A group health insurance is a type of health coverage typically offered by an employer or organization to a “group” of people—the employees or members of the organization. Group health insurance is typically cheaper for members of the insured group as compared to separate individual plans since the insurer’s risk is spread across a large number of participating members of an organization. It is an important part of an employee benefits program and employers should know how group health insurance works in Canada. 

Whether you’re an employer who is looking to offer group health insurance to your employees in Canada or someone who is simply curious about how an employee benefits plan works in Canada, this blog is for you! 

What is group health insurance? 

Group health insurance, also known as a group plan or employer-sponsored coverage, is a type of health insurance that an employer purchases and offers to its employees and their dependents. This group of people is accordingly covered under a single policy, offering benefits such as:

• Dental and vision care
• Hospitalization
• Prescription drugs
• Chronic disease coverage
• Other healthcare services

Employers or organizations usually negotiate the terms of the insurance policy and may subsidize part or all of the premium costs for their employees or members. Group health insurance is typically offered to all full-time or part-time workers as part of an employee benefits program.

How does group health insurance work in Canada? 

Group health insurance, also called group benefits or employee health benefits, provides employees with access to comprehensive healthcare coverage and is offered by an employer or an organization. The employer is the primary policyholder of a group health plan which covers all or some of the employees in an organization. 

Most insurers require 80% to 100% participation in a group health plan depending on the number of employees.

Group health insurance policies in Canada typically work in the following way:

1. Employer sponsorship: Employers choose a plan they want to offer to their employees. The employer negotiates the terms of the insurance policy with an insurance provider and may subsidize part of the premium costs for their employees. Within the plan, the employer can choose to add various types of benefits such as  health, dental, vision and prescription drug coverage, plus optional access to life insurance, disability and family assistance plans.
2. Employee enrolment: Employees can choose to enroll in or decline a group health insurance plan during the specified annual enrollment period. They have the option to choose from a few plan options and coverage levels. To mitigate risk across a larger group and prevent adverse selection, most insurers require a minimum 70% participation. 
3. Premium payments: The premiums are typically split between the employer and employees. Employers pay directly to the insurance company and deduct the employee’s contribution through payroll. 
4. Access to dependents: Employees can add family members and current and future dependents to the group health insurance plan at an additional cost
5. Employee usage: Employees can thereafter claim on the benefits as needed. Pharmacies, dentists, as well as health and vision practitioners directly bill the insurance company for covered expenses
6. Annual renewal: Employers work with the insurance company for annual renewal and repricing of the insurance contracts
7. Administration: The administration of group health insurance plans can vary. Some employers choose to manage the plans themselves, while others may contract with insurance companies or third-party administrators to handle claims processing, customer service, and other administrative tasks.

Group health insurance is cheaper than individual policies. This is simply because of the higher number of participants in the group health insurance plan, making it one of the most affordable health care policies available in Canada. One of the key implications of group health insurance is that healthier individuals effectively subsidize the costs of those who require more medical care.

Check out a variety of group health insurance types available for Canadians

Employee enrollment process for group health insurance

To ensure a smooth administration of group health coverage, employers should follow the steps mentioned below:

• Inform the employees about the available health plans, coverage options, and enrollment period
• Employees should select their plan and if they want to add dependents, if applicable
• Employees will have to fill out a form with the designated coverage options as well as their personal information
• Employees will submit the forms to the employer or HR department within the pre-discussed timeframe
• Once the enrollment procedure and verification are complete, employees will receive confirmation and health insurance cards

Employee eligibility criteria for group health insurance in Canada

• Employment status: Employees must be actively employed, either full-time or part-time, by the organization offering the group plan. Depending on the plan’s requirements, temporary, contractual, or seasonal workers may also be eligible
• Minimum hours worked: Employees typically need to work a minimum number of hours per week, often 20-30 hours, to qualify for the group plan. Some plans may have different minimum-hour requirements
• Residency requirements: Employees must be Canadian citizens or permanent residents to be eligible for the group plan. Some plans may also accept employees with valid work permits
• Age limits: Group plans typically cover employees up to the age of 65 or 70. Dependent coverage may be available for spouses and children up to a certain age, often 19-25 years old
• Pre-existing conditions: Group plans cannot exclude or limit coverage for pre-existing medical conditions. Employees are covered for pre-existing conditions from the start of the plan
• Minimum group size: Employers must have a minimum number of eligible employees, often 3-10, to qualify for a group health insurance plan

How is group health insurance different from individual plans?

