Group retirement
Group Planning
Group retirement programs designed to attract and retain talent while keeping employer planning clear.
01 — Group RRSPs
The extra edge.
A Group RRSP makes retirement saving easier by combining payroll deduction, pre-tax contributions, and individual employee accounts.
- Contributions can be deducted from pay before tax is calculated
- Employees save regularly without a last-minute RRSP scramble
- Employer setup can make participation simpler and more consistent
More detail
A Group RRSP is a collection of individual RRSPs where the employer arranges for employees to make contributions through regular payroll deductions. Funds are forwarded to the financial organization selected by the employer as investment manager and administrator for the group plan.
Because contributions can be made on a pre-tax basis, the amount of tax deducted at source may be reduced immediately rather than waiting for a refund after filing.
Example: For every $300 monthly contribution to a Group RRSP, take-home pay may be reduced by only $226 because of reduced tax deducted at source. Actual cost varies by salary, contribution, province, and personal situation.
Additional benefits
- Payroll deduction offers the ultimate convenience — the easiest way to save.
- Avoid the last-minute RRSP rush at the end of February.
- It's easier to reach your RRSP limit than with a single lump-sum contribution.
- Contributing earlier maximizes the value of your savings by keeping them tax-sheltered longer.
- It eliminates the need to borrow money from a bank to make an RRSP contribution, saving interest costs.
02 — DPSP
Deferred Profit Sharing Plan
A DPSP lets employers share profits with employees through a registered plan funded by employer contributions.
- Employer-funded plan registered with CRA
- Contributions are generally tax-deductible to the employer
- Can supplement a Group RRSP or pension program
More detail
DPSPs can be used as a pension plan or supplement to a company's Group RRSP. The employer may contribute an amount out of profits, or related to profits, into a trust fund that accumulates sheltered from income tax. Employee contributions are not permitted.
Employer contributions into a DPSP are subject to legislated limits and create a pension adjustment.
Highlights
- No minimum employer contributions
- Employer contributions are not subject to payroll taxes
- Only employer contributions are permitted into the plan
- Vesting period of up to 2 years may be imposed
- Withdrawals can be restricted to termination, death, and retirement
- Owners or relatives of owners cannot participate in the plan
- Terminated employees can withdraw the total vested amount subject to taxation
- Creates a pension adjustment
- Can be used to share profits with employees or as a pension plan
03 — DCPP
Defined Contribution Registered Pension Plan
A DCPP is a formal pension arrangement where contributions are defined and retirement income depends on accumulated value.
- Employer contributions are required
- Contribution formula is clearly defined
- Vested funds are generally locked in for retirement
More detail
DCPPs are formal arrangements made by a sponsor to provide employees with retirement income. If employees are required to contribute, the plan is contributory; otherwise it is non-contributory.
Highlights
- Vesting period of up to 2 years may be imposed
- The contribution formula is clearly defined (minimum employer contribution is 1% of YMPE)
- After contributions vest, all monies are locked in
- Employer contributions are not subject to payroll taxes
- Legislation allows voluntary contributions to be redeemed; however, employers have the option of locking in all contributions
- Plans are creditor-proof
- Low administrative costs
- The employer is responsible for the plan
- Creates a pension adjustment
04 — Combination
Combination DPSP / Group RRSP
A combination plan can pair employer DPSP contributions with employee Group RRSP contributions.
- Employer contributions can be directed to the DPSP
- Employee contributions can go to the Group RRSP
- Useful when flexibility and employee participation both matter
More detail
This arrangement allows employers and employees to use features of both plans. Employer contributions are made to the DPSP, while employee contributions are made into the Group RRSP. Employer contributions can also be made contingent upon employee participation.
Highlights
- No minimum employer contributions
- Employer contributions to the DPSP are not subject to payroll taxes
- Vesting period of up to 2 years may be imposed on the DPSP only
- Withdrawals can be restricted to termination, death, and retirement on the DPSP
- Owners or relatives of owners cannot participate in the DPSP portion
- Terminated employees can withdraw the total vested amount subject to taxation
- The DPSP creates a pension adjustment
- Can be used to share profits with employees or as a pension plan
- Employer and employee contributions can be made in any combination but cannot exceed an individual's RRSP limit