1-888-601-9980
- A group retirement savings plan in Canada is a workplace benefit that allows employees to save for their retirement in a tax-deferred way, and is often paired with employer matching contributions
- In Canada, Group retirement plans encompass several plan types, including Group RRSPs, Deferred Profit Sharing Plans (DPSPs), Defined Benefit (DB) and Defined Contribution (DC) pension plans, Pooled Registered Pension Plans (PRPPs), and Group Tax-Free Savings Accounts (TFSAs)
- In 2025, employees can contribute up to 18% of their earned income from 2024 to a maximum of $32,490 into their retirement savings account, aligning with Canada Revenue Agency (CRA) rules
- Group retirement plans are typically available to permanent employees who are Canadian citizens or residents and at least 18 years old
- Reputed providers like Sun Life, Manulife, Canada Life, Desjardins, BMO, and RBC offer comprehensive group retirement solutions to help employers support their teams’ long-term financial goals
- What are the different types of group retirement savings plans offered in Canada?
- How does a group retirement savings plan work?
- How are contributions made in a retirement savings plan?
- Why do employers offer group retirement plans?
- Which companies are the top group retirement savings providers in Canada?
- What is the contribution limit for a group retirement plan?
- What investment options are available in a group retirement savings plan?
- What happens to my GRSP funds if I change jobs?
- Can I have both a group retirement plan and an individual RRSP?
- What are the pros and cons of joining a group retirement savings plan?
- How can I offer a group retirement savings plan to my employees?
- Frequently asked questions
A Group Retirement Savings Plan (GRSP) is an employer-sponsored retirement savings program that helps employees build their retirement funds in a savings account through regular payroll contributions. Some plans, such as DB or DC pensions, require mandatory contributions by the employer. However, plans like Group RRSP leave room for employers to decide whether they want to provide matching contributions to their employees.
A group retirement savings plan is a powerful employer benefits tool that employers can utilize to attract top talent, improve employee loyalty, and offer tax-deferred cash growth for employees. In this blog, we’ll talk about the different types of group retirement plans available in Canada and why they could be a game-changer for your organization.
Call 1-888-601-9980 to speak to our licensed advisors right away, or book some time with them below.
What are the different types of group retirement savings plans offered in Canada?
In Canada, employers can offer several types of group retirement plans to help employees save for the future, including group registered retirement savings plan (Group RRSP), deferred profit sharing plans (DPSP), defined contribution (DC) pension plans, defined benefit (DB) pension plans, pooled registered pension plans (PRPP), tax-free savings accounts (TFSA) and Voluntary Retirement Savings Plans (VRSP).
Group Registered Retirement Savings Plan (Group RRSP)
A Group RRSP is an employer-sponsored workplace retirement savings plan. Employees contribute to a retirement savings account through payroll deductions, and contributions are tax-deductible and grow tax-deferred.
Some employers may choose to offer matching contributions into their employees’ savings accounts to maximize retirement cash value growth. Group RRSPs are easy to administer and flexible for employers and employees. Also, the funds in a Group RRSP are not locked in, meaning employees can withdraw money from their Group RRSP account at any time, though withdrawals are taxed.
Deferred Profit Sharing Plan (DPSP)
In a DPSP, only the employer contributes, and it is usually based on company profits. Contributions are tax-deferred, designed just to reward employees for company success. Employees can’t contribute to the DPSP funds.
Also, the funds are subject to vesting rules, meaning the employee may need to work for a certain period before gaining full ownership of the funds.
Defined Contribution (DC) pension plan
In a DC plan, both the employer and the employee contribute a fixed percentage of the employee’s salary into a pension plan.
The contribution from both parties can then be used to purchase a variety of investment options such as stocks, bonds, or mutual funds. The final cash value available to the employee at retirement depends on the total investment returns accumulated over time.
Defined Benefit (DB) pension plan
This traditional plan promises a specific retirement income based on an employee’s salary and years of service. The employer is responsible for managing the investments and ensuring there’s enough to pay out the promised benefit. It offers stability for employees, but it is usually complex for employers.
Pooled Registered Pension Plan (PRPP)
The PRPP is designed primarily for small businesses, self-employed individuals, and workers without access to a traditional workplace plan. It is managed by a licensed financial institution, not the employer.
The contributions in a PRPP are pooled by multiple employers and employees from different companies. This helps to reduce admin and investment costs, which is especially beneficial for small businesses and startups etc.
Both the employer and the employee can contribute to a PRPP, and the funds are locked in until retirement. PRPPs are also portable, meaning you can take your plan with you if you change jobs.
