Employee RRSP and Pension Plans

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During this time of year, RRSP contributions are on everyone’s mind. For many Canadians, there is an opportunity to contribute to your RRSP or a pension throughout the year through their company RRSP or pension plan. However, some employer plans require their staff to ‘opt-in’, so if you haven’t opted in to your employer’s RRSP or pension plan and you are eligible, you could be leaving money on the table.

Here are some other benefits to company RRSP or pension plans:

It’s Automatic

Your contribution is automatically deducted from your paycheque, which means you’ll be saving for your golden years without even thinking about it. You also won’t miss this money, because you never had it in your bank account in the first place!

Dollar-Cost Averaging

Because you’ll be making contributions every time you get paid, you’re minimizing your exposure to risk through dollar-cost averaging, which reduces the impact of price fluctuations throughout the year.

Free Money

It is common for companies to match your contributions, which means you are getting a 100% return on your contribution! You won’t find a better return on investment anywhere else, meaning that signing up for your employer’s RRSP or pension plan is a great way to maximize your retirement savings.  

Keep in mind that some companies require you to work there for a specific period of time before you’ll be eligible to join their RRSP or pension plan. If this is the case, diarize the date you become eligible and get the enrollment process started as soon as you are able to. You may also be required to work at a company for a set period of time before their contributions become vested, meaning that if you leave your employer before that time, you will lose their contributions.