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Group retirement and savings products

  • RPP (registered pension plan)

    RPP (registered pension plan)

    Registered pension plan

    An RPP is set up by an employer to provide retirement income to employees. The plan is registered with the Canada Revenue Agency (CRA) to provide tax advantages. Contributions made to an RPP are tax-deductible within certain limits. Investment income isn’t taxed until it’s paid out of the plan.

    The employer is required to contribute to an RPP and the employees may or may not be required to contribute. There are two types of RPPs: defined contribution and defined benefit.

    Defined contribution
    The employee and/or the employer make contributions on the employee's behalf—usually a percentage of the employee's current income. The limit is 18 per cent of the employee’s current annual income subject to a dollar maximum. This limit applies to contributions made by both the employee and/or employer. Retirement income from the plan is based on the total value of the accumulated contributions and the investment income earned by the time the employee retires. The value of the plan will vary, depending on market performance and the selected investments.

    Defined benefit
    A defined benefit plan guarantees the employee a specific income at retirement. This income is determined by a formula, which is usually based on years of service and earnings. One sample formula might be: (2% x years of service) x average income for best five years = pension benefit. For example, an employee works 30 years, and her best five years of income averaged $50,000, so her annual pension income will be $30,000. (2% x 30 years) x $50,000 = $30,000. There are variations of formulas depending on the plan. Some formulas include adjustments for income up to the YMPE to factor in expected CPP/QPP benefits in retirement.

    Employees may be required to contribute a percentage of their earnings to a defined benefit plan. The employer must contribute any additional amounts required to provide the promised benefits. Most provinces have legislation in place that prohibits employees from paying for more than half of their own benefits.

  • RRSP (registered retirement savings plan)

    RRSP (registered retirement savings plan)

    Registered retirement savings plan

    A savings plan that’s registered with the federal government to qualify for the following tax advantages:

    Tax-sheltered growth
    Earnings on the assets in an RRSP aren’t taxed when earned. Instead, they’re "tax-deferred," meaning investors don’t have to pay tax until earnings are withdrawn from the plan. Investors earn income on money they’d otherwise have paid out in tax. Over time, this can really add up!

    Tax deduction
    RRSP contributions are tax-deductible (within the specified limits). Contribution amounts are deducted from an investor’s taxable income for the year, reducing income tax owed.

    A group RRSP differs from an individual RRSP in two ways:

    • Contributions to group RRSPs can be made through payroll deduction.
    • Group RRSPs usually have lower investment management fees.

    Contribution limits
    Limits are defined by the Income Tax Act. The limit is 18 per cent of the previous year's earned income minus the pension adjustment for the previous year. The 18 per cent limit is subject to a dollar maximum.

    If contributions to an RRSP are less than the limit, the difference is called your deduction room. For example, an investor with an annual RRSP contribution limit of $7,000 contributes only $2,000. The deduction room is $5,000 and can be carried forward for an unlimited time. For more information about RRSP contribution limits, visit http://www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/myccnt/menu-eng.html.

  • DPSP (deferred profit-sharing plan)

    DPSP (deferred profit-sharing plan)

    Deferred profit-sharing plan

    These plans are set up by employers as a way to share profits with their employees. Contributions depend on the profits of the company. Employee contributions aren’t allowed. The plan is registered with the Canada Revenue Agency (CRA) and contributions are tax-deductible to the employer within certain limits, as defined by the Income Tax Act. The contribution limit is half of the defined contribution limit subject to a dollar maximum. Investment income isn’t taxed until it’s paid out of the plan. A DPSP often substitutes for, or supplements, a group RRSP.

  • TFSA (tax-free savings account)

    TFSA (tax-free savings account)

    Tax-free savings account

    A TFSA is a flexible investment savings plan that allows investors to earn investment income tax-free and pay no tax on withdrawals. 

    Income earned within a TFSA and withdrawals from it don’t affect eligibility for federal income-tested benefits and credits, such as Old Age Security, Guaranteed Income Supplement or the Canada Child Tax Benefit. Contributions aren't tax-deductible because investors contribute after-tax dollars and the investment income earned in the account, along with any reported losses or gains, aren't considered taxable loss or taxable income.

