Your Personal Finances

Employment Issues

Do you have a hard time coming up with a last minute contribution for your Registered Retirement Savings Plan? Many people find themselves in the same boat. One of the best ways to ensure saving for retirement is not left to the last minute is by making regular payments throughout the year, and one of the best ways to do that is through your company's Group RRSP.

Group RRSPs make saving for retirement easy. Your money comes off your pay cheque automatically each pay period and is directed to a plan your company has set up. In many cases, companies will also contribute. Employer contribution formulas can vary dramatically. For example, some plans kick in a certain percentage of contributions based on the length of employment. Some contribution limits change each year based on company performance. Surprisingly, there are a large number of people who don't take advantage of Group RRSPs. Even if you can only contribute $20 per week, a $20 match is a welcome bonus. Here are more reasons why you should seriously consider your company's Group RRSP.

1. Out of sight, out of mind. If your contributions are coming off your pay cheque automatically you can't spend them.
2. Free money. Company matches or top-ups are generous gifts.
3. Tax benefits. Your contributions are made with pre-tax income reducing your taxes each pay period. A $25 contribution only costs you $15 off your net pay (assuming a 40% tax bracket).
4. Choice. You usually get to choose how your contributions are invested.
5. Dollar Cost Averaging. By investing on a continual basis you reduce investment risk by smoothing out any large swings in value.
6. Break on Fees. Your company absorbs any administrative fees for setting up the plan.
7. Access. While there are tax implications, you can usually access your money at any time. There may be limitations on accessing your employer's contributions.

If your company offers a Group RRSP, take advantage of it and be sure to consult with your financial advisor when choosing your investments inside the plan.