Group Retirement Benefits

Group Registered Retirement Savings Plans (GRRSP)

A Group RRSP is a collection of individual RRSPs, into which employees and/or their employer make contributions through regular payroll deductions on a pre-tax basis. By contributing directly from your payroll the amount of tax your employer is required to deduct is therefore reduced. GRRSPs can be very comprehensive and can include virtually any qualified investments that suit your needs: cash, mutual funds, stocks, small-business ventures, labour-sponsored funds, segregated funds, guaranteed investment certificates (GICs), bonds (including Canada Savings Bonds), foreign investments, etc.

Registered Pension Plans (RPP)

A pension plan is a formal arrangement made by a sponsor to provide you with a monthly lifetime income after retirement. A sponsor can be a single employer, multiple employers, a union, or a combination of these. There are two major types of group pension plans: Defined Contribution Plans and Defined Benefits Plans.

In a Defined Contribution plan your employer contributes a fixed percentage of your pay, which accumulates and is then used to fund your retirement. The retirement benefit in a Defined Contribution plan is not known in advance.

In a Defined Benefit plan your retirement benefits are defined in the plan agreement. The benefit is usually a formula based on the number of years you have worked or contributed, your average salary (or final year's salary), and a set percentage that may be tied to CPP. In a Defined Benefit plan the retirement benefit is defined, but the contributions are not.

Deferred Profit Sharing Plans (DPSP)

Deferred Profit Sharing Plans (DPSPs) are simple and flexible arrangements whereby a Company (the Plan Sponsor) distributes a portion of the company's pre-tax profits to its employees (the Plan Members). Employees do not contribute to the plan. Contributions are related to corporate profitability and are not required in unprofitable years. Contributions are not added to members' earnings and do not increase payroll taxes. The Plan Sponsor has ample freedom to reward in relation to member performance. Members may be enticed to improve their performance since their efforts help generate company profit, which in turn will be distributed under the DPSP.