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The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

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Freedom 55 Financial is a division of The Canada Life Assurance Company and the information you requested can be found here.

Are you a member of the Public Service Health Care Plan (PSHCP) and looking for information about your benefits with Canada Life? Get details on the PSHCP Member Services website.

What are group RRSPs and how do they work?

Key takeaways

  • Group RRSPs are available through an employer.
  • They have several benefits including tax savings and investment management fees (IMFs) that are typically lower than what’s available through banks or other retail institutions.
  • You have options for your group RRSP money if you leave your employer.

What’s a group RRSP?

A group registered retirement savings plan (RRSP) is available through an employer.

Like an individual RRSP, your contributions to a group RRSP are tax-deductible and any investment returns are tax-deferred.

Group RRSPs use the contribution room provided to you annually in your Notice of Assessment from the Canada Revenue Agency (CRA).

Some group RRSPs also offer a spousal RRSP option.

How a group RRSP works

With a group RRSP, your contributions (usually made by convenient payroll deduction) are pooled with those from other employees.

Group RRSPs allow you to choose from a variety of investments based on your risk tolerance , investment personality and when you’ll need to use the money.

You can also make additional lump-sum contributions via cheque, pre-authorized contributions , through online banking or by transferring your individual RRSP at another financial institution into your group RRSP. Check with your financial institution to see if fees apply.

See how the size of the contributions to your group plan can affect your retirement income with this calculator.

Group RRSP benefits

Group RRSPs offer several benefits over individual RRSPs.

Lower fees

Because your RRSP contributions are pooled with your co-workers, your employer can negotiate lower IMFs than you might pay with an individual RRSP.

Tax savings

If you contribute through payroll deduction, your contributions are invested before tax is deducted on your income. If you’re in a 40% tax bracket, that means a $25 RRSP contribution will cost you just $15 net.

Employer matching

Many employers make matching contributions (up to a certain limit) to help their employees save for retirement. Maximizing your matching opportunities can really help boost your future retirement income.

Disciplined saving and dollar cost averaging

Payroll deduction takes the guesswork out of when to invest and helps you stay disciplined with your savings.

In addition, contributing regularly helps you benefit from dollar-cost averaging. When the price of the investment fund you’ve chosen is lower, your contributions will buy more units. When prices are high, you buy fewer. This helps you avoid trying to “time the market”.

What happens to your group RRSP money if you leave your employer

If you contributed to a group RRSP, once you leave your employer you can:

  • Transfer that money to an individual RRSP in your name
  • Transfer the money to a RRIF
  • Use the money to purchase an annuity
  • Withdraw the money as cash if there’s no locked-in requirement. It will be taxed as income in the year you receive it

If your workplace retirement and savings plan was with Canada Life, you can seamlessly transfer your account to NextStep.

What's next?

Now that you know more about group RRSPs and how they work, why not meet with your advisor or member guide to:

  • Determine other sources of retirement income and what your total income might be in retirement
  • Determine which strategy for contributing to your group RRSP best meets your needs

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.