While group health insurance is purchased by an employer and covers the employees of an organization, an individual health insurance plan, as the name suggests, is purchased independently by an individual for their own needs. Individual health insurance plans, also known as personal health insurance or private medical insurance, vary based on the individual’s age, medical history, and lifestyle (whether they’re smokers etc.). 

Benefits of group plans for employers

Offering group health benefits is an effective way to promote employee well-being and morale. It also:

• Helps organizations attract and retain talent 
• Can be written off as a business expense, hence saving tax for the organization
• Encourages employees to seek preventative care, promoting a more healthier and productive workforce
• Depending on the location of the organization, offering health insurance coverage to employees may be required by law. Providing group health insurance ensures compliance with applicable regulations

Group health benefits for employees

With a group health insurance plan in Canada, employees also get:

• Access to a wider range of medical services like dental care, vision care, prescription medication, emergency travel, life insurance, etc.that are not covered under provincial plans
• Lower premiums as compared to other individual plans
• The option to add family members and current and future dependents to their policy
• Coverage for pre-existing medical conditions
• Incentives for preventive care and wellness programs, motivating employees to adopt healthier lifestyles 

What do employee benefits cover?

Group health policies and employee benefits, although distinct, are often used interchangeably. A group health insurance plan is part of an employee benefits package, offered by employers to their employees. While group health insurance is a significant component of employee benefits, it is not the only one. Other common employee benefits may include life insurance, disability insurance, paid time off (such as vacation days and sick leave), wellness programs, and more.

Depending on the plan an employer chooses, group employee benefits typically include a variety of health and other non-medical benefits.

How can I enroll in group health benefits?

Once hired, you need to enroll in the group health insurance plan within a deadline. If this deadline is missed, you might have to wait until the annual enrollment window is open. Typically, a new employee who joins after the enrollment period is over has to wait for a period of 30-90 days before they can get group health benefits. This period is designed to ensure a degree of commitment from the employee to the employer before benefit enrollment.

Some group health insurance plans offer supplemental benefits like dental and vision care. During the enrollment process, you can choose any additional benefits you might want and add your family members and/or dependents.

Who pays for group health insurance?

Generally, there are three ways in which the premiums for group health insurance are paid. These include employer-sponsored plans, cost-sharing plans and employee add-on costs.

1. Employer-sponsored plans: The employer pays the entire cost of the group health benefits plan and the employee is not expected to contribute.
2. Cost sharing with employees: An employer and their employees split the premium costs at a predefined rate. Commonly used splits are 50 percent each or 70 percent by the employer and 30 percent by the employee. These arrangements can differ depending on the specific plan and the agreements between the employer and their employees.
3. Employee add-on costs: If employees want to add dependents or get an advanced plan with additional benefits, they have the option to pay the extra premium

How much do group health plans cost?

The cost of a group health plan varies depending on the type of package an employer purchases with options such as basic, advanced, premium offering different levels of coverage. Each package offers different coverage and depending on who is covered, the premiums can vary. For small businesses, a benefits plan can cost about 5-15 percent of the total payroll on an annual basis. 

In the following table, we’ve included representative average premium costs for a group health insurance plan based on who is covered, the plan type, and coverage options: 

An employee benefits package is incomplete without group life insurance. After all, nearly 2 in 5 Canadians rely solely on their employer for life insurance coverage. Offering life insurance coverage as part of employee benefits can influence a potential job seeker’s decision when they choose to work with an organization. 

So, what is group life insurance, how does it work, and what can it be used for? Let’s find out. 

