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February 20, 2022

Employers match workers' RRSP contributions

By Gordon Powers, Sympatico / MSN Finance

If your employer offers any kind of RRSP at work, be sure to get on board. While not as attractive as the guaranteed pension plans found in the public sector, they’re still generally a good deal.

Many employers support their employees’ retirement savings by matching their RRSP contributions – either up to a certain percentage of salary or as a flat amount – to an RRSP of their choice or to a company-sponsored group RRSP. And, if you're not taking advantage of that match, you’re losing out on free money.

Matching formulas range from 50%-100% of employee contributions to a maximum of 3%-6% of salary. The actual formula is often tied to length of service and will certainly vary by seniority. But it's still the only place where you can get a 100% return on your investment.

With a group RRSP, employer contributions are considered earnings, attract payroll taxes and vest immediately. That means they belong to you and can be redeemed or transferred, although there are sometimes restrictions concerning withdrawing funds that the employer has contributed or matched.

Your contributions are also deducted at source which means, rather than waiting for a tax return refund, you’ll immediately stop paying tax on the portion of your paycheque that you invest.



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...