Group Tax-Free Savings Account (TFSA)
A group TFSA is often offered alongside a group RRSP, as a bundled benefits package. Employees contribute with after-tax dollars, but any investment growth and withdrawals are completely tax-free. It’s a flexible savings tool that can complement more structured retirement plans.
Voluntary Retirement Savings Plans (VRSP)
VRSPs are mandatory in Quebec for organizations that do not offer a group retirement savings plan and have a minimum of five or more working employees. VRSPs are low-cost, government-regulated plans designed to encourage retirement savings for employees in Quebec.
The employees are automatically enrolled in VRSPs, but they can always prefer to opt out of this retirement savings plan. The employers must facilitate the plan, but they are not required to mandatorily contribute to the plan.
Comparing different types of group retirement savings plans
| Plan Type | Contributors | Are Funds Locked In? | Tax Treatment | Vesting Required | Withdrawal Rules | Ideal For |
| Group RRSP | Employee + optional employer | No | Tax-deductible contributions & tax-deferred growth | No (immediate ownership) | Withdrawals allowed anytime; taxed as income | Companies wanting a simple, flexible retirement plan |
| DPSP | Employer only | Sometimes (2-year vesting common) | Employer contributions are not taxable to employees until withdrawal | Yes | Withdrawals allowed post-vesting; taxed as income | Employers tying contributions to company profitability |
| DC Pension Plan | Employer + employee | Yes | Contributions grow tax-deferred | Yes (per provincial pension law) | Withdrawals only at retirement; must convert to an income product | Employers seeking predictable costs and structured savings for staff |
| DB Pension Plan | Employer + employee | Yes | Contributions grow tax-deferred | Yes | Guaranteed retirement income; strict rules on access | Large employers offering secure, long-term retirement income |
| PRPP | Optional employer + employee | Yes | Tax-deductible contributions & tax-deferred growth | Yes | Withdrawals are restricted until retirement age | Small businesses/self-employed looking for a low-cost pension option |
| Group TFSA | Employee + optional employer | No | No deduction on contribution; growth and withdrawals are tax-free | No | Withdrawals anytime, tax-free | Short-term savers or high earners who maxed out their RRSPs |
| VRSP Quebec | Employee + optional employer | Yes | Tax-deductible contributions & tax-deferred growth | Yes | Withdrawals are generally restricted until retirement or termination | Quebec-based companies with 5+ employees, needing a simple auto-enroll plan |
How does a group retirement savings plan work?
Group retirement savings plans work the same way, regardless of your chosen plan. Initially, the employer will set up the plan, choosing between Group RRSP, DPSP, DB, or DC pension plans, etc. Once the plan is purchased, employees are encouraged to enroll in the retirement plan, contributing a certain percentage of their salary into this account.
The money invested in these retirement accounts is usually invested in stocks, bonds, or mutual funds to maximize cash value growth, which is tax-deferred. Employees can withdraw this fund without paying any additional taxes once they retire.
- Plan setup: The employer partners with a financial provider (such as Manulife, BMO, Desjardins, etc) to offer a group retirement plan, such as a Group RRSP, DPSP, or DB/DC pension plan, to their employees
- Employee enrollment: Employees are encouraged to join the retirement savings plan, either through automatic enrollment or through a sign-up process
- Contributions: Employees contribute a certain percentage of their salary via payroll deductions into their retirement savings plan. Employers may also choose to contribute or match a portion of employee contributions for added cash growth
- Investment options: The contributions are invested in mutual funds, GICs, or target-date funds. These investment options are either chosen by the employees or defaulted by the plan
- Tax benefits: Most retirement plans offer tax-deferred cash value growth, and the money can be withdrawn upon retirement without additional tax implications
- Vesting period: Some plans, like DPSPs and DB/DC pensions, may have a vesting period. Vesting period is the minimum amount of time you must be employed at an organisation before you gain full ownership of the employer contributions to your GRSP. Withdrawing without completing the vesting period may cost you the employer’s contribution to your retirement fund
- Account growth: Over time, the invested funds grow through compound interest and market significant returns
- Withdrawals: Funds are typically accessed at retirement. Some plans, such as Group RRSPs, may allow earlier withdrawals, although taxes may apply
How are contributions made in a retirement savings plan?
Contributions in a group retirement savings plan vary depending on the type of retirement plan that you have chosen.
DC and DB pension plans require mandatory contributions from both the employer and employee, whereas DPSP only allows the employer to contribute towards the employee’s retirement fund. Group RRSPs require employees to contribute through payroll deductions, but employers may choose to match a portion of the contribution for added benefits.
