Group Retirement & Savings 

Victoria Group Retirement Savings Plans

HMR Insurance is very experienced at designing custom, secure retirement plans for companies and their employees in Victoria and across BC. Contact us for a retirement plan designed for your employees' needs, or for a sample of the plans we've provided to other Victoria area companies. 

Which type of Group Savings Plan is right for my organization?

Defined Contribution Registered Pension Plan (RPP)

Under a Defined Contribution or “Money Purchase” Registered Pension Plan, the contributions of plan members and Plan Sponsors are invested towards the eventual purchase of retirement income. The contribution going into the plan in known, while the final benefit is not known. The amount of retirement income which a plan member will receive is based on:

  • Contributions made;
  • Investment selection;
  • Investment return
  • Annuity rates at the time the employee retires

 

Advantages to the Plan Sponsor

 ·               Control over plan design

The Plan Sponsor elects the contribution level and decides whether employee    contributions are mandatory or optional.

 ·               Cost control

As contributions are often set as a percentage of payroll, the Plan Sponsor is in a good position to forecast the cost of the RPP.

 ·               Tax advantages

Contributions and plan expenses are tax deductible.  Furthermore, employer contributions are not added to the earnings of plan members and they do not affect the calculation of payroll taxes such as C/QPP, EI and WC.

 ·               Guaranteed retirement income

            Assurance that monies in the RPP will not be cashed out prior to retirement.

 

Advantages to members

 

·               Sponsor contributions

Plan members receive the benefit of formally promised and regularly paid contributions from the Plan Sponsor.  When matched with plan member contributions, the savings and returns are greater.

 

·               The benefit of immediate investment and compound interest

The power of compound interest on regular, frequent deposits - whether bi-weekly or monthly - means that plan members’ deposits start earning investment income immediately.  In this way, plan members accumulate more savings at retirement than they would under an annual pay-in-arrears individual RRSP.

 

·               Dollar cost averaging

Regular deposits of a fixed dollar amount over a prolonged period of time reduces investment risk by averaging out the purchase price of investments.

 

·               Guaranteed retirement income

            All locked-in contributions must be used to provide retirement income.

 

·               Group Buying Power

Members have access to higher interest rates even on small contributions.  Investment management fees on market-related funds are comparable (even lower) to retail mutual funds.

 

·               Creditor-proof

            Pension plan contributions cannot be seized by creditors.

 

·               Immediate tax reductions

            Revenue Canada allows payroll deduction contributions to be made before taxes are deducted from pay.

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 Structured Group Registered Retirement Savings Plan (GRRSP) 

 

The Structured RRSP provides a systematic method of allocating Plan Sponsor and member contributions in separate accounts under the umbrella of a single registered retirement savings plan.

For tax purposes, the Plan Sponsor’s contributions are treated as though they were member contributions added to members’ earnings and earmarked as additional member contributions.  (Note, this may increase C/QPP, WC contributions, holiday pay and benefits.  EI premiums are not affected.)

 

Advantages to the Plan Sponsor

 

·               Control over plan design

The plan is designed to meet the specific needs of the members. The Plan Sponsor retains control and flexibility over eligibility requirements and contribution levels.

 

 

 

·               Hassle-free administration

Less time is spent on daily plan administration compared to a pension plan arrangement.  Less time and fewer regulatory requirements mean lower costs.

 

 

 

·               Tax deductions

 

            Costs incurred by the Plan Sponsor in the administration of the plan are tax deductible.

 

 

 

Advantages to members

 

 

 

·               Access to funds

 

In the design of the plan, the employer can restrict access to the employee and employer required funds thereby further encouraging the members to think of their accounts as retirement and not bank accounts.

 

Contributions can be accessed for Home Buyer’s Withdrawal, Life Long Learning Plan or hardship, as approved by the employer.

 

 

·               Flexibility at termination and retirement

 

Upon termination, vested funds can be transferred to another RRSP vehicle.  At retirement, contributions can be used to purchase a RRIF or annuity or, because funds are not locked-in, cashing out the assets is an option.

