Group Retirement Plans

What is a Group Retirement Plan?

Group Retirement Plans (registered with the Canada Revenue Agency) are set up by Employers for their Employees as part of a workplace benefit and compensation package. When Employers contribute to the plan, it is tax deductible for the Employer. For Employees, if they contribute also, the monies are tax deferred until retirement. Employees have their own accounts and can decide how their retirement funds are invested.

Group retirement plans for Employees, sometimes referred to as company pensions, are an integral part of long-term employment in any modern industrialized economy. The place of employment could be a job a fast-food restaurant, daycare centre, medical practice, tourism business, manufacturing plant or even a non-profit organization. An employee compensation package needs to include a group retirement plan if this enterprise is to stay competitive in its line of business.

Message to Employers and Employees:  take charge of your pensions now. You will thank yourself later.  A good group retirement plan, plus an individual registered retirement saving plan (RRSP) play a big role for Canadians in building up savings and wealth for their future use  when they are no longer in the workforce.  For Employers, it is an affordable, tax-mitigated way to attract, motivate and retain good quality personnel.

Some options to think about:

When an Employer wants to offer a group retirement plan to Employees, there are some options to think about.

  • Contribution – how to fund the program? It can be half contributed by the Employees and by the Employer; or, it can be only funded by the Employer.
  • Flexibility of contribution – should all contribution be a set amount? Should it be linked to the profitability of the business, Years of Service or be discretionary to the Employer?
  • Eligibility and vesting – which Employees are eligible? Are they eligible immediately or after a vesting period (maximum is 2 years)?
  • Administration – Who will administer the plan? The Human Resources department or will you outsource the plan to a Third Party Administrator?
  • Cost and investment – A good retirement plan for employees will have its investments and its costs. An Employer must be clear on the objectives and the scope of the plan. A good plan is something that is carefully planned and properly administered so that it brings about value for everyone.

Call us to discuss further if this plan is right for your business: 1-833-946-1773, or request a quote.

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