What is group life insurance?

A group life insurance is  a contract or an agreement that promises to pay an employee’s dependents a tax-free lump sum amount in the event of their demise. It is offered by an employer to a “group” of people—the employees. A group life insurance policy helps soften the financial impact that comes with losing an earning member of a family. 

While individual life insurance policies are owned by one person, a group life policy is owned by the employer. Think of it as an umbrella that one person is holding but is protecting several people from the pouring rain. 

Most group life benefits are offered as term life insurance that is renewed annually by the insurance provider. Unlike whole life insurance which covers an individual for their entire lifespan, term life policies provide coverage for a certain “term” or fixed period of time. 

Know more about employee benefits in Canada

How does group life insurance work?

Group life insurance gives a tax-free lump sum payment to an employee’s family or beneficiaries upon their death. In most cases, employers pay the premium for group life benefits or split the cost with their employees. 

Some insurance providers also let employees buy additional coverage for their dependents. In this case, the payout happens when the dependent passes away. It is typically a flat amount like $5,000 for a child or $10,000 for a spouse and is often used to cover funeral expenses. 

Benefits of providing group life insurance to employees

There are several benefits to providing group life insurance to employees, including:

• Increased employee retention: Employee benefits like life insurance encourage employees to stay with the company long-term, as they would lose this coverage if they left
• Increased employee satisfaction: Offering financial security for employees’ families shows a commitment to their well-being, boosting morale and overall job satisfaction
• Reduced business risks: Group coverage protects companies from large, unexpected expenses by replacing potential lump-sum payments to bereaved families with manageable monthly premiums. This helps maintain financial stability while ensuring employees’ families receive proper support

Group vs individual life insurance

Group life benefits offered to the employees of an organization are less expensive than an individual life insurance policy. Apart from the pricing, there are several other differences between group and individual life insurance policies. Some of these are:

• Flexibility: Group life insurance policies are usually a standard plan for all the employees of an organization. They do not take into consideration the unique financial requirements of every single employee. Individual plans on the other hand, offer flexibility to an individual who can choose the coverage option based on their economic and personal circumstances. 
• Underwriting: Most group life insurance policies do not require any underwriting and the plan is offered to all employees regardless of their age, gender, economic background, etc. Individual health policies require medical underwriting which can often be a tedious process, especially for those with pre-existing medical conditions. 
• Coverage: Since individual life insurance plans are customized for an individual’s needs, they offer ideal coverage for the insured, as opposed to group life insurance plans that are standard for all employees. 

Read more about individual life insurance

Group term life insurance

Group life insurance plans are usually offered as term insurance that covers the employees of an organization for a set period of time. It is a type of temporary life insurance which needs to be renewed, typically on a yearly basis. Group term life insurance policies pay a tax-free lump sum amount to the insured’s beneficiaries in the event of their demise. 

Insurers usually give employees the option to purchase additional cover for their families. If an employee were to leave their employer, they often have the option to convert the group term life plan into an individual policy. The cost for this however, will go up.  

Individual term life insurance

Similar to a group term life policy, individual term life plans pay a lump sum benefit to an individual’s beneficiaries if they die within the term policy. Individual term life plans can be for 10, 15, 20, 25, 30 years up to the age of 65. 

Some life insurance companies in Canada (such as RBC Life Insurance or Industrial Alliance Life Insurance) allow you to pick your own term (6, 8, 11 years, etc.).

What can group or individual term life insurance payouts be used for?

With term insurance, an individual or employee (depending on the type of policy), can choose to match time-bound debts or liabilities. This could include financial obligations like:

• Mortgage
• Any outstanding debt 
• Coverage for children’s education
• Living expenses for loved ones so they maintain the same standard of living

Group whole life insurance

Group whole life insurance provides coverage for an employee’s entire life. It is a type of permanent life insurance that has higher premiums and death benefits. Group whole life insurance is often offered at no cost to the employees. In cases where the cost is split or the employee chooses to add dependents or an advanced plan, the premium is deducted from their paycheck. 

