Choosing a retirement plan is one of the most important decisions an employer can make for their employees and company. Not only does choosing the right one help employees save for retirement, but it gives them confidence that you’re taking steps to ensure their future is well looked out for. Having that kind of trust between you and your team can make all the difference and will make employees want to stay a part of your organization for years to come.
Here are some key considerations businesses need to make before deciding what kind of group retirement plans will work best for their team.
Know The Types Of Retirement Plans Out There
Before you choose which plan works best for your company, you should know what kind of group retirement plan options you have. Both RRSPs and VRSPs have their benefits and drawbacks depending on the business.
A group RRSP (registered retirement savings plan) is a collection of individual RRSPs, but is an employer-sponsored retirement plan that’s administered by the employer. They’re great for growing companies because there is no minimum age to start contributing and employees can contribute up to the age of 71. Employees can also set up recurring contributions that are taken out of their pay, and if they go under the contribution cap of 18% of the salary of the previous year, that unused portion rolls over into next year. A group RRSP is also easy to administer by the employer. Employers can also choose whether to set up matching contributions or not.
A group VRSP is a voluntary retirement savings plan that works best for small to medium businesses. It’s a useful one for employers since contributions aren’t required but are not subjected to payroll taxes and are considered a salary expense. The money an employee contributes isn’t subject to taxes until it’s withdrawn at retirement.
Think About Optional Vs. Mandatory Plans
Most employees don’t mind being automatically set up with the plan an employer chooses for them, but it’s important to know that some prefer to make their own retirement plans. Anyone over the age of 18 and who pays income tax is eligible to set up an RRSP, and if a group VRSP is set up, employees are automatically enrolled but can opt out of the plan within 60 days.
What Kind Of Customizations Work For Your Employees?
Just as important as choosing group retirement services for your employees is figuring out what should be in the RRSP or VRSP. Therefore it’s important to take your employee’s needs and feedback and your business’s priorities into account when figuring out what kinds of dental, healthcare, travel, and other portions will show up on your customized retirement plan.
Zero In On What Administering Company You Want
Not all group retirement plans are created equal and the same goes for the company administering them. There are four main types of retirement plan administration companies, and employers should make themselves familiar with them before choosing theirs. Retirement plans can be administered by insurance companies, mutual fund companies, banks, and self-directed trustees, and they all offer different services that may work or not work depending on the plan you need.
Ready To Learn More About Group Retirement Plan Options?
If you are a business owner or human resources professional and you would like to start a new group retirement plan for your employees or improve upon the one you already have in place, feel free to contact our team at SCORE Financial today to learn more about our group retirement plan services.