- In a Group RRSP, employees contribute through automatic payroll deductions, and employers may choose to match all or part of those contributions, though it’s not mandatory
- A Deferred Profit Sharing Plan (DPSP) allows only the employer to contribute, typically based on company profits, with a common vesting period of up to two years
- In a Defined Contribution (DC) Pension Plan, both the employer and employee are required to contribute a fixed percentage of the employee’s earnings
- Defined Benefit (DB) Pension Plans also involve mandatory contributions from both parties, but the employer is responsible for ensuring the plan can deliver a guaranteed retirement benefit
- For Pooled Registered Pension Plans (PRPPs), employee contributions are voluntary, and employer contributions are optional
- With a Group TFSA, employees contribute post-tax dollars through payroll deductions, and employer contributions are allowed but not common
Each plan has different rules, but most contributions are invested to grow over time and support long-term retirement savings.
Why do employers offer group retirement plans?
Employers offer group retirement plans as an employee benefit to attract, retain, and reward talent while helping employees build long-term financial security. Offering group retirement plans showcases that the company is invested in its employees’ future, which can boost morale, job satisfaction, and loyalty. Group retirement benefits also give employers a competitive edge when they’re scouting for skilled workers.
- Attract top talent: Competitive retirement benefits help employers stand out and appeal to skilled candidates
- Improve employee retention: Offering long-term financial incentives encourages employees to stay with the company
- Boost morale and engagement: Retirement plans show employees that their future is valued, enhancing job satisfaction
- Support financial wellness: Helps employees plan for retirement, reducing stress and increasing productivity
- Tax advantages: Employer contributions may be tax-deductible, and some plans (like DPSPs) can reduce payroll taxes
- Flexible compensation tool: Plans like DPSPs tie contributions to company profits, offering performance-based rewards
- Reinforce company culture: Providing benefits builds a positive workplace reputation and promotes loyalty
Which companies are the top group retirement savings providers in Canada?
In Canada, some of the top group retirement plan providers include Manulife, Desjardins, Sun Life, Canada Life, RBC, and BMO. These companies offer a variety of retirement plans that employers can choose from, along with added benefits and ease of access.
Manulife
- Offers Group RRSPs, DC pension plans, DPSPs, and TFSAs
- Strong digital tools and a mobile app for easy access
- Excellent financial education and retirement planning support
Desjardins
- Offers RRSPs, TFSAs, DPSPs, and VRSPs (in Quebec)
- Known for bilingual support and personalized service
- Offers socially responsible investment options
Sun Life
- Provides full-spectrum plans including DB/DC pensions, RRSPs, and TFSAs
- Advanced analytics and employee engagement tools
- Mobile-friendly platform with personalized retirement tracking
Canada Life
- Offers RRSPs, DPSPs, DC pensions, and TFSAs
- Known for flexibility in plan design and advisor-driven support
- User-friendly digital tools for employees and plan sponsors
RBC
- Specializes in Group RRSPs, TFSAs, and DPSPs for small/mid-sized businesses
- Integrated banking and payroll services
- Simple setup process with strong customer service
BMO
- Offers Group RRSPs, TFSAs, and DPSPs with flexible contribution options
- Ideal for cost-effective plans for SMEs
- Features MyBMOPlan portal for easy plan management
Are contributions to a group retirement savings plan tax-deductible?
Yes, contributions to a group retirement savings plan are usually tax-deductible. The employee contributions for GRSPs are typically taken directly from their payroll, resulting in immediate tax savings.
Also, both the employer and employee contributions to the group retirement plans continue to grow tax-deferred until withdrawal. This makes GRSPs a tax-efficient and preferred workplace benefit for employees.
Who is eligible to participate in a group retirement savings plan?
Full-time and part-time employees are eligible for a group retirement savings plan in Canada, usually after serving a probationary period. The employee must also be a Canadian resident and above the age of 18 to avail group retirement benefits.
- Full-time employees are most commonly eligible, usually after a probationary period (e.g., 3–6 months)
- Part-time or contract employees may be eligible, depending on the employer’s policy
- Must be a Canadian resident for tax purposes to benefit from the tax advantages
- Typically requires a minimum age of 18 to participate
- Some employers may set minimum hours worked per week as a requirement
What is the contribution limit for a group retirement plan?
A Group retirement savings plan (GRSP) shares the same contribution limits as an individual RRSP. For the 2025 tax year, the maximum contribution is up to 18% of the earned income from 2024, to a maximum of $32,490, whichever is less.
Contributions to both GRSPs and individual RRSPs are combined when assessing the annual contribution limit of an individual. Any contributions made by the employer to the employee’s GRSP also count toward their personal RRSP contribution room.
