Clearpoint Retirement Solutions is one of Canada’s leading resources for designing, implementing and managing Defined Contribution Pension Plans (DCPP) for employers
What is a Defined Contribution Pension Plan?
With Defined Contribution Pension Plans, contributions into the pension plan are typically made by both the employee and the employer. DDPPs are very similar to Group RRSPs from the perspective that contributions into the pension plan are typically made by both the employee and the employer and they are pre-defined.
Contributions by the employer are taxable as income to the employee but they get an offsetting tax deduction as a result of the contribution.
The main difference between the Defined Contribution Pension Plan and a Group RRSP is the Pension is guided under pension law where the Group RRSP is administered under the income tax act. As a result, the rules around withdrawal of pension funds by the employee are more restrictive.
To withdraw or not?
In Canada, retirement savings rates are low and the only people saving money are people who are naturally good at it or people who are fortunate enough to have a Group Retirement Savings plan at work.
Some employers have a really paternal view of the retirement plan and do not want employees to be their own worst enemy by withdrawing funds. In these cases, pension plans are ideal because legislation does not allow for withdrawal of funds while employees are working. Pension plans are still best suited for retirement savings.
Other employers take the opposite stance and believe that employees are adults and if they want to access their funds, they should be able to do so. In this case, Group RRSPs are better.
Clearpoint Retirement Solutions can help you decide the best plan to put in place based on a variety of factors.
Under Defined Contribution Pension Plans there are a myriad of investment options offered including daily interest, GICs, mutual funds, segregated funds, and target date options. In fact the options you have available in Group RRSP plans are the same as the options in Defined Contribution Pension Plans.
Related article: How many investment options do you need in a group retirement plan?
Investment decisions for Defined Contribution Pension Plans are typically made by the employee so the employer and the plan provider are responsible for providing education and tools to help members make these investment decisions.
Advantages of a Defined Contribution Pension Plan
- Payroll Deductions for easy and forced savings
- Immediate tax relief to employee
- No front end or back end fees
- Lower investment management fees
- Flexibility of plan design
Using a Group Benefit Broker
Using a benefits broker has advantages. Clearpoint Retirement Solutions specializes in designing, implementing and managing Defined Contribution Pension Plans for employers. We are not generalists who try to be all things to all people. We stay up to date with the changing landscape of Pension Rules.
As independent brokers we are not aligned or affiliated with any financial institutions. Instead we shop the market for the best Pension Plan products for our clients. We can either work on a fee only basis as a cost to the employer or we can also derive our compensation through commissions. Either way, we will disclose compensation to maximize objectivity.
We also work hard with the employer to continue to manage the plan effectively. This includes employer reports, staying compliant with regulatory requirements and providing employee financial education.
The bottom line is we understand the needs of the employers and help design plans that are attractive to employees to aid in rewarding, retaining and attracting great employees.
Clearpoint Benefit Solutions has clients in Edmonton, Calgary, Fort McMurray, Lac La Biche, Lloydminster, Whitehorse, Yellowknife and other regions in Alberta, Yukon and Northwest Territories.
Contact Clearpoint Benefit Solutions to design, implement or review your Pension plan.
Is Your Group Retirement Plan Ordinary?
When was the last time your group retirement program reviewed?
When was the last time someone provided some financial education for your employees?
When was the last time your broker shopped your plan around to make sure the pricing is competitive?
We can make your group retirement plan exceptional