    Savings can be used to supplement retirement income, purchase health or long-term care plans, or plan for major events like a house down payment or continuing education.

    The TFSA provides seniors with a tax-free savings vehicle to meet ongoing savings needs, even after age 71.

    To qualify for a TFSA, an investor must be 18 or older, a resident of Canada and have a valid social insurance number. Spouses, common-law partners and children age 18 or older of employees may set up an account in a group TFSA, if the plan sponsor permits it.

    Like registered retirement savings plans (RRSPs), there is an annual contribution limit. TFSA contribution room equals the TFSA dollar limit for the year plus unused contribution room from previous years plus any withdrawals made from the TFSA in the previous year. Unused contribution room is carried forward indefinitely. The Canada Revenue Agency (CRA) will track members’ contribution room.  Members can find their personal TFSA contribution room by signing in to My account on the Canada Revenue Agency website www.cra.gc.ca/myaccount.

    Multiple TFSAs are allowed, but the maximum annual contribution limit applies to the total contributed to all accounts held.

  • NRSP (non-registered savings plan)

    NRSP (non-registered savings plan)

    Non-registered savings plan

    Provides investment opportunities for amounts unrestricted by government regulations and contribution limits. Investment growth in an NRSP is subject to annual taxation. An NRSP provides flexibility at termination and retirement since no locking-in rules apply.

  • EPSP (employee profit-sharing plan)

    EPSP (employee profit-sharing plan)

    Employee profit-sharing plan

    An EPSP is an arrangement under which amounts are paid by the employer into individual accounts held for the benefit of participating employees. These amounts must be calculated by reference to the employer’s profits or paid out of accumulated profits.

    Employer contributions are deductible as an expense without limit. Employees must include all contributions to the EPSP on his or her behalf and any investment income earned thereon in his or her taxable income. In short, the tax treatment of EPSP contributions is the same as if the employer paid the employee an increased salary.

    There are no vesting requirements and vesting provisions vary from plan to plan, ranging from immediate vesting to deferred vesting that doesn’t occur until the plan member retires.

  • Employee stock purchase plan

    Employee stock purchase plan

    Employee stock purchase plan

    In employee stock purchase plans, employers typically give eligible employees the opportunity to purchase shares of the company at a set price. The employer doesn’t pay for the shares. Employees purchase the shares using after-tax income.

  • SPP (simplified pension plan)

    SPP (simplified pension plan)

    Simplified pension plan

    This plan type, available from Great-West Life only in Quebec and Manitoba, offers:

    • Flexible employer contribution levels including ad-hoc contributions
    • Flexible employer plan designs including withdrawal rules and portability
    • No need for a pension committee, which is required for a traditional pension plan
    • Simplified plan administration and reporting

    For more information, visit: www.rrq.gouv.qc.ca/en or www.gov.mb.ca/government.

  • PRPP (pooled registered pension plan)

    PRPP (pooled registered pension plan)

    Federal pooled registered pension plan

    The federal pooled registered pension plan (PRPP) was implemented by the federal government to provide greater access to workplace savings programs to help Canadians adequately save for retirement. The PRPP’s goal is to provide low-cost retirement savings opportunities for employees of companies and self-employed individuals who don’t have access to plans.

    Employers in federally regulated jurisdictions (e.g., banking, extra-provincial transport, aircraft transport, etc.) as well as employers and the self-employed in the territories are eligible to participate in a federal PRPP.

    Each province can enact their own version of the federal PRPP to make these plans accessible to non-federal employers and their staff.

