A group RRSP is a collection of centrally administered individual RRSPs offered to employees by their employer or for members of an association by the association. In this type of plan:
Advantages of a group RRSP
- Contributions are tax-deductible
- Earnings grow tax-free
- Attractive group rates, since group RRSP fees are generally lower than those that apply to individual RRSPs
- Overall returns are higher because of these lower fees
- Income tax is deducted at source resulting in higher take-home pay
- Regular contributions offer the benefits of systematic savings
About contributions to a group RRSP
- Savings are eligible for the Home Buyers' Plan (HBP) and the Lifelong Learning Plan (LLP)
- The capital is not locked in and can be withdrawn at any time
- Employees decide how much to contribute, with no minimum investment or limits on inter-fund transfers
- Transfers from other plans and additional voluntary lump-sum contributions are allowed
- Employer can contribute to employees' RRSPs, but there is no required minimum and the contribution amount can be adjusted at any time
- Employer and employee contributions can be made in any combination, as long as they don't exceed the Income Tax Act contribution limit (same limit as individual RRSPs)
- Employer contributions are considered salary paid to the employee and are therefore taxable benefits
LIRA + group RRSP = a winning combination!
A LIRA (locked-in RRSP) is an investment tool designed to hold money from a previous employer's pension plan. If you leave your job, you can transfer the locked-in amounts from your pension plan to a LIRA. It's the perfect add-on to your group RRSP to consolidate your retirement savings.
- Like a group RRSP, income grows on a tax-deferred basis
- Unlike a group RRSP, money cannot be withdrawn prior to retirement (funds are locked in)
- A LIRA must be converted into an annuity, a Life Income Fund (LIF) or another type of locked-in retirement income plan by December 31 of the year you turn 71
Which retirement plan is right for you? Check out the Retirement savings plan table to find out.
This text is for information purposes only. Refer to your policy for all conditions, exclusions and restrictions.