It’s crucial to monitor all contributions to avoid exceeding the contribution limit. Overcontributions beyond a $2,000 buffer may incur a penalty of 1% per month on the excess amount.
Can employees withdraw funds from a GRSP before retirement?
Yes, employees can withdraw money from a GRSP account before retirement, but it comes with some downsides.
Any money that is taken out of the group retirement savings account will be taxed as income. After the withdrawal, the employee will also need to report the full amount on their tax return. Unlike a TFSA, once a specific amount is taken out of a GRSP, the contribution room is not re-added — meaning the employee will lose some of the future tax benefits and growth potential.
Some employers may also have their own rules about when and how their employees can withdraw from the plan, so it’s always a good idea to check with the HR department or the plan provider before making any withdrawal.
What investment options are available in a group retirement savings plan?
A Group registered retirement savings plan (GRSP) typically offers a variety of investment options to help employees grow their retirement savings, including:
- Mutual funds
- Guaranteed Investment Certificates (GICs)
- Bond funds
- Equity funds
- Target-date funds
Mutual funds are the most common, offering diversification across sectors and asset classes, while GICs provide low-risk, fixed returns for more conservative savers.
While the specific investments available can vary depending on the provider, most GRSPs allow employees to select from a range of funds or portfolios, often with the option to switch or rebalance over time.
What happens to my GRSP funds if I change jobs?
When you change jobs, what happens to your group retirement savings depends on the type of plan you were enrolled in. Each type of group plan—Group RRSP, Defined Benefit (DB) Pension Plan, Defined Contribution (DC) Pension Plan, Deferred Profit Sharing Plan (DPSP), and Group TFSA—has different rules.
- If you were contributing to a Group RRSP, the funds belong to you and can usually be transferred to your personal RRSP or another registered account without tax consequences
- Group TFSAs work similarly—you can keep your funds and transfer them to a personal TFSA without penalties, although contribution room doesn’t reset with the transfer
- For Defined Contribution (DC) pension plans, your contributions and any vested employer contributions are yours to keep. These can typically be moved to a locked-in retirement account (LIRA) when you leave
- With Defined Benefit (DB) pension plans, the options can vary. If you’re vested, you may be able to leave the funds in the plan and receive a pension at retirement, or take a lump sum commuted value and transfer it to a LIRA
- DPSPs are employer-funded only. Once vested, you can transfer the funds to an RRSP or another eligible account. However, if you leave before becoming vested (usually after two years), you may lose the employer’s contributions entirely
Can self-employed individuals participate in a group retirement savings plan?
Self-employed individuals generally can’t join a group retirement plan because these plans are sponsored by employers for their employees. Since there’s no employer involved, a GRSP isn’t an option.
However, being self-employed doesn’t mean you miss out on retirement savings opportunities. You can open a personal RRSP, TFSA, or even an Individual Pension Plan (IPP) to enjoy similar tax advantages and long-term growth. With the right strategy, self-employed professionals can build a strong retirement fund too.
Can I have both a group retirement plan and an individual RRSP?
Yes, you can have both a group retirement savings plan and an individual RRSP at the same time.
Many Canadians use a mix of GRSP and individual RRSPs to maximize their retirement savings. However, both plans share the same annual RRSP contribution limit, which is based on your earned income (up to a maximum set by the CRA each year).
So, contributions made to your GRSP will reduce the contribution room available for your personal RRSP. By coordinating both accounts wisely, you can take full advantage of tax-deferred growth while potentially benefiting from employer matching through your GRSP.
What happens to my group retirement plan if my employer changes providers?
If your employer changes the provider of your Group Registered Retirement Savings Plan (GRSP), your funds are usually transferred to the new provider without any tax consequences or loss of savings.
You won’t lose your contributions or any vested employer contributions. The main change is that your investments may be moved into similar options with the new provider, and you’ll receive new login details and account access.
You might also get new investment choices, updated fees, or slightly different plan features. In most cases, you’ll be notified well in advance, and the transition is handled by the employer and both providers.
What happens to my group retirement plan if my employer changes providers?
If your employer changes the provider of your Group Registered Retirement Savings Plan (GRSP), your funds are usually transferred to the new provider without any tax consequences or loss of savings.
You won’t lose your contributions or any vested employer contributions. The main change is that your investments may be moved into similar options with the new provider, and you’ll receive new login details and account access.
You might also get new investment choices, updated fees, or slightly different plan features. In most cases, you’ll be notified well in advance, and the transition is handled by the employer and both providers.
What are the pros and cons of joining a group retirement savings plan?
