Comments on: Reader Question on Employer RRSP Match

By: Andrew Karr

Andrew Karr — Mon, 01 Mar 2010 22:33:00 +0000

Are there rules surrounding the RRSP Match? Is there a government web page that details these rules. I work for a software provider to the construction industry in Canada and am trying to determine the requirements that surrounds this benefit. Any information would be greatly appreciated.

Thank you.

By: Dave from GP

Dave from GP — Thu, 20 Sep 2007 14:12:21 +0000

The lump sum payments are basically free money regardless of whether you can dollar cost average it, anyway so you are getting a good return. Of course it is a retention thing! We have a group RRSP plan but the company does not contribute to it at all so I do not participate. My company (US based) has a DC pension plan in which I pay 4% of my monthly salary and the company pays 4%. After 5 years their portion of contributions increases to 5% while I remain at 4%.

By: telly

telly — Wed, 19 Sep 2007 15:52:52 +0000

Though I contribute to my 401k twice a amonth, the matched money is only deposited twice a year. The same goes for the pension deposit (defined contribution). It seems to be the standard in the US.

By: WhereDoesAllMyMoneyGo.com

WhereDoesAllMyMoneyGo.com — Tue, 18 Sep 2007 17:36:58 +0000

Yes it seems these vesting periods and delayed matchings are just attempts to increase employee retention. In the end, I wonder if it is worth it as there must be as many people who are turned off by these provisos as there are who stay a bit longer just to take advantage….? In the end, perhaps a zero-sum game…

I don’t remember the last time I heard of someone taking an “exit poll” when they leave their employer and further to that any questions about pension plan vesting periods being part of that decision – so it’s all academic at the end of the day…

By: Hamcake

Hamcake — Tue, 18 Sep 2007 15:21:52 +0000

Our company has a great RRSP matching program, except for the last part: 100% match of up to 5% of our salary, but payable the following year… Contribution period started this month, so this actually means anything I contribute now will be matched in September 2009, ie: one year from the end of the current period.
Like I said, it’s that last step that’s a doozy. I’m contributing my maximum, but two years is a long time to wait.

By: WhereDoesAllMyMoneyGo.com

WhereDoesAllMyMoneyGo.com — Tue, 18 Sep 2007 03:15:06 +0000

The part I don’t like in particular is that if his employment “ends” part way during the year he does not get any matching for the year. While I understand we don’t want to look a gift horse in the mouth – they are providing some bonus savings for you – that “clause” just makes being in their employ not as appealing as the more run of the mill Group RRSPs out there.

By: Canadian Capitalist

Canadian Capitalist — Tue, 18 Sep 2007 03:12:26 +0000

Dividend Guy: Thanks for your input. I didn’t know you worked in HR. It’s nice to get some inside info

By: FourPillars

FourPillars — Tue, 18 Sep 2007 02:54:58 +0000

Interesting post and good advice CC.

Alek – 2% is 2% – just do the contribution and take the money.

Mike

By: The Dividend Guy

The Dividend Guy — Tue, 18 Sep 2007 02:26:13 +0000

As someone who’s “real” job is working in HR, I would suspect that the reader does not have much of a choice in terms of negotiating the way the employer match is set up. There may be “plan documents” that are legislated that cannot change. However, this is not always the case so you can certainly ask the question.

In terms of a good match from employers, the matches vary greatly. It also depends on what is being matched – some companies have a match on a pension plan as well as a savings plan (RSP or otherwise). In the oil and gas business, both of these matches are usually the case. The matches on the pension plan vary from about 2% to 10%, usually depending on years of service. On the savings plans, the matches I see tend to be around 5%. I have never in my experience seen a company match at the end of the year however. Our matches come each month when contributions are made. The oil and gas industry is a bit unique on this front.