Group RRSP Benefits

This is a review of the main benefits to the employer and the employee, of a Group RRSP. These various points are subject to change as the government changes the applicable legislation.

17 benefits of a Group Retirement Savings Plan:

Benefits to Employer are,

1. No direct cost except on Payroll administration
2. Employer contributions are not mandatory
3. Employer contributions are tax deductible, and may vary each year, and for each employee
4. Improve employee morale and reduce turnover
5. Administrative support is provided for ongoing service as well as set-up
6. Professional financial guidance is provided
7. All trust and safe-keeping services provided
8. Full staff participation is not necessary

Benefits to Employee are,

1. Immediate tax deduction at time of contribution
2. 100% portable
3. Contributions are not limited to $3,500 as with pension plans
4. Monthly contributions are variable
5. Value of plan and rate of return on the investments can be easily calculated
6. Existing RRSPs may be incorporated with ease
7. Employee contributions are not mandatory
8. Monthly contributions may be cancelled, or lump sums added at any time
9. Personal consultation and financial planning services are provided at no cost

The program can be made as flexible and innovative as you wish. There are no legislative restrictions on the way you use the plan. for example, consider the following suggestions for motivating your employees. One employer uses the RRSP as a bonus plan. He has set up the plan so that the employee receives the RRSP contribution as a bonus for excellent performance. Another will match the employee's contributions dollar for dollar up to 2.5% of their wages. A third manager has offered a "tax free raise" by way of contributing the salary increase to the employee's RRSP.

Unlike the Registered Pension Plan where legislative restrictions limit participants, contribution patterns and investments, the Group RRSP is subject only to the contribution limits and some mild restrictions on investments. this year the maximum contribution is promised to be 20% of earned income, less certain employment expenses, to a maximum of $7,500.

In summary, it is clear that the flexibility and simplicity of the Group RRSP program lends itself to many attractive features. the adaptability of the program fosters imaginative uses for employee motivation, without excessive cost. with the added feature of the planning and advice from Great Pacific, the Group RRSP stand out as a most attractive employee benefit program.