A group RRSP is a collection of centrally administered RRSPs that offer members attractive group rates. The member makes tax-deductible contributions that accumulate in a tax-sheltered fund. The amounts invested in an RRSP are not locked in, which means they can be withdrawn at any time. In addition, members make their own investment decisions. Contributions are deducted directly from member salaries, thereby providing an immediate tax deduction and a higher long-term return, since every contribution is invested the moment it is received.
In a DCPP, the employer and employee make contributions that are tax deductible and accumulate on a tax-deferred basis. The administrator of the plan (in Quebec, the administrator is a pension committee) is required to offer a wide variety of investment funds to make the retirement fund grow. In most cases, members provide their own investment instructions for the amounts contributed on their behalf. The funds accumulated in a DCPP cannot be withdrawn before the member retires and must be used to purchase an annuity.
These plans are generally better suited to employers who are concerned with assisting their employees in building an income for retirement.
At Macnaughton & Ward Financial Services we represent many of the leading carriers in the Group RRSP & Pension Markets.