1. Low cost: Unlike many bank GICs or mutual funds, some Group RRSPs require only a minimum contribution of $25 per month. The more you save and the longer you can do so, the bigger your retirement income will be.
2. Defer taxes: All RRSP contributions reduce the income tax you pay. Investment earnings grow tax-free until you withdraw them.
3. Immediate tax relief: A $25 contribution only costs you $15 off your net pay (assuming a 40% tax bracket) because you get your tax break when each contribution is made.
4. Payroll deduction: Your contribution is deducted from your paycheque before you have a chance to spend it somewhere else. This can be a painless way to save.
5. No front or back end loads: There are no fees charged for moving assets from one investment to another. There are no hidden administration costs – the investment management fees you pay are negotiated between Group carrier and your employer.
6. Access to competitive investment options: Group RRSPs offer you investments from a variety of top managers. The fund management fees are usually much lower than what you would pay yourself, because you’re part of a larger group.
7. Contribute on behalf of your spouse (if offered in your plan): If the income levels between you and your spouse differ significantly, the higher earner should make the RRSP contributions to get the biggest tax break. At retirement, the lower earner makes withdrawals from the Spousal RRSP at a lower tax rate.
8. Online or toll-free phone services: Most Group carriers use web-sites, automated telephone inquiry systems or Customer Call Centres to:
- obtain account information
- monitor investments
- process transactions
9. Retirement planning tools: A variety of tools are available from the online or telephone services to help you monitor your contribution amounts and investment returns.
10. Regular updates: Through your member statements, newsletters, and reference materials, you receive regular updates to help you plan for your retirement.
For more information about Group Benefits, click here to contact Ken MacCoy, CHS.