Why Should Businesses Offer Group RRSPs?
69% of Canadian Employees Say They Would Leave Their Job Without a Company Savings Plan to Go to a Company With a Group RRSP.
Group Registered Retirement Savings Plans (RRSPs) are an important tool for businesses to help ensure that employees have adequate retirement savings. Group RRSPs also help to ensure employees remain with the business for the long term, as they offer many benefits for both employer and employee. A group RRSP is a savings plan offered through an employer. It’s similar to an individual RRSP, but with the added benefit of:
allowing employees to have savings deducted from their paycheques into a range of investments, and
receiving matching contributions (up to a certain limit) from the employer – if it is offered.
Benefits for the Employer
Group RRSPs provide employers with several advantages. For one, they are a tax-efficient way of providing an attractive retirement benefit without eating into the company’s profits. By contributing to the group RRSP, the employer is able to reduce the company’s taxable income while increasing the employee’s retirement savings. In addition, by offering a group RRSP to employees, employers are able to attract and retain top talent, as employees may become more likely to stay with a business that offers them a retirement benefit.
Finally, group RRSPs can be used as a tool to encourage employees to contribute to their retirement savings. By offering group RRSPs, employers can provide a way for employees to save for retirement without having to worry about the complexity of setting up their own retirement plan.
Benefits for the Employee
Group RRSPs offer a variety of benefits for employees. Group RRSPs also allow the employee to benefit from their employer’s contributions and any associated matching. This can help to significantly increase the amount of money the employee can save for retirement. Additionally, the employee will have access to a variety of investment options and can choose an investment strategy that best suits their goals.
Contributions to an RRSP reduce the income tax an employee pays. And if you contribute through payroll deductions, your contributions can be invested before tax is deducted. This allows you to realize the savings on the spot.
Group RRSPs can also benefit from lower investment management fees than if employees were to purchase mutual or index funds through their bank or financial advisor for their RRSP. When you buy in bulk, you get a better deal. The same concept applies to a group RRSP.
Group RRSPs are a valuable benefit for both employers and employees. Speak to your Benefy advisor today about how you can get a group RRSP set up and start helping your employees save for their future.