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Group Retirement Plans
 

People can no longer expect government social programs to provide an adequate post-retirement standard of living. These programs only supply a minimum threshold income on which to try to survive.

Employees feel that employer-sponsored group retirement programs, offered through the workplace, are very valuable. The Payroll Deduction feature is a convenient and painless way to save and improved investment management fees increase the rate of return on employee's investments

Group Registered Retirement Savings Plan
  • A group RRSP is a collection of centrally administered single RRSPs into which members make tax-deductible contributions that accumulate in a tax shelter.
  • The amounts invested in an RRSP are not locked in, which means that they can be withdrawn at any time, except if withdrawals are limited under the contract.
  • Members decide how much to contribute and make their own investment decisions.
  • Contributions are deducted directly from members' salaries, thereby providing an immediate tax deduction and a higher long-term return, since every contribution is invested the moment it is received.
  • Members can contribute to RRSPs on behalf of their spouses.
  • Members generally benefit from attractive group rates (e.g., lower plan administration fees).

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Defined Contribution Pension Plan

  • In a DCPP, the employer and employee make contributions that are tax deductible and accumulate on a tax-deferred basis.
  • The plan administrator (in Quebec the administrator is a pension committee) is required to offer a wide variety of investment funds to make the retirement fund grow.
  • In most cases, members provide their own investment instructions for the amounts contributed on their behalf.
  • The funds accumulated in a DCPP cannot be withdrawn before the member retires and must be used to purchase an annuity or a life Income Funds (LIF).
  • These plans are generally better suited to employers who are concerned with assisting their employees in building an income for retirement.

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Deferred Profit Sharing Plan

  • A Deferred Profit Sharing Plan is a savings plan in which the employer distributes a portion of the company's profits to some or all company employees.
  • Employees cannot contribute to the plan but they can combine it with other employer-sponsored plans eligible for salary contributions.
  • Employer contributions are not locked in until retirement, which means that employees can withdraw all or a portion of their contributions after two years' membership in the plan, or sooner if permitted by the employer.
  • Employees usually make their own investment decisions for the amounts deposited on their behalf.
  • Deposits and fees are tax deductible as operating costs and, like an RRSP, deposits and investment income are tax sheltered.
  • This is a very flexible plan for the employer, since it does not involve a permanent financial commitment and the employer does not have to contribute in years in which the business suffers a loss.
  • The advantage of a DPSP is that it provides an incentive for employees to work towards the goals and success of the company. It is directly linked to a company's profit, and money is put towards employee pensions.
Contact us to find out more about a customized Group Retirement Plans for your company’s needs!
 
 
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