Employee Retirement & Savings:
Defined Contribution Plan
Offering a Defined Contribution Plan to your employees can provide an excellent addition to your total compensation offering. This gives employers an easy and tax-effective plan and gives employees a cost-effective option to save for their futures.
What is a Defined Contribution Plan?
A Defined Contribution Plan is a type of retirement plan where the amount of the employer’s annual contribution is specified. Usually employers can provide their employees with two account types, a Group RRSP and a Group TFSA, giving employees a way to save for both long- and short-term goals:
- Group RRSP – The amount you’d like to contribute to the group RRSP is automatically taken out of your pay. These types of accounts are designed to help you save for longer-term goals such as retirement, since withdrawals are fully taxable.
- Group TSFA – The amount you’d like to contribute to the Group TFSA is automatically withdrawn from your bank account. These are great for shorter-term goals, but are quite flexible.
Why should I offer a Defined Contribution Plan?
- Cost effective with no employer costs and the option of making matching or stand-alone contributions on behalf of employees
- Competitive advantage – attract and retain talent by offering a value-added compensation package
- Hassle-free administration – your financial advisor covers recordkeeping, reporting, investment oversight, and more
- Maintain employee satisfaction – employees gain a convenient and tax-effective savings plan
- Low-fees – investment management fees are lower than comparable retail options