Group RRSP, DC plans a powerful combo

One-two pension punch ‘growing like crazy’ as employers abandon DB plans
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 02/07/2008

As defined benefit (DB) pension plans are increasingly phased out, many plan sponsors are rolling out defined contribution (DC) plans to shift more of the financial risk to employees. But for a more complete retirement package, group registered retirement savings plans (RRSPs) are proving an attractive companion.

“The combination of DC plans and group RRSPs taking the place of DB plans is a huge theme in Canada,” says Lori Bak, Toronto-based vice-president, client relationships and marketing, group retirement services at Sun Life Financial Canada.

“We see far more companies going from a DB to a DC and adding group RRSP to round out the full offering. If a plan sponsor is thinking of stopping a DB and moving fully to a DC or group RRSP, they can step their toe in the water with a group RRSP because it puts the responsibility on the individual — it starts them learning the process and weaning them off a more paternalistic plan into a more proactively managed plan by themselves.”