Invest in the future of
your employees
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It’s no surprise that fulfilling work, a positive environment and fair compensation top the list of must-haves for employee job satisfaction. What might surprise you, though, is that nearly two-thirds of employees look for a retirement plan, too (according to a recent Angus Reid poll).
By offering SPP to employees, you can take comfort in knowing your plan has been rigorously designed with elements from various plan types to balance flexibility and performance. With many companies (including your competition) offering different types of incentives, it’s helpful to understand how they all work and see how SPP stacks up.
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With a Defined Contribution plan, employees own their pension account. Both they and their employer can contribute to the account, usually at a pre-determined rate/amount. For example, an employee might contribute 5% of their salary, with the employer matching that amount.
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Simple for employers to contribute and administer
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Plan can travel with the employee wherever their career takes them
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Funds are often locked-in until a certain age
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Flexible contributions for employers and employees (no minimum)
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At its heart, SPP is a Defined Contribution pension plan, offering simplicity, flexibility and affordability for both employers and employees.
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While Defined Contribution specifies the amount put into savings, a Defined Benefit plan is based on how much an employee will get out – a promised income upon retirement based on factors such as salary and years of service. For example, an employee with 30 years of service might be entitled to $36,000/yr in retirement.
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Guaranteed specific amount for employees upon retirement
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Typically not portable (cannot be transferred if employee changes jobs)
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More challenging for employers to setup and administer
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Potential for greater cost/commitment required by employers
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SPP differs from a Defined Benefit plan, prioritizing accessibility, simplicity and portability.
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Group RRSPs, similar to personal RRSPs, are owned by the employee, but administered through the employer, allowing contributions via payroll deduction as well as employer contribution matching. For example, an employee might contribute 5% of their salary with the employer contributing 3% of the employee’s salary.
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Similar structure and tax benefits to a personal RRSP
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Employees choose how to invest their money
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Easy for employers to administer with less regulatory burden
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SPP offers similar flexibility and low administrative requirements to a Group RRSP, but funds are locked-in until age 55, eliminating the risk of premature withdrawals.
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A plan designed to reward performance of the company, with Deferred Profit Sharing Plans (DPSPs), employers contribute a portion of profits to an employee’s retirement account. For example, an employer might distribute 10% of its annual profits to the DPSP, with individual amounts often based on salary.
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Contributions are made only by the employer
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Amounts are tied to the company financial performance
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No guarantee of retirement income for employees
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Unpredictable – many factors can influence company performance
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Like DPSPs, SPP contributions can be a great way to reward employee performance and loyalty. SPP, however, provides much more flexibility and predictability than a DPSP.
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A Solution That Brings It All Together
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SPP is designed to combine the best aspects of the options above to maximize the benefit to employees while keeping the effort and mainenance manageable for employers.
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Simple to set up and administer
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Flexible contribution options for employers & employees
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Easily pay out bonuses and profit sharing
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No minimum contribution for employees or employers
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Funds locked-in until age 55
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Portable plan stays with employees
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SPP allows you to invest in your employees in a way that’s sustainable for your organization.
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Get the most out of SPP for your business
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Get in touch or sign in to MyBusiness to add new employees or update contribution amounts.
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