Employee group retirement and savings
Workplace plans that help your team save for retirement through payroll contributions.
How a group plan works
A group plan lets your employees save for retirement through payroll deductions, in a plan your business sets up with a provider. The most common is a group RRSP, where each employee has their own RRSP. Some employers add a deferred profit sharing plan (DPSP), which only the employer pays into. A registered pension plan is a more formal arrangement, with more rules and administration. We can help you choose a plan and set it up.
Saving made simple
Contributions come off each pay, so saving happens without anyone having to remember it.
Tax
Employees deduct their group RRSP contributions, and the tax saving comes off each pay. Employer contributions to a group RRSP are a taxable benefit, offset by the RRSP deduction. Employer contributions to a DPSP aren’t taxed until they’re withdrawn. For the business, contributions are a deductible expense.
Your contribution, your choice
You decide whether to contribute, and how. Contributions aren’t required anywhere in Canada, though in Quebec, employers with enough eligible employees must offer a plan.
Investments
Employees choose from the funds the plan offers.
Getting money out
A group RRSP is the employee’s own savings: withdrawals are usually allowed, though the plan may limit them while they work for you, and they’re taxable. In a DPSP, employer contributions vest within two years of joining, and amounts that haven’t vested are forfeited if the employee leaves. A registered pension plan is locked in until retirement. An RRSP has to be converted by the end of the year its owner turns 71: to a registered retirement income fund (RRIF), to an annuity, or cashed out, which is taxable.
Who it suits
May suit you if
- You want to help your team save for retirement.
- You already have a group benefits plan and want to add to it.
- You want employees to be able to save through payroll, with or without an employer contribution.
Something else may fit better if
- It’s just you, in your own corporation: speak with us about your own retirement and tax planning.
Frequently asked questions
All questionsHow does a group retirement plan differ from a personal retirement plan?
A group plan is set up through your employer. Your contributions come off your pay, your employer may add its own, and you choose from the investments the plan offers. A personal plan, such as your own RRSP, is one you open and fund yourself, with whatever investments your provider offers. Contributions to a group RRSP and a personal RRSP share the same RRSP contribution room.
Are employer contributions to a group retirement plan mandatory in Canada?
No. Employers don’t have to contribute to a retirement plan anywhere in Canada. Outside Quebec, they don’t have to offer one either. In Quebec, an employer with enough eligible employees must offer a voluntary retirement savings plan (VRSP) or an allowed alternative, such as a group RRSP with payroll deductions, but doesn’t have to contribute to it. Many employers choose to contribute anyway, to attract and keep good people.
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 an employee’s group retirement savings when they change jobs?
It depends on the type of plan:
- a group RRSP is the employee’s own savings, so it can usually move to a personal RRSP or a new employer’s plan, or be withdrawn, which is taxable;
- in a deferred profit sharing plan (DPSP), employer contributions vest within two years of joining. Vested amounts can be transferred or paid out, and amounts that haven’t vested are forfeited;
- in a registered pension plan, the money is locked in. It can stay in the plan or move to a locked-in account, but generally can’t be cashed out.
What tax benefits are associated with group retirement plans?
Your own contributions to a group RRSP or a registered pension plan are deducted from your taxable income, and through payroll the tax saving comes off each pay. Investment growth isn’t taxed until you withdraw it. Employer contributions to a group RRSP are a taxable benefit to you, offset by the RRSP deduction. Employer contributions to a DPSP aren’t taxed until you withdraw them. For the employer, contributions are a deductible business expense.
When can employees access funds in a group retirement plan?
It depends on the type of plan. A group RRSP is the employee’s own savings, so withdrawals are usually allowed, though the plan may limit them while you work there, and they’re taxable. A deferred profit sharing plan may allow withdrawals of vested amounts while you’re employed, and pays out when you leave or retire. A registered pension plan is locked in until retirement, with limited exceptions such as a small balance or financial hardship.
Related to employee group retirement
- Employee group benefits Health, dental and other benefits for your employees.
- Health spending accounts Pay health and dental costs through your business.
- Lifestyle spending accounts A taxable account for the lifestyle and wellness costs you choose.
- Key person insurance Protects your business if you lose someone vital to it.
A question about your coverage? Ask us.
No obligation. We’ll tell you plainly what we think, including when you already have what you need.