Employee Retirement & Savings:
Group Registered Retirement Savings Plan (Group RRSP)
Group RRSPs help you and your employees to save for the future. It serves as an easy way to save, since it is often easier to have a small amount of money deducted from each paycheck than it is to make a large payment once a year.
How Does it Work?
In Group RRSPs, an RRSP is created for each participant and then these RRSPs are grouped together under one contract with the RRSP issuer. The contribution amount is decided by the individual employee and taken from the employee’s pre-tax pay via payroll deductions, which immediately reduces tax burdens instead of making the employee wait until the end of the year. The amount is then deposited into the employee’s RRSP.
In contributing a small percentage of income regularly, individuals can build a sizeable nest egg, providing the security and retirement income needed for financial independence after retirement.
Why Should I Contribute to a Group RRSP?
- You can enjoy a low cost with a Group RRSP, with a minimum contribution of $25 a month
- You can defer taxes — RRSP contributions reduce the income tax you pay and earnings grow tax-free until you withdraw your money
- You’ll benefit immediately from tax relief — contributing $25 costs you only $15 off your net pay
- It’s easy to save with a payroll deduction — the predetermined contribution amount is deducted directly from your paycheque, so you don’t even have to worry about coming up with the funds for a lump sum contribution however a you can make a top up contribution if required
- There are no hidden fees for moving investments or assets around
- You’ll have access to competitive investment options from a variety of top managers
- You may also be able to contribute on behalf of your spouse, depending on your plan
- Use web or phone services to monitor your investments and process transactions
For Employers: When Should I Implement a Group RRSP?
You should only consider implementing a Group RRSP when your business enjoys a strong and stable cash flow, as this is a serious long-term commitment to employees.
Benefits of a Group RRSP:
- Easier and less regulated than a Pension Plan
- Not subject to Pension legislation
- Simple to administer with minimal ongoing paperwork once set up