Group Pension & Group RRSP
Defined Contribution Registered Pension Plans (RPPs)
This is a private pension plan, usually established by an employer on behalf of its employees to provide for their retirement years. With a defined contribution plan, the amount of the employer and employee contributions is fixed while the savings are accumulating, and the actual value of the pension is not known until retirement. Studies have shown that employees typically view a pension plan as a valuable component of their overall compensation.
Group Registered Retirement Savings Plans (Group RRSPs)
This is an employer-sponsored savings program, approved by the Canada Customs & Revenue Agency, that permits tax deferred saving for retirement purposes. Contributions to a RRSP are tax deductible, and earnings on contributions are sheltered from taxes until they are withdrawn. Employers may wish to enhance the value they provide to employees by offering a Group RRSP in addition to, or in the place of a Group Pension Plan.
Deferred Profit Sharing Plans (DPSPs)
This is a registered plan that enables a company to share profits on a tax-assisted basis with non-shareholder employees. Contributions to a DPSP are tax-deductible for the company and tax-sheltered for the employee until withdrawn from the plan. Employees are not eligible to contribute to DPSPs. Many employers find that by allowing employees to share in company profits, they are able to enhance employee productivity and loyalty.
Employee Share Ownership Plan (ESOP)
An employee share ownership plan is a savings vehicle that makes it easy for employees to become shareholders in the company they work for. Typically employees invest a portion of each paycheck in shares of their company and it is common for the employer to contribute to the employee's account, often on a matching basis. Share ownership can increase employee motivation and loyalty by giving employees a more tangible stake in the success of their company.
Non-registered Savings Plans (NRSPs)
This is a savings plan that an employer may establish where employee and/or employer contributions are made on an after-tax basis. This type of plan may be attractive to employers who want to offer another savings vehicle to members who have reached their limit for registered investments.