    PRPPs benefit employees because they’re:

    • Affordable– Employees have access to typically lower investment management fees compared to individual retail investments because of the group buying power of a plan with a large pool of assets.
    • Simple – Saving is easy with:
      • Automatic enrolment – Employees will automatically be enrolled in the plan, so there aren’t any applications to fill out. If they don’t want to enrol, they’ll have 60 days to opt out before contributions start being deducted from their pay.
      • Payroll deductions – This is an easy, disciplined way for employees to save for retirement. Plus, their contributions are deducted from taxable income, which means they get tax advantages right away.
      • Default investment option – If employees don’t make a fund selection, their contributions will be invested into a Harmonized Target Date Fund that’s closest to the year they turn 65 – a simple and effective investment solution to help reach their retirement goals.
    • Flexible – Employees can:
      • Choose their contribution rate – Also, they can change their contribution rate after 12 months have elapsed since their contributions began, with the option of setting their contributions to zero (0) per cent if needed.
      • Choose their investment options – The clearly defined investment choices meet employees’ retirement needs without unnecessary complexity.
    • Portable – Employees can continue contributing to the plan even if they change employers or they can choose to transfer their PRPP to their new employer’s plan.

    For more information on the federal PRPP, visit www.prpp-greatwestlife.com.

  • VRSP (voluntary retirement savings plan)

    VRSP (voluntary retirement savings plan)

    Voluntary retirement savings plan

    The voluntary retirement savings plan, or VRSP, is a type of group retirement savings plan in Quebec. The VRSP is meant to encourage a larger number of employees to save for retirement.

    The VRSP benefits employees because they’re:

    • Affordable – They have access to typically lower investment management fees compared to individual retail investments, because of the group buying power of a plan with a large pool of assets.
    • Simple – Saving is easy:
      • Employees automatically enrolled – If employees have at least one year of continuous service, they’re automatically enrolled in the plan unless they choose to opt out. They have 60 days to opt out before contributions start being deducted from their pay.
      • Payroll deductions – By setting aside a bit from each pay, employees have an easy, disciplined way to save for retirement. Plus, their contributions are deducted from taxable income, which means they get tax advantages right away.
      • Contributions automatically increase– Employees can choose their contribution rate. If they don’t pick a rate, one will be automatically set for them:
        • Two per cent of base, gross salary from July 1, 2014 to Dec. 31, 2017
        • Three per cent of base, gross salary from Jan. 1, 2018 to Dec. 31, 2018
        • Four per cent of base, gross salary as of Jan. 1, 2019
      • Simple investment options – If employees don’t make an investment choice, their contributions will be directed into the Harmonized Target Date Fund that’s closest to the year they turn 65 – a simple and effective investment solution to help reach their retirement goals.
    • Flexible – Employees can:
      • Change their contribution rate – Up to two times a year, they can change their contribution rate. If needed, they can set the rate to zero (0), subject to certain conditions.
      • Choose their investment options – The clearly defined investment choices meet employees’ retirement needs without unnecessary complexity.
      • Opt out of the plan.
      • Withdraw their contributions; however, amounts withdrawn are subject to Quebec and federal tax.
    • Portable – Employees can continue contributing to the plan even if they change employers, or they can choose to transfer to their new employer’s VRSP.

    For more information on the VRSP, visit www.vrsp-londonlife.com.

  • Investment only plan

    Investment only plan

    Investment only plan

    An investment only (IO) plan is not a traditional type of plan like an RRSP or an RPP. IO is an industry term which describes the administrative and investment services that a service provider like Great-West Life can offer for defined benefit plans.

    IO plans offer simpler plan funding solutions for defined benefit plans, and include access to a broad range of pooled investment options.

    Defined benefit pension plans Investment only program is a simple investment solution.

Retirement income products

  • RRIF (registered retirement income fund)

    RRIF (registered retirement income fund)

    Registered retirement income fund

    A RRIF is used to generate retirement income from the savings accumulated in an RRSP, while continuing to invest any savings not being withdrawn as income. Investors can withdraw as much from the RRIF as they want, when they want it. The only requirement is that they withdraw a minimum amount each year. The schedule of minimum withdrawal amounts has been determined so that the level of withdrawals increases from year to year up to age 94. This schedule provides a basic level of inflation protection for the majority of retirement years. After age 94, the minimum payments are 20 per cent of the value of the RRIF at the beginning of that year.

