With the arrival of the VRSP, you must be totally overwhelmed with requests to implement a retirement plan. It is a fact that if you do not implement it before the end of 20161, you're exposing your company to hefty penalties. In order to choose the best group retirement plan, it is crucial to ask the right questions.
Why ask questions? Simply because there are many types of group retirement plans, each with their own advantages and disadvantages. Each plan aims to address different needs for certain types of companies and their employees.
Why do you want to offer a group retirement plan?
Do you want to offer a retirement plan because the new law forces you to do so, or are you trying to attract and keep your employees?
If your goal is only to comply with the law, and no one is really interested in contributing, the VRSP may be the best option. However, if you wish to offer a retirement plan in order to attract new employees, other types of plans will better suit your needs.
What IS YOUR COMPANY'S profile ?
Are you the owner of a new business, an established company’s HR director, or the administrator of a non-profit organization? Each company has different and specific needs for its retirement plan.
Do you have employees outside of THE PROVINCE OF Quebec?
If you have an office outside of the Province of Quebec, certain types of retirement plans might not allow those employees to join the plan. For example, the VRSP and the simplified pension plans (SSPs) are only available to employees within the Province of Quebec.
Do you want to contribute for your employees?
If you wish to contribute to your employee’s retirement savings, certain types of group retirement plans can get you better financial advantages than others. Certain plans also provide the employer much more flexibility.
Do you want to mobilize AND RETAIN your troops?
One of the group retirement plans allow the employer's contributions to vary based on the company’s profits. Employees can thus be rewarded based on the performance of the company.
Furthermore, this type of plan allows the employer to keep the money they’ve put in savings for an employee if he/she leaves his/her position before a given date. This option allows for better employee retention.
Do you want to allow your employees to withdraw money from their retirement plan during their employment or before retirement?
Certain types of plans are more restrictive than others regarding the withdrawal of accumulated savings. Some plans completely prevent withdrawals, to allow for the savings to be kept until retirement. The majority of the plans allow withdrawals for the purchase of a first home.
Do you want to offer an optimal plan to your employees?
Certain plans, like the VRSP, offer very basic services or support to your employees. Other plans offer much more services: training, help in choosing investments, retirement seminars, etc.
In order to help you choose the right group retirement plan, we invite you to download our guide of the different plans available on the market. This guide will help you establish the best plan suited to your needs.
Different pension plans available on the market
| Group RRSP | DPSP | SPP | DC | VRSP | Group TFSA | |
|---|---|---|---|---|---|---|
| Contributions | ||||||
| - employer | Allowed (salary) | Allowed | Mandatory(min 1%) | Mandatory(min 1%) | Allowed | Allowed (salary) |
| - employees | Allowed | Not allowed | Allowed | Allowed | Allowed | Allowed |
| Eligible Employees | All | All, except for connected persons | All | All | All, 18 and older | All, 18 and older |
| Vesting | n/a | After 2 years of participation, at the latest | Immediate | Immediate | Immediate | n/a |
| Locking-in | ||||||
| - employer contributions | n/a | No | Yes | Yes | Yes | n/a |
| - employee contributions | n/a | No | Employer's choice | Yes (except voluntary) | No | n/a |
| Administration | n/a | Trustees | Issuer | Pension committee | Authorized administrator | n/a |
| Annual meeting | No | No | No | Yes | No | No |
| Annual fee payable | No | No | Yes* | Yes | Yes* | No |
| Registration | CRA | CRA | CRA and RQ | CRA and RQ | CRA and RQ | CRA |
* Paid by the financial institution or the authorized administrator, as applicable.
Do not hesitate to communicate with one of our brokers, to benefit from their expertise in choosing a retirement plan, but also to help with the implementation and administration of your group retirement plan.
1. The deadline for companies with 20 or more employees is December 31rst, 2016. For companies with 10 or more employees, the deadline is December 31st, 2017. For companies with 5 employees or more, the date remains to be established.
Jimmy brings overs 20 years of experience in pension plans. After starting his pension career at the Ontario Teachers’ Pension Plan, he worked as DC Consultant for a large actuarial firm and two insurance companies before joining AGA. With his extensive pension experience, he has developed an acute expertise in the selection, the design and the implementation of pension plans. Jimmy provides his clients with both expertise and insight on their employee benefits.