Do you have an existing group benefits plan, but are looking for another offering to make your organization more competitive? Maybe you don’t have a benefits plan in place and are looking at all of the options available from a compensation perspective. Allow me to introduce the GRSP – short for group retirement savings plan.
What Is A GRSP?
As mentioned above, GRSP is a broad term that stands for ‘group retirement savings plan’ which is administered by an employer on behalf of their employees. Under the GRSP umbrella, there are a number of different savings programs that your organization can select, like an SPP (simplified pension plan), PRPP (pooled registered pension plan), DPSP (deferred profit-sharing plan), group RRSP (registered retirement savings plan), etc. All of these options have their own distinguishing parameters.
How Do I Know Which GRSP Is Right For My Business?
In order to determine the product that is right for your business, you must consider who will be contributing, the frequency of those contributions, when the funds can be accessed, and more. Based on your preferences and goals for your company and employees, your GRSP Consultant will then recommend the solution that best fits your goals.
How Is A GRSP Administered?
We like to think of a GRSP as ‘forced savings’ since the money is contributed via automatic payroll deductions. Contributions by members are income tax deductible and because they are deducted directly from their pay, it allows for “at-source” exemption, making saving less onerous and highly beneficial.
Many employers opt to invest in the future of their employees through matching contributions. Employer-made contributions are tax deductible for the business, and employers will typically the match employees’ contributions, up to 3-5% of the employees’ annual salary.
Being that the goal is to help your employees save for their retirement, you can set out limitations on when withdrawals can be made. For example, you can choose a product in which the funds are locked in until the employee hits a particular age range or retires. Additionally, if you choose to not lock in the funds, you can set guidelines out in your P&P to dictate instances when the money could be withdrawn without penalty. In that scenario, it allows you as the employer to suspend contributions if the guidelines are not being adhered to.
Group RRSP’s are a great way to build retention and attract new talent in a cost-effective way, giving you lots of controls. You can truly build your GRSP to suit your needs, budget and target.