• A Group RRSP is a collection of individual RRSPs where an employer assists employees by handling their contributions through regular payroll deductions on a pre-tax basis
• A Group RRSP may cut your taxes instantly at source and give you that money as extra take-home pay to spend or save as you see fit
• A Group RRSP is designed to shelter taxes on any gains made until retirement, at which point the member is usually at a lower marginal tax bracket
• You can invest 18% of your previous year’s earned income up to a maximum of $20,000 in 2008 and $21,000 in 2009
• You are able to set up spousal accounts within a Group RRSP. Contributions would be made by the higher-earning spouse to the plan of a lower-earning spouse, as long as the contributor is an employee of the company. This option allows for withdrawals at retirement at the lower-earning spouse’s tax rate

What is a Deferred Profit Sharing Plan (DPSP)?

• Only plan sponsor contributions are permitted to a DPSP
• Most plan sponsors use a DPSP as a complement to a non-contributory Group RRSP - i.e. an RRSP with no plan sponsor contributions
• Contributions to a DPSP are limited to the lesser of 18% of the member’s compensation, or half of the defined contribution pension plan limit ($10,500 in 2008)
• Remember that contributions made by the plan sponsor in a given year create a Pension Adjustment (PA) and this will reduce your RRSP contribution room for the following year by the amount of the PA
• When you leave the company any vested money from the DPSP can be transferred to an individual RRSP account

What is a Defined Contribution (DC) Pension Plan?

• In a DC Pension Plan, the contributions are defined in the plan document, but the benefits are not
• Pension legislation requires the plan sponsor to contribute a minimum of 1% of your pensionable earnings to the plan
• The plan sponsor may also require you to contribute to the plan as well
• Your contributions and the contributions of the plan sponsor create a Pension Adjustment (PA) and will reduce your RRSP contribution room the following year by the amount of the PA
• Once plan sponsor and member contributions vest, the money is locked-in until retirement or death
• The pension derived from a DC Pension Plan depends on a number of factors, such as: the contribution amounts, investment performance and number of years contributions are made to the plan

Group Registered Education Savings Plans (Group RESP)

• A Group RESP is a registered plan where investment growth is tax-deferred until withdrawn by the beneficiary
• Withdrawals – called Educational Assistance Payments – are taxed in the beneficiary’s hands and not the contributor
• The Government of Canada offers the Canada Education Savings Grant (CESG): 20% on the first $2,500 an individual contributes to an RESP each year
• The Additional CES Grant program provides children in low-income and middle-income earning families with additional grant money to supplement the Basic CES Grant payments they may be already receiving
• If someone is unable to take advantage of the full grant in one year, a series of catch-up RESP contributions may be eligible for the Grant, up to a maximum of $1,000 annually and a lifetime maximum of $7,200
• The Government of Canada offers the Canada Learning Bond (CLB) to help modest-income families start saving early for post-secondary education of children born after December 31, 2003. For families who qualify, the total grant available for a child could amount to $2,000

Group Non-Registered Payroll Savings Plan

• A group non-registered plan combines the convenience of saving through payroll deductions with the flexibility of saving outside a registered plan
• Contributions can be invested in any instrument and are not subject to contribution limits
• As with any non-registered plan, there may be taxes payable on any gains from the plan
• Group non-registered plans require no plan sponsor contributions and can help you save for upcoming purchases, vacations and similar expenditures
• You may also benefit from assistance with planning and saving skills and a reduced reliance on borrowing for personal expenditures