It's hard to believe, but November is nearly half-way through, and once again that crazy time of year is breathing down our necks.... And no, we are not talking about the upcoming holiday season! (Although that is quickly creeping around the corner as well! Don't forget to come visit our blog in December for some easy and fun holiday recipes/tips.)

We're talking about "RRSP Season" - the months of January and February - when Canadians are suddenly inundated by messages to contribute money into a Registered Retirement Savings Plan (RRSP). From radio ads, full-page newspapers and magazines spreads, posters being displayed in the bank, and phone calls from investment advisors, there are certainly no shortage of reminders.

Do you, as an Employer, ever grow concerned about the retirement prospects for some of your longer-term staff? Without a government or Employer-sponsored Pension Plan, some employees may have little or no financial security after retirement. As an Employer, you can help to encourage your employees to plan ahead by providing them an opportunity and incentive to save for their retirement.

Did you know that over 70% of employees with a workplace retirement savings plan have said that it was a major factor in their employment?  Group savings plans can highly influence workplace satisfaction and loyalty among employees.

So then, what's the upside of offering a retirement plan? 

Whether a pension plan or RRSP, the advantages listed below apply:

• Employee contributions can trigger an immediate tax reduction at source each pay period.
• Contributions made to a pension plan or RRSP are tax-deductible for the Employer, and “free” money to the employee receiving the contribution.
• Unlike salary increases, your Employer contributions do not trigger any CPP/QPP or other payroll taxes. Offering your employees an Employer Contribution to a savings plan rather than offering them another pay raise helps keep payroll taxes under control for both you and your employees. It can even prevent higher marginal tax rates for some employees.
• RRSP participation and contribution levels are usually set up as voluntary on the part of the employee. One advantage to this is that they can start with small contributions, as low as $25 per pay period, and can increase their contributions later once they get used to saving.
• Investment income generated by the invested contributions is tax-exempt inside the plan. Even better, the “bulk-buying" of investments usually means lower investment-management fees, which means more growth over time for your employees.
• The benefits accumulated in a plan cannot generally be seized by creditors.

Next week we will discuss some of the pros and cons of Pension Plans compared to RRSPs. Stay tuned for more details, or see our website page on group savings plans.