Many Canadians find it difficult to save for their retirement, especially when you have to first earn money, then you must pay tax on it, then try to save from what is left.

A Group Registered Retirement Savings Plan is a collection of individual RRSP’s where the employees make contributions through regular payroll deductions on a pre-tax basis.

The Group RRSP offers a flexible way for employees to save for their retirement without taking on large financial and legal commitments.

The employer may also make contributions to the individuals RRSP’s. These contributions are a tax deductible expense to the business, and offer a great benefit that may help to attract and retain employees.

The employer may also design the basic plan. They can for example decide when employees will be eligible to participate, how often contributions will be made, and if you the employer will match employee contributions or not. You as the employer are not responsible for guaranteeing your employee’s retirement income nor are you restricted by Registered Pension Plan legislation.

A letter of Agreement containing all the core issues of the plan is completed with the employee group and your business prior to a group plan being established.

The administration required by the employer is minimal. You will have to set up a Contribution listing, which lists all the employee participants and the amounts of their individual contributions and the employer or company’s contribution if there is going to be contributions made by the company.

After the initial set up, you the employer will submit the list and payment of the contributions you have deducted for each employee and if you have chosen to match the contributions payment for the matched amount from your company.

Remember matched contributions are not mandatory.

A copy of a report of the Employer's statement of account is forwarded to you each month.

Offering the opportunity to employees is a great benefit in helping employees reach their retirement financial goals.

For employees, the biggest difference between contributing to a group RRSP and contributing to an RRSP on your own is that with the group RRSP, the contributions are deducted at source. You are not paying tax on the money first prior to making these contributions, you get an immediate tax deduction. This contribution also assists in ensuring you are saving – the “pay yourself first” theory and gaining benefits of ‘dollar cost averaging’.

Group RRSP’s provide more flexibility than formal pension plans may offer. Formal Pension plans may have rules for vesting of pension benefits and what happens to contributions when an employee leaves the firm. In a Group RRSP there is no question about who owns the contribution and what you can or can't do with your portion of contributions . You can do whatever you want with it - transfer it, redeem it, add to it. Note that there may be some locking-in provisions or restrictions on the transfer of amounts contributed by your employer.

With a Group RRSP, our financial investment specialist, who works with your firm on the group RRSP is also available to you, the business owner and you the employee for other personal financial planning needs.

Contact us for details on the types of Group Registered Retirement Savings Plan investments available to you, how to get started or how to transfer existing plans. It’s easy, convenient, and Horizon Credit Union offers “hands on” professionals to help you.