Group Registered Retirement Savings Plan

A Registered Retirement Savings Plan (RRSP) is a personal savings plan that is registered with the Canadian federal government allowing, individuals to save for the future on a tax-sheltered basis.
The purpose of an RRSP is twofold; to reduce income taxes each year, and to defer tax on investment income until retirement, when ones tax rate is expected to be reduced. 

• Employee contributions reduce taxable income
• Employer contributions create a taxable benefit
• The contribution limit is based on 18% of the previous years’ income, to an annual limit
• Income earned within the RRSP is tax-deferred until withdrawal

A Group RRSP is simply a RRSP set up through an employer, offering contributions by payroll deduction.

Deferred Profit-Sharing Plans

A DPSP is an employer- sponsored registered plan and is often established in conjunction with a Group RRSP, to hold the Employer contribution portion. A DPSP offers:

• Contributions are tax-deductible and do not generate payroll tax
• Contributions create a pension adjustment for the employee
• Contribution limit is half the Money Purchase limit
• Income earned within a DPSP is tax-deferred until withdrawal
• Ability to include vesting provision (up to 2 years)

The purpose of a DPSP is to share profits with employees; contributions can be calculated based on profits, a percentage of employee salaries or another formula.

Registered Pension Plans

A Registered Pension Plan is subject to stricter regulations than other group savings programs.

• Contributions are locked-in
• Employers must contribute, regardless of business profitability
• Federal and provincial legislation applies
• Additional government reporting, compared with other group savings programs.

There are two main categories of pension plans:

• Defined Contribution Plan; contribution levels are pre-determined and the pension amount payable in the future will depend on the performance of the account. Employees typically contribute a percentage of salary, which is matched by the employer.
• Defined Benefit Plan; the pension amount payable in the future is determined based on a formula such as years of service. The plan is managed by the employer to ensure the guaranteed pension payouts can be made; employers and employees typically both contribute. 

Tax-Free Savings Accounts

Deferred Profit Sharing Plan:

A Tax-Free Savings Account (TFSA) is an account that accrues tax-free savings.

• Contributions are not tax deductible to employee
• Employer contributions create a taxable benefit
• No tax payable on the income earned within the account
• No tax payable at withdrawal of the funds.
• Contribution limit adjusts each year, and accrues 

While a TFSA does not provide the same tax advantages as a RRSP, employees can benefit through a consistent and systematic savings plan, and access to lower investment fees.