Most group whole life insurance plans are offered to employees after they have completed a probationary period or any other defined duration before they get coverage. Like with any other insurance policy, group whole life requires employees to designate at least one beneficiary. Employees have the option to change beneficiaries if they want to. 

Unlike individual whole life insurance, group whole life benefits do not have a cash value component. 

Individual whole life insurance

Individual whole life insurance provides coverage from the day an individual purchases a policy till their demise. It is a permanent life insurance policy that doesn’t expire as long as the premiums are paid on time. 

Most whole life policies come with a cash value component. Part of the premium that an individual pays is invested and generates a tax-deferred cash value that grows over time. It can then be accessed in many ways such as:

• Withdrawing the cash value
• Borrowing the cash value
• Using it as loan collateral
• Cancelling the policy and cashing out the value

Key features of group life insurance

Group life benefits vary from one organization to another and all the decisions are made by the policy owner—the employer. Some of the key features of a group life insurance plan are:

• Benefits schedule
• Non-Evidence Maximum (NEM)
• Maximum benefit
• Premium
• Waiver of premium
• Coverage amount 
• Eligibility 
• Portability 
• Tax benefits 
• Benefit reduction and termination

Benefits schedule

A benefits schedule outlines the coverage an employee gets under a group life policy. This is usually based on the employee’s salary or a flat amount. Most insurers use two methods to calculate a group life insurance benefits schedule—earnings based schedule and flat benefit schedule.

• Earnings-based schedule: The coverage amount is based on the employees’ salary and may include commissions and bonuses. If the schedule is 2x of salary, an employee earning $100,000 will have coverage of $200,000
• Flat benefit schedule: This is a category or class-based coverage where members of a class have the same level of coverage, typically ranging from $25,000 to $500,000. Different categories of group members will get different benefits. For example, a senior vice president could get a benefit schedule of 2x their salary while a junior employee could get a flat benefit of $50,000

Non-Evidence Maximum (NEM)

Non-Evidence Maximum is the minimum coverage for which all eligible employees are enrolled without having to provide proof of insurability. An employee’s medical history and health condition is usually considered as proof of insurability. 

NEM gives employees a minimum level of coverage through their group life insurance plan. It is particularly important for those group members who might not qualify for individual life insurance due to health issues. 

The NEM amount can vary based on the size of the group and the perceived risk associated with it. Larger groups and those considered to be low risk may have higher NEMs that provide greater coverage without any underwriting. 

Maximum benefit

The maximum benefit is the highest amount of coverage that employees can get under a group life insurance plan. This upper limit is pre-defined in the policy document and it does not depend on the type of benefits schedule. 

Maximum benefit applies uniformly to all group members. It adds a certain degree of fairness and consistency to a group life insurance plan by ensuring that no individual exceeds the maximum coverage. 

The maximum benefit varies based on three factors:

1. Insurance provider’s guidelines 
2. Employer’s plan design or structure 
3. Regulatory guidelines 

It is typically set to balance the need for adequate coverage with the insurer’s risk exposure. 

An average employee in Canada works for 40 hours a week. That is 40 hours of their time dedicated to working for an organization and helping it grow and achieve its goals. In return they expect their employer to care of their wellbeing. One of the easiest and most effective ways for an organization to do this is by offering them an employee benefits plan. 

Employee benefits plans, also known as group benefits, employee insurance plans, or employer-sponsored plans, are offered by an organization to its full-time or part-time workers. In Canada, these plans are available in various forms, customized to meet the unique and diverse needs of an organization and its employees. 

In this blog, we’ve explained the different types of group insurance plans that are available. If you’re an employer, looking to attract and retain talent, or an employee who wants to understand group health coverage, this blog is for you!

How is a group health plan different from an individual health insurance plan? 

The main difference between a group health plan and an individual health plan is reflected in their respective names—the former covers a “group” of employees in an organization while the latter is purchased by an individual for personal health coverage.

Types of group