1 - Selecting the type of retirement plan
There are several types of retirement plans to choose from. It is important to select the right plan, i.e. the one that best suits the needs of your business and your employees. To help you with this selection, you may read our post on the 7 questions you should ask yourself before choosing a group retirement plan.
2 - Confirming plan features
Before starting to set up a retirement plan, several aspects must be specified, such as the qualifying period, the contribution level, the funds offered, etc. You may read our post on the 9 points to consider before setting up a group RRSP, where you will find a description of all the essential features that must be worked out. Also, especially with the law that will soon require all business owners to offer a retirement plan to their employees by the end of 2016, it is important to make sure your company is complying with what will be legally required.
3 - Selecting your service provider
Insurance companies are the main service providers for retirement plans. They each have their strengths and weaknesses. It is important to consider the management fees that will be levied on your employees’ investment return, but the fund offering and performance, the web platform, the services included, etc. are equally important.
4 - Setting a time frameto set up a retirement plan
Implementing your retirement plan can take a few weeks. The insurance company must create the account and program everything in their system. Therefore, you must set a realistic time frame. As many businesses are required to offer a retirement plan to their employees since December 2017, it is important to act sooner than later to avoid the predictable year-end crush.
5 - Signing documents
Once the implementation date has been set, the employer will have to sign the forms and documents prepared by the insurance company. This is the step where the plan details and effective date are confirmed. It is important to properly validate the documents and ensure the accuracy of the information. This will prevent problems down the road!
6 - Communicating with employees
It is important to develop a good employee communication plan based on employer and employee needs. Group meetings are often preferred, as they create a clear understanding and prevent false starts! Several aspects must be addressed, such as investment choices and returns, the enrollment process, beneficiary selection, etc. A Q&A period is usually planned to ensure everything is clear for your employees.
7 - Enrollment period
After the meeting, the employees will have to enroll in the plan. This can be done using a paper form or directly online, thus minimizing employer involvement. Employees will specify such things as the amount they want to contribute, their investment instructions and the name of their beneficiary.
8 - Remitting contributions
Once employee enrollment is completed, all you have to do is to program contribution deductions in your payroll system and periodically remit the amounts to the insurance company.
To guide you through the setting up of your retirement plan, you can download our retirement plan implementation guide. Do not hesitate to contact one of our advisors to benefit from their expertise in order to set up you retirement plan correctly.
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.