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Every group benefit plan has its pros and cons. It is important to educate your employees about their options and the benefits of each choice.
RRSPs are less complicated to administer than pension plans. But they are still governed by federal and provincial legislation. They may also carry some administrative costs for employers.

What is an RRSP?

A registered retirement savings plan (RRSP) is an investment account registered with the Canadian government to help people save for retirement. It allows employees to have funds deducted from their paycheques and invested. Typically it happens through a pooled plan administered by an employer or financial institution. Often, employers will match employee contributions up to a certain dollar amount.
Your contributions to an RRSP are tax-deductible, meaning you don’t pay taxes on the money contributed to your account until you withdraw it. An employer’s contributions to your RRSP are not a taxable benefit in the year made. Your employer’s contributions will be taxed when removed from the RRSP by you. Similarly, earning on money invested into an RRSP are not taxed until withdrawn.
A group RRSP can be used by small businesses with younger or transitory employment pools. In this blog, we will help you navigate through the pluses and minuses of different group RRSP options to choose one that works for your company and your employees.

Why Do You Need a Group RRSP in Canada?

With ongoing economic uncertainty and market volatility, Canadians need to prioritize retirement savings now more than ever. A Group RRSP offers a structured approach to long-term savings, helping individuals navigate turbulent economic times and build a secure financial future.
The retirement landscape in Canada is evolving, with longer life expectancies and changing pension dynamics. Relying solely on government pension plans may not be sufficient to maintain a comfortable standard of living in retirement. By participating in a Group RRSP, individuals can supplement their retirement income and ensure a financially stable future.
Employer contributions to a Group RRSP represent free money for employees. By taking advantage of employer matching contributions, individuals can accelerate their retirement savings and maximize their investment potential.
What is a Group RRSP and Why Do You Need It in Canada
Contributing to a Group RRSP offers immediate tax benefits, reducing taxable income and potentially resulting in a higher tax refund. Over time, the tax-deferred growth of investments within the plan can lead to significant wealth accumulation, providing a tax-efficient source of retirement income.
Automatic payroll deductions make saving for retirement effortless and instill financial discipline. By contributing regularly to a Group RRSP, individuals develop savings habits and prioritize their long-term financial goals.
Group RRSPs offer a diverse range of investment options, allowing individuals to create a well-balanced and customized investment portfolio. Whether seeking growth, income, or capital preservation, employees can tailor their investments to align with their risk tolerance and investment objectives.

What are the Benefits of a Group RRSP?

An employer may decide to offer a group RRSP plan as part of their employees’ benefits package. This provides a great way to show your employees you care about their financial future by helping them to save for retirement.
Employees can automatically invest a portion of their paychecks into the group RRSP. Many employers match contributions made by their employees dollar for dollar, which can help boost savings even more.

Typically, fees are lower with a group RRSP. Because the accounts are managed by one provider rather than by multiple providers. This can lead to significant savings over time.

How Do I Set Up a Group RRSP?

Whether you are a small business owner or not, offering a group RRSP is a great way to attract and retain employees.
Employees can choose to contribute a fixed dollar amount or percentage of their paycheque to the group RRSP. It is then invested by an investment manager. These managers may charge lower fees than investing on your own and can offer you a wider selection of investments.
The contributions you make are deducted from your taxable income and will be reported on your T4 slip (Statement of Remuneration Paid). Investment earnings in the group RRSP are taxed in the same manner as individual RRSPs, only when the funds are withdrawn from the account. The benefit of a group RRSP is that it takes the monthly decision out of your hands. In addition, it increases your chances of saving regularly.

How Do I Manage a Group RRSP?

The employer needs to provide their team with all of the information they need to understand how this type of investment account works and how to manage it. They should also be clear about what their responsibilities are concerning the group RRSP. For example, they may need to be vigilant about the quality of the chosen provider and what fees are charged to manage the plan.
In addition, they want to be able to explain to an employee the advantages of contributing to a Group RRSP and whether the employer is also contributing. If an employee participates in a group RRSP with their employer, they can choose to have their contributions automatically deducted from each paycheque. This can take the monthly decision-making out of savings and increase the likelihood that they will save regularly.
In addition, the contributions from an employer are tax deductible for the employer.

Key Features of Group RRSPs

What is a Group RRSP and Why Do You Need It in Canada
Employers set up and administer Group RRSPs, often matching a portion of employee contributions. This employer contribution serves as an additional incentive for employees to save for retirement.
Contributions to a Group RRSP are deducted directly from the employee’s paycheck, making saving for retirement a seamless and hassle-free process.
Group RRSPs offer a range of investment options, including mutual funds, stocks, bonds, and guaranteed investment certificates (GICs). Furthermore, employees can choose investments based on their risk tolerance and financial goals.
Similar to individual RRSPs, contributions to a Group RRSP are tax-deductible, reducing taxable income and potentially resulting in a lower tax bill. Additionally, employer contributions are NOT a taxable benefit, and investment earnings within the plan grow tax-deferred until withdrawal during retirement.


A Group RRSP is a valuable tool for Canadians looking to secure their financial future in 2024 and beyond. With its employer sponsorship, tax advantages, and diverse investment options, a Group RRSP provides a structured and efficient way to save for retirement. By prioritizing participation in a Group RRSP, individuals can take proactive steps toward achieving their retirement goals and enjoying a financially comfortable future.