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GRSP: The Next Step In Employee Retention

Want to have a direct impact on your employee’s future? Want to incentivize employee retention? It’s time to take the next step to get your employees excited about growing their career within your company.


In a competitive employment market, the total compensation package you provide for your employees may include vacation time, wellness perks, a benefits plan, and company events all on top of an employee’s salary. Do these perks make an employee want to stay with your business, or could they get the same perks from another employer?



One way to gain a competitive edge, especially as a smaller business competing against larger institutions, is to add a Group Retirement Savings Plan (GRSP) into your firm. Similar to a Defined Contribution Pension Plan that you may find at a large institution, a GRSP uses an employer match to employee contributions to help employees build a fund towards retirement.


What is a Group Retirement Savings Plan (GRSP)?

A GRSP is put in place by an employer to help encourage employees to save for retirement. Employees who choose to contribute to the GRSP will have a percentage of their income deducted from each pay cheque and put directly into the plan design that they choose. As the employer, you get to decide the percentage of salary that you match towards contributions. 

For example: 

• A common employer match is 3%.

• The employee makes $48,000/year paid Semi-Monthly ($2,000 per pay period)

• Each pay, the employee contributes $60 as a payroll deduction into their GRSP (pre-tax)

• Each pay, the employer also contributes $60 into the employees GRSP

How does a GRSP contribution work?

At a high level, a GRSP contribution (either from an employee or an employer) works similarly to an RRSP contribution, as all contributions count towards the total contribution limit outlined in the employee's most recent Notice of Assessment. The contribution limit increases each year by 18% of a person’s previous year’s salary (up to a maximum of $27,230 in 2020).



When following the example above, the employee and employer contribution will add to 6% of salary, so an employee should have around 12% that they can still contribute (slightly less if the employee gets a raise). The employer is making a significant investment that is noticeable towards an employee’s future.

Why is a GRSP valuable?

For the Employer:


Employee Retention & Financial Wellness

  • Shows the employee that the employer cares about their future through a financial top-up. Both benefit plans and GRSP’s can be expensive, but a GRSP’s financial contribution is directly noticed by an employee.
  • The employee feels like they are growing with their company as their account continues to grow the longer they stay with your firm
  • Employers can add vesting options (through a DPSP/GRSP model) where employer contributions are returned to the employer if the employee leaves before a certain length of employment (ie. 2 years).
  • This can help if your company has a high turnover


For Employee:

  • Pre-tax income used for the contribution = more getting contributed
  • The employee doesn’t have to wait until their tax return to get savings for their contributions
  • Employer match means that employees have help in reaching their retirement goals
  • They only need to save 15% of salary instead of 18% to max out their RRSP contribution limit
  • The employee can use GRSP funds the same way as an RRSP for either the HBP (Home Buyer’s Plan) or LLP (Lifelong Learning Plan) as well as retirement


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