Contributions to a Group Retirement Plan are typically made with pre-tax dollars, reducing taxable income. Additionally, investment growth in the plan is tax-deferred until withdrawal.

Still have questions?

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