Group RRSP’s are an easy way to set up and administer a plan for employee retirement savings. As they are less regulated than pension plans they are often preferred by smaller companies and companies with a younger or more transitory employment pool.

RPP Benefits will guide your through the plusses and minuses of RRSP options and help you decide which plan best fits your company’s and employee’s needs. As your company matures your employees’ needs may change. We will keep an eye on these needs, your budget, changes in legislation and new products that may come on the market so your plan is always up to date and fit for purpose.

If the time comes when a more formal Group Pension Plan becomes a preferably choice RPP Benefits will guide you through what you need to know, and can execute the changes on your behalf.

Advantages of Group RRSP

1. A Group RRSP is simpler and less regulated than a Pension Plan, making it easier than a Pension Plan to suspend or wind down should unforeseen cash flow problems occur.
2. It is by far the first choice for many small business owners, and it is not subject to pension legislation. A Group RRSP is created by implementing an RRSP for each participant and ‘grouping’ them under one contact with the RRSP issuer (a bank or insurance company).
3. Once set up, it is very simple to administer and there is minimal ongoing paperwork.
4. A younger workforce may appreciate an RRSP because first-time home buyers are allowed to withdraw from their RRSP to create a down payment for a home purchase. Under the Lifelong Learning plan, an employee of any age may borrow from the RRSP to fund training or education.

Disadvantages of Group RRSP

1. A Group RRSP is less assured than a Pension Plan to create a retirement pension of your employees, because there are no legislated locking-in rules.
2. Once employer contributions are committed to the plan on the employee’s behalf, those funds are immediately accessible to the employee who then controls the funds. They can remove all the RRSP monies (whether employee or employer contributions), pay any resulting tax, and use the funds for daily living, thus forfeiting an opportunity to plan for retirement.
3. To offset this disadvantage, you can design your plan to minimize the temptation for employees to remove funds from their plan.