 

 

 

·               Plan Sponsor contributions

 

Benefit from higher contributions as a result of supplementary deposits from Plan Sponsor, which results in higher investment income and a greater incentive to contribute. 

 

If it is decided to use this type of plan over a DPSP/RRSP combination, the Executive’s, who may not wish to use the DPSP, can contribute to the maximum in an RRSP and use spousal accounts to their benefit.

 

 

 

·               Immediate tax deductions

 

           Revenue Canada allows payroll deduction contributions to be made before taxes are deducted from pay. 

 

·               Immediate investment and compound interest

 

The power of compound interest on regular deposits - whether bi-weekly or monthly-means that members’ deposits start earning interest immediately. Members accumulate more savings at retirement than they would under annual lump sum contributions made to an individual RRSP.

 

 

 

·               A convenient, disciplined savings program.  Dollar cost averaging.  Income- splitting.  Creditor-proof.

 

          An easy, systematic way for members to save for retirement.  Lump sum “top-ups” can be made at any time.

 

Regular deposits of a fixed dollar amount over a prolonged period of time reduce investment risk by averaging out the purchase price of investments.

Contributions can be made to a spousal plan to reduce the member’s combined taxes even after retirement.

Assets are protected from creditors under the Insurance Act, under most circumstances, provided an appropriate beneficiary is named.

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  Deferred Profit Sharing Plan (DPSP)

 

 

 A DPSP is a simple, flexible arrangement whereby a Plan Sponsor distributes a portion of the company’s pre-tax profits.  Specified shareholders (ie. individuals who own, directly or indirectly, more than 10% of company stock) are excluded.  Employees do not contribute to the plan.  When used in conjunction with an RRSP plan for employee deposits, this combination promotes a disciplined way for members to save for their retirement. 

 

Advantages to the Plan Sponsor

 

 

 

·               Flexibility in plan design

 

          Can be used in conjunction with a Payroll Deduction RRSP.           

Contributions can be controlled in one of three ways:

1.         Percentage of profits
2.         Fixed dollar amount per member
3.         Fixed percentage of payroll.

 

 

 

·               Cost control

 

Contributions are related to corporate profitability and are not required in unprofitable years.  Contributions are not added to members’ earnings and do not increase payroll taxes.  All contributions and expenses are tax-deductible.

 

 

·               Effective incentive

 

The Plan Sponsor has ample freedom to reward in relation to member performance. Members may be enticed to improve their performance since their efforts help generate company profit, which in turn will be distributed under the DPSP.

 

 

Advantages to members

 

 

 

·               Deferred, tax-sheltered compensation

 

            Members enjoy the added value of the Plan Sponsor’s contribution tax-free. 

 

·               Flexibility at termination and retirement

 

Vesting can be determined by the company up to a maximum of 2 years participation in the plan. At termination, funds can be transferred to another RRSP vehicle.  At retirement, contributions can be used to purchase a RRIF or annuity or, because funds are not locked-in, cashing out the assets is an option.

 ·               Access to funds

 

Members are encouraged to save for their retirement and partial withdrawals are restricted while employed, unless otherwise stated by the Employer. 

 Contributions can be accessed for Home Buyer’s Withdrawal, Life Long Learning Plan or Hardship, as approved by the employer. 

 

·             Income-splitting

 

         Contributions can be made to a spousal plan to reduce the member’s combined taxes even after retirement.

 

 ·            Preferred group rates

 

Members have access to higher interest rates due to group purchasing power.  Retiring members enjoy preferred rates for annuity purchases so their accumulated funds go further in payout dollars

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  Our Providers

 
 

HMR Employee Benefits Ltd. 206-2187 Oak Bay Avenue - Victoria , BC V8R 1G1 PHONE: (250) 592-4614 - TOLL FREE: 1-888-592-4614 Fax: (250) 592-4953 - EMAIL:
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