Group RRSPs

Similar to the Registered Pension Plan, generally the biggest hurdle for a plan sponsor is determining how much money they are willing to set aside in order to fund this type of program.

Most often, if this is a structured Group RRSP, the employer is willing to commit a certain amount depending upon the employee's contribution, e.g. for every $1 the employee contributes, the employer is willing to contribute $0.50 on the dollar up to a predetermined maximum.

Employer Contributions in Lieu of an RPP

Compared to a Registered Pension Plan, a Group RRSP carries with it the following advantages / disadvantages:

Advantages

Outside of provincial pension legislation - "Employer basically writes the rules"
No restrictions on eligibility, contribution flexibility by member, etc.
No "locking-in" upon termination
Employer contributions do not need to be remitted monthly
Decreased administration
No Pension Adjustment reporting

Disadvantages

Immediate vesting (Assuming the legislation goes through for registered pension plans, this could no longer be a disadvantage in the future)
In service cash withdrawals can be discouraged but are legally allowed
Monies could be used for something other than their intended purpose, i.e. source of retirement income
CPP, EI, EHT & WSIB are applicable, i.e. payroll taxes would apply on salary increases given by the employer to fund the R.R.S.P.