With the wide variety of Registered Retirement Savings Plans (RRSP) now available to Canadians from traditional retail outlets, online banks and other financial services organizations, you might wonder what the advantage is to participate in a group RRSP (GRRSP) through your employer.
GRRSPs make saving for retirement easy—not only are most plans already set-up by your employer, making it simple to get started and begin growing your savings, but they can also have some great advantages over traditional retail RRSPs. Here are three reasons to join your GRRSP today:
1. Lower Fees
When funds are invested through a group savings plan, you benefit from the buying power of the whole plan. Investment Management Fees (IMF) and Management Expense Ratios (MER) are fees payable to a professional fund manager for their expertise. These fees apply to the investment funds of a group savings plan and to any mutual funds you might purchase in the retail marketplace.
Retail investors can expect to pay an investment management fee between 1.75% and 2.75%. Within a group savings plan, the fees for the same funds are typically much lower. Group savings plans will have investment funds priced as much as 1% lower than retail funds.
Not only are there lower investment management fees; there are typically no transfer fees, front-end loads or deferred sales charges associated with group savings plans. However, these additional fees are typical in the retail marketplace.
2. Access to specialized fund managers
Some investment fund managers specialize in group retirement assets exclusively (institutional funds) and do not manage assets in the retail marketplace. These high-quality fund managers may be made available to you as a plan member in a group savings program at a lower price because they do not advertise to the retail marketplace.
Many group plans also offer individualized and group learning sessions, both online and in person. These can educate you about your program, provide you with the tools you need to understand it, and help you make a financial plan that makes sense for you.
3. No minimum deposits
Employees can make much smaller deposits into a group investment fund than they would otherwise be able to through a retail product via a bank, investment advisor or directly through an investment company. For example, many mutual fund investments can only be purchased with a minimum amount of $500 through the retail marketplace. With a group plan, you can start at zero and grow your account with regular contributions through payroll deductions, making it easy and convenient.
Saving for retirement can be challenging, but it doesn’t have to be. Talk to one of our investments experts today to learn more about how you can benefit from a Group RRSP program.