Group Solutions - Retirement Programs
An aging workforce means assisting your Employees in planning for their future may also assist with employee retention and continuity of work.
Retirement Plans…they’re more than just RRSP’s.
There are numerous options when it comes to saving for Retirement – let us show you how to create a specialized plan that works for you and your Employees:
Registered Pension Plans (RPP)
An Employer sponsored Registered Pension Plan is a plan that is registered with the Canada Revenue Agency and complies with provincial legislation.
There are two forms of Registered Pension Plans: Defined Contribution and Defined Benefit.
Defined Contribution (Pension Plan)
Under a Defined Contribution or Money Purchase Registered Pension Plan, the employer and employee contributions are pre-determined and accumulate with investment return. The contributions made by the employer and employee are invested towards the funding of a retirement income.
At retirement, the employee is responsible for turning their lump-sum pension plan into an income stream.
Defined Benefit (Pension Plan)
A Defined Benefit Plan defines the amount of the pension benefit payable at the time of retirement. This is done utilizing a formula that relates the value of the pension benefit to earning levels and years of service.
The benefit is defined up front. Employee contributions are usually set at a fixed percentage of employment earnings. The employer must then contribute sufficient funds to ensure the pensions of plan members are adequately funded.
Register Retirement Savings Plan (RRSP)
A Group Registered Retirement Savings Plan provides a method of allocating Employee and Employer contributions in separate accounts under the umbrella of a single registered retirement savings plan. The employer and employee contributions are specified and accumulate with investment return. Employees may also contribute to an account on behalf of their spouse, and are able to borrow funds from their RRSP for the purpose of purchasing their first home or for funding education.
Deferred Profit Sharing Plan(DPSP)
A Deferred Profit Sharing Plan is a simple, flexible arrangement, whereby an employer distributes a portion of the company's pre-tax profits. These types of plans may be set up in conjunction with a Group RRSP.
The Employee: may contribute to the RRSP but is not permitted to contribute to the DPSP.
The Employer: afforded more flexibility than a Registered Pension Plan; contributions are made to the DPSP but not required in years of no profit. The Employer has ample freedom to reward in relation to member performance.
Individual Pension Plan (IPP)
An Individual Pension Plan is a defined benefit pension plan for one individual (may also include a spouse). IPP’s benefit those who are over the age of 40, consistently earning $85,000+ per year. Past service can be recognized dating back to 1991.
The main objective of an IPP is to fund the maximum amount permitted under the Income Tax Act. IPP contributions can be made in excess of the RRSP and Pension Plan limits.
Tax Free Savings Account (TFSA)
The Tax-Free Savings Account is a flexible savings vehicle providing employees with the incentive to save. All investment growth accumulates tax free.