OSPC: Retirement Income Sources

What Laws Apply to Group and Individual RRSPs?

Group Registered Retirement Savings Plans (Group RRSPs) and Individual Registered Retirement Savings Plans (RRSPs) are not covered by The Pension Benefits Act. The federal Income Tax Act set the rules for contributing to and getting savings from RRSPs.

While these individual pension plans are not covered by the act, these plans can also provide Retirement Income Sources for employees and their families.

An individual RRSP is personal retirement savings plan that allows Canadians to save money for retirement. RRSP contributions and the interest earned in the RRSP are sheltered meaning they will not be taxed as long as the funds remain in the plan.

The federal Income Tax Act does not allow employers to contribute directly to group RRSPs. Only the employee can contribute. So in order for the employer to contribute to the group RRSP on an employee's behalf, the employer may increase the employee's salary by a percentage or set figure, then deduct the increase for payment into the employee's group RRSP account. This usually means an increase in the employer's salary taxes, meaning higher payments to the CPP/QPP, employment insurance, etc., depending on the program.

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