Group Retirement Plans

Group RRSP

A group RRSP is the most common pension plan option for small businesses.  Contributions are made each month by way of payroll deductions and the investment company supplies annual tax reporting.

Group RRSP’s can be set up in 2 ways:

• Only the employee contributes
• The employee contributes and the employer matches a portion.  For example, the company matches the employee’s portion up to a maximum of 5% of the employees annual salary

Deferred Profit Sharing (DPSP):

A DPSP is designed to motivate employees by allowing them to share in the company’s success and prepare for their own retirement.  This is a pension plan through which an employer shares a portion of the company’s profit with some/all it’s employees.  It is also very flexible and does not involve a permanent commitment on the part of the employee.  For example, the employer contributes only when the company has been profitable in that fiscal year.

Registered Defined Contribution Plan (RPP):

A defined contribution plan is a contract whereby the employees and employer, or only the employer, agree to make regular contributions to a retirement plan.  Only the amount of the contributions are pre-determined, the amount of the pension is not known until the member retires.  In a RPP the member bears all the financial risk, which means they are subject to the prevalent economic conditions.