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The Group RRSP

I know that the RRSP season is over and most people are tired of hearing about RRSP's and are now thinking about their tax return. One common ailment at this time of year is the pain that is felt upon completing your tax return and the surprise at just how much tax you pay. Many Canadians vow to do something about it. One good vehicle for saving for your retirement and for reducing taxes is the Group Registered Retirement Savings Plan.

The purpose of this article is to show you why you may want to contribute to such a plan if one is offered where you work, and if one isn't offered, to encourage you to bring up the topic of establishing a group RRSP with your personnel department. There are many advantages for both you and for the firm.

Group RRSP's are growing in popularity. According to a Benefits Canada report, group assets totaled $22.6 billion in 1999 and are expected to grow to $50 billion by the year 2004. There are several reasons for this growth. The first has to do with demographics and aging. A greater portion of society is reaching the age where retirement is important to them and they are taking advantage of group plans. Another reason is the decline in popularity of defined benefit pension plans. These plans are subject to ever increasing legislation, high costs, administrative demands and potential future funding liabilities for the employer.

Advantages for the employee:

Advantages for the employer:

Many Canadians find it difficult to save for their retirement. This is especially so when you have to first earn money, pay tax on it, then try to save. Many people also find it difficult to top up an RRSP at the end of the year or make RRSP loan payments. The group RRSP can be a godsend for investors who experience these problems.