Group Retirement Savings Plan

Group Retirement Savings Plans

As the Canadian population continues to age and the Canada Pension Plan strains under the weight, more and more people are recognizing the importance of taking their retirement planning in their own hands – and early.  A 2012 survey revealed that 80% of Canadians age 18 to 34 are not confident about being able to save enough money for retirement.

Inherent in this for a growing number of employees is finding an employer that will make things easier by offering and contributing on their behalf to a group savings plan, options for which include:

  • Group Retirement Savings Plan (GRSP)
  • Deferred Profit Sharing Plan (DPSP)
  • Registered Pension Plan (RPP)
  • Tax Free Savings Account (TFSA) 

Employees want a group savings plan because it provides them with a simple way to save for their retirement while providing them with additional advantages:

  • Instant tax savings. This happens because employees participating in a group savings plan can have their contributions reduce their taxable income each month before the tax deductions are taken off their paycheques. 
  • Higher rates of return on investments.  With higher volumes of pooled money from payroll savings plans, for example, the Management Expense Ratio (MER) fees are usually lower than “retail” individual MER fees leaving employees with more money in their investment pockets.
  • Reduced payroll taxes for the employer. Some payroll savings plans are structured in such a way that they do not attract employer payroll taxes, like CPP and EI. 

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