Your employer cares about your future and has partnered with Wealthsimple to offer you a group savings plan (GRSP), helping you save for the long term! A GRSP is a great way to help you save for retirement - you can save a small amount from your pay check
What is a GRSP?
GRSP is standards up “group retirement savings plan” offered by employers for their employees to save for the long term - whether it's retirement or a house. Picture it like a registered retirement savings plan (RRSP), except that it’s administered by a business. What happens is a company sets up a GRSP, and employees can take advantage of it by contributing as much as (in 2018) 18% of their income for a maximum of $26,230.
The money you put into a GRSP is pre-tax—which means, because you’re not supposed to touch it until you retire, you don’t have to pay income tax on that portion of your income until later.
What are the pros?
There are lots of benefits here. First, as we mentioned above, you lighten your income tax burden: You don’t have to pay income tax on up to $26,230 each year.
Second, some employers often throw in a little bit of money, too, usually matching your contribution up to between 3 and 5% of your salary. That’s right, your company is giving you free money just because you’re saving for retirement! (And because the contributions are tax deductible for them.) And the interest, dividends, and capital gains you earn from your investments will also be tax-free.
Finally, since you’re contributing each week, you’ll get to take advantage of dollar-cost averaging, a fancy way of saying that you’ll make sure you’re not buying all your investments at their yearly peak in price.
Can I use it for a Home Buyers Plan (HBP)?
Yes. You can use your GRSP for HBP, similar to a RRSP. Read more about it in the FAQ here.
Is there anything to be careful about?
A withdrawal from your GRRSP will count as taxable income for the year it is withdrawn, except under two circumstances - the Home Buyers' Plan or the Lifelong Learning Plan. It will also be subject to a withholding tax which gets taken out of your withdrawal immediately and paid to the government to cover a portion of the taxes you'd normally owe.