Group retirement savings plans have several advantages in terms of tax-deferred cash value growth, easy contribution methods through automatic payroll deductions, and lower management fees and employee contributions.
However, there are a few disadvantages to group retirement plans, as withdrawals are usually taxed, many plans have a vesting period, and there are contribution limitations to your group retirement savings plans.
What are the pros and cons of joining a group retirement savings plan?
Group retirement savings plans have several advantages in terms of tax-deferred cash value growth, easy contribution methods through automatic payroll deductions, and lower management fees and employee contributions.
However, there are a few disadvantages to group retirement plans, as withdrawals are usually taxed, many plans have a vesting period, and there are contribution limitations to your group retirement savings plans.
Pros and cons of joining a group retirement savings plan
| Pros | Cons |
| Many GRSPs include employer matching, increasing your savings | GRSP contributions count toward your personal RRSP limit |
| Earnings within the plan grow tax-free until withdrawal | All withdrawals are taxed as regular income |
| Contributions are deducted from your paycheck before tax | Investments are limited to those offered by the provider |
| GRSPs often come with institutional pricing and lower management fees | Some plans may have a vesting period. Any withdrawals made during the vesting period will automatically lose employer contributions |
| Employees do not have to constantly monitor their group retirement plan, and it’s the employer’s responsibility to manage the GRSP on behalf of the employees | You may have to transfer the funds if you leave the job or if the employer switches providers |
How can I offer a group retirement savings plan to my employees?
To offer a group retirement savings plan to your employees, you’ll first need to evaluate your company’s size, budget, and long-term goals. Start by deciding which type of plan best aligns with your team’s needs and your financial outlook. But it can all seem too complicated. This is where PolicyAdvisor comes in!
At PolicyAdvisor, our expert advisors can help you choose the best plan for your exact needs! Whether you’re a small business owner or running a mid-sized company, our team will work with you to compare multiple plan options, highlight the pros and cons of each, and secure competitive quotes that fit your budget.
Our lifetime after-sales support ensures that as your business evolves, your retirement savings plan can adapt too. Schedule a call with us today and take a step towards helping your employees secure their financial future!
Frequently asked questions
Is a group retirement savings plan the same as a pension plan?
No, a group retirement savings plan is an umbrella term that can include various employer-sponsored retirement programs, such as defined benefit pensions, defined contribution plans, DPSPs, and group TFSAs. While pension plans fall under GRSPs, not all GRSPs are pension plans.
Are contributions to a group retirement savings plan locked in?
Whether contributions to a Group Retirement Savings Plan are locked in depends on the type of plan. Group RRSPs and Group TFSAs are not locked in and allow withdrawals anytime (with tax consequences for RRSPs).
However, Defined Benefit (DB), Defined Contribution (DC) pension plans, and Deferred Profit Sharing Plans (DPSPs) are usually locked in, meaning funds can’t be accessed until retirement or under special circumstances.
Are employer contributions to a group retirement savings plan mandatory?
Employer contributions to a GRSP are not universally mandatory. Whether an employer must contribute depends on the type of plan and the employer’s policy. Also, in DC and DB pension plans, employer contributions are typically required by the plan design.
For DPSP, only the employer contributes, but contributions are voluntary unless outlined in the plan terms. In contrast, Group TFSAs don’t require employer contributions at all—they’re optional and based on the employer’s benefits strategy.
Is there a waiting period to join a group retirement plan?
Yes, there can be a waiting period before you’re eligible to join a group retirement savings plan. Many employers require new employees to complete three to six months of employment before they can enroll.
This is especially common with pension plans and DPSPs. However, the exact waiting period, if any, varies depending on the employer’s policies and the specific plan design.
A Group Retirement Savings Plan (GRSP) in Canada is an employee benefit offered by some organizations to help their employees save up a substantial cash value for their retirement. Some of the most common retirement plans in Canada include Group RRSPs, Deferred Profit Sharing Plans (DPSPs), Defined Benefit (DB) pension plan, Defined Contribution (DC) pension plan, Pooled Registered Pension Plan (PRPP), and Group Tax-Free Savings Account (TFSA). These retirement plans offer benefits like tax-deferred cash value growth, often paired with employer matching contributions. In 2025, the group retirement savings plan contribution limit is 18% of earned income from 2024 or up to a maximum of $32,490. Permanent employees, typically Canadian citizens over the age of 18, are eligible to enroll in group retirement plans. Some of the top group retirement savings plan providers in Canada include Sun Life, Manulife, Canada Life, Desjardins, BMO, and RBC, helping individuals build up a financial safety net for their retirement.
