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Group RRSP









Group plan

A group RRSP comprises the individual RRSP’s of persons who are members of one group. RRSP contributions are retained in the salary and the administration is centralized The policy’s administrator is not obliged to contribute to a group RRSP.

Group RRSP’s provide its participants with advantages that would be practically unavailable to them individually, such as favourable interest rates and lower minimum payments.

Benefits for a company or an association
  • Flexible policy philosophy – The policy can be used on its own or in conjunction with a deferred profit-sharing plan (DPSP).
  • Extensive admissibility restrictions – any Canadian resident aged 71 years of age or less can participate – including the shareholders, the sole owner and the associates whose participation to other policies, advantageous from a fiscal point of view, can be subject to certain restrictions.
  • Tax relief – The contributions and administrative fees are tax deductible for the employer. However, these sums must figure in the participants’ T4.
  • It is not mandatory for the employer to contribute.
Benefits for the employee or participant
  • A practical and disciplined savings plan. A simple and methodical way to plan for retirement.
  • Immediate tax savings- Revenue Canada authorizes the deduction of wage contributions from the non-taxable income.
  • The advantage of immediate allocation and accrued interest. The efficiency of accrued interests on frequent and regular deposits (bi-monthly or monthly) allows the participants’ deposits to generate immediate interest. Upon retiring, the participants will have accumulated larger sums than if they had contributed to a basic individual RRSP policy at the end of each year.
  • Evened-out investment risk – A fixed sum invested regularly over a long period reduces the investment risk by spreading out the investment’s purchasing cost.
  • Collective buying power
  • Income splitting – Spousal contributions are allowed in order for the participants to benefit from advantageous tax savings, even after they have taken their retirement.


Voluntary retirement savings plan

VRSP is a new type of group retirement plans created by the Québec government to help residents of Québec save for retirement. It came into effect on July 1, 2014, and is accessible to self-employed workers, individual investors, business owners and associates.

For the employer

A VRSP will be mandatory if your company:

  • has a certain number of employees who are 18 years of age or older, and have at least one year of uninterrupted service, as defined by the Labour Standards Act; and
  • does not already offer a registered retirement savings plan (RRSP) or tax-free savings account (TFSA) for which payroll deductions could be made, or a registered retirement plan.
For the employee

A VRSP is particularly interesting for salaried employees who do not have access to a group retirement savings plan with their employer. Much like the RRSP, contributions to a VRSP are deductible from taxable income, and contributions and investment income grow free of taxes until retirement.


Deferred Profit Sharing Plan

An arrangement by which an employer, for the benefits of certain employees, pays an amount calculated on the basis of the tax-free profits recorded by the company. The designated shareholders (those that possess directly or indirectly more than 10% of the company’s capital-shares) are excluded. The amounts paid by the company to participating employees are not considered as earned income.


Individual Pension Plan

An IPP is a registered pension plan normally established for a single participant, and designated specifically for business owners or key employees. A retirement insurance policy with fixed benefits.

The IPP offers upper-level managers and executive directors the benefits of maximum tax relief as well as maximum retirement annuity. The IPP is an excellent business strategy-company executives and upper-level managers that have the necessary income to benefit from daring tax-shelter conditions.

To be eligible for an IPP, the participant must :

  • Earn income revenue (T4)
  • Be employed by an incorporated company (taxable according to the Income Tax Act); and in general,

Be 40 years of age or more and earn at least $75 000 from an employer that sponsors an IPP. This salary can be reduced to $50 000 if it represents the participant’s sole source of taxable income.


Defined Contribution Registered Pension Plan

Employee and employer contributions are calculated up to retirement at which time they become retirement income.

The size of the contributions contained in the policy is foreseeable, while the size of the retirement income is not.

The sum allocated to the participant is calculated according to:

  • The initial capital;
  • The types of investment;
  • The amount of income invested;

The annuity rate and economical conditions pertaining to the employee’s retirement date.


Defined Benefit Registered Pension Plan

A retirement insurance policy with fixed benefits allows for the allocation of fixed retirement benefits in accordance with the participant’s wages and his or her number of years of employment.


Simplified Pension Plan

A simplified pension plan (SIPP) is a written contract by which an employer only or an employer and workers are required to make contributions in view of providing the workers with retirement income. The SIPP is offered and administered by a financial institution.

It combines the advantages of defined contribution plans, group RRSPs and deferred profit-sharing plans (DPSPs). It is designed to respond to the needs of small businesses.


Retirement Compensation Arrangement

A retirement compensation arrangement (RCA) is a measure that insures the provision of additional retirement benefits which are not part of a retirement insurance policy.

Benefits for the employer

Fiscal benefits

The contributions paid out through a Pension Benefits Agreement are not wage deductible. The employer’s contributions are tax deductible for the year during which they are allocated.

An incentive for key employees

a retirement agreement is an efficient measure to attract and retain the employers and experts occupying key positions.

Benefits for the employee or participant

Employer contributions

The employer is committed to allocating the participants an annuity whose amount is predetermined. When an employer allocates contributions in a trust fund in order to capitalize on the promised premiums, the participants are guaranteed payment of their premiums.

Protection against creditors

Given that the policy’s asset value is different from the company’s asset value, it is protected against the employer’s creditors.

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