Defined Contribution Registered Pension Plans (DCRPPs) offer another option for employers considering group retirement plans. DCRPPs have gained popularity because they are extremely flexible for the employer and they offer many benefits:

No Increase in Payroll Taxes: Your contributions to a DCRPP are not subject to Canada Pension Plan, Employment Insurance or any other applicable provincial payroll taxes. A DCRPP may stimulate employee loyalty through incentives and restrictive access to contributions.

Retention of Employees through Vesting: You may opt to have your employees’ plans vested after as many as 24 months of consecutive plan membership. (This option is available in most provinces.)

Fostering of Loyalty through the “Locked-In” Feature: With a DCRPP, required contributions from both the employer and employee are locked in until retirement. Because the funds are only available at retirement, your employees may feel more of a long-term commitment to your business and their pension.

Flexibility: DCRPPs are more flexible than traditional Defined Benefit Plans. While Defined Benefit Plans require you to contribute enough money to meet specified group savings levels, Defined Contribution Plans only require a specified contribution.

Predictability: Because your payments to DCRPPs are fixed, your monthly expenses are easier to calculate and your contribution amount will never be a surprise.