There has been a long-standing myth in the Canadian workforce that you need to work for a large corporation or in the public sector to secure a comfortable retirement. Group RRSPs for small businesses in Canada were a pipe dream in the past, after all how were they going to compete with the Canadian government or a large corporation?
In the on-going battle for highly skilled employees, small businesses have the tools available to compete with the large players in their industry. After all, if small businesses can’t survive, neither can our economy. Here are some common myths about Group RRSPs for small businesses in Canada:
Group RRSPs are too Expensive
Like with any product or service, with the right provider your group retirement plan can be affordable and attractive to employees. There are many tools available to minimize costs, including off-setting administration costs with tax savings from contribution-matching, to taking advantage of group buying power in small business RRSP programs.
Group RRSPs Require Many Employees
The word “group” can be misleading in this case, according to the government any business with two or more employees indicates a small business that can take advantage of group RRSPs to maximize their savings.
Group RRSPs are too Difficult to Administrate
Although this is a common objection, it is not based in reality. There are numerous administration tools available to you, including automatic web-based programs that make the entire process seamless. Even bringing on new employees or facilitating changes to departing employees can be done effortlessly.
I Can Just Pay My Employees More Money
While true for some employers, the majority of employees would rather take a lower salary and avoid paying for a higher tax-bracket. While employees can manage their own RRSPs to help with tax-savings, having a contribution every month immediately deducted from their pay-cheque is the most effective method of saving for retirement. Sophisticated employees understand this, and top talent is more likely to be attracted to a group RRSP with contribution-matching from the employer.
Group RRSPs for small businesses in Canada have never been easier to set-up and manage, the cost of not providing such a program is much higher in the long-run when you consider employee turnover and production loss. If you are interested in implementing a Group RRSP, now is a great time to speak to a consultant, before the 2018 tax-year is over!
The information in this material is derived from various sources. Material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please contact us for benefit, pension and insurance advice based on your corporate or personal circumstances.