Did you know that saving for your future doesn’t need to be stressful? It can be easy! In Canada, saving for retirement consists of three main avenues, also known as the “three pillars of retirement.” The three pillars are:
- Government based programs (Canada Pension Plan, Old Age Security, etc.),
- Employment based programs (like your IBEW Local 353 pension, and Group Registered Retirement Savings Plan (RRSP)) and,
- Individual savings (individual RRSPs, Tax Free Savings Accounts, personal savings, property, etc.).
A Group RRSP is a savings plan registered with the Canadian government where you and/or your employer on your behalf, can contribute over the course of your career until you retire. The government introduced RRSPs in 1957 to help Canadians save for their retirement.
Why contribute to your Group RRSP? Taxes on RRSP contributions are deferred until retirement which means the more money you contribute now, the more money you will have to retire with. Also, the earlier you start saving, the more time you have for your money to grow. The reason for this is related to the time value of money. The longer the timeline you have to invest, the more money you can generate with your savings.
For every hour you work, your employer contributes a percentage of your wages to the IBEW Local 353 Group Retirement Savings Plan (RRSP) (currently 3% for many IBEW Local 353 collective agreements), which is administered by Canada Life.
Your Group RRSP has six important benefits:
- Investment fees can be less than half of the going retail rate as compared to individual RRSP accounts.
- There are reduced administrative fees compared to individual RRSP accounts.
- It’s a painless way to save because contributions are paid directly by your employer and deposited into your individual Group RRSP account.
- As with other retirement savings plans, your contributions to the Group RRSP are tax deductible (up to a contribution limit affected by pension contributions) when you file your tax return.
- You choose the investment strategy that’s right for you – from a variety of funds.
- You can use your RRSP to supplement your income in retirement, to buy your first home, or use it in a financial emergency.
You can always monitor your contributions online at myteibas.com or by reviewing your quarterly contribution statements from TEIBAS. Canada Life will provide you with regular information on how your investments are performing.