    Like an RRSP, a RRIF provides investment flexibility so investors can tailor investments as needs change. Profits earned on investments in a RRIF are tax-sheltered, which means taxes are paid only on withdrawals.

    There’s no minimum age for setting up a RRIF. However, most people wait until they’re retired because once a RRIF is set up, they’re required to withdraw the minimum amount every year. A RRIF can be changed back to an RRSP at any time before the age of 71 to stop the income stream.

    It’s possible to hold more than one RRIF, which allows diversification into a number of different investments and institutions. People who invest in RRIFs and then change their minds can use their funds to purchase annuities.

    A RRIF is a very flexible option, offering an income that increases with inflation, provides tax-sheltered growth and the opportunity to tailor investment portfolios.

  • LIF (life income fund)

    LIF (life income fund)

    Life income fund

    A LIF provides people who have savings from pension plans or locked-in RRSPs or locked-in retirement accounts (LIRAs) an opportunity to begin receiving an income.

    LIFs provide investment flexibility to give people more control over their money—similar to a RRIF. For example, compared to an annuity, a LIF gives people control over their investment portfolios.

    Some of the LIF’s principal must be withdrawn each year and there’s also the same minimum withdrawal formula as used for a RRIF. The maximum yearly withdrawal can’t exceed the balance of the fund at the beginning of the year divided by the present value of an annuity certain to age 90 (or in Alberta, to age 85) based on an interest rate determined by pension legislation.

    Currently, LIFs are available in most provinces across Canada. Exact rules vary by jurisdiction. In Newfoundland & Labrador, money in a LIF can grow sheltered from tax until age 80, when the LIF matures and must be used to purchase an annuity. In all other provinces, a LIF has no maturity date and no requirement to purchase an annuity.

Investments

  • Investment lineup

    Investment lineup

    Investment lineup

    Great-West Life offers the largest investment lineup in the industry, spanning a wide range of asset classes, sectors and investment styles. This extensive lineup enables you to build a well-diversified and customized investment menu for your group plans. For more information, contact us.

  • Investment managers

    Investment managers

    Investment managers

    Great-West Life offers the largest investment fund lineup in the industry, including these respected investment managers:

    • AGF Investments Inc.
    • Beutel, Goodman & Company Ltd.
    • BlackRock Asset Management Canada Ltd.
    • BonaVista Asset Management Ltd.
    • Brandywine Global Investment Management, LLC
    • Connor, Clark & Lunn Investment Management Ltd.
    • CIBC Asset Management 
    • CIBC Global Asset Management Inc.
    • Canada Life Investments
    • Dynamic Funds
    • Fidelity Investments Canada ULC (including Fidelity Institutional Asset Management) 
    • Fiera Capital Corporation
    • Foyston Gordon & Payne Inc.
    • Franklin Templeton Investments Corp. (including Franklin Bissett Investment Management)
    • Greystone Managed Investments Inc.
    • GWL Realty Advisors
    • GLC Asset Management Group Ltd
    • Invesco Canada  Ltd.
    • Irish Life investment Managers Ltd.
    • Jarislowsky Fraser Global Investment Management
    • J.P. Morgan Asset Management
    • Leith Wheeler Investment Counsel Ltd.
    • Mackenzie Investments
    • Meritas Financial Inc.
    • MFS Investment Management
    • Montrusco Bolton Investments Inc.
    • Phillips, Hager & North Investment Management
    • Putnam Investments
    • Russell Investments
    • Setanta Asset Management Limited
    • Sprucegrove Investment Management Ltd.
    • Scheer Rowlett & Associates Investment Management Ltd.
    • Sentry Investments
    • TD Asset Management Inc.
  • Asset allocation funds

    Asset allocation funds

    Diversification within a single fund

    Target risk funds
    Combine investments in different asset classes and investment styles to match a target level of risk (conservative to aggressive).

    Target date funds
    Combine investments in different asset classes and investment styles to match a target retirement year.

    Risk-adjusted target date funds
    Combine investments in different asset classes and investment styles to match both a target retirement year and a target level of risk.

    Learn more

Investment updates

RRIFs -What are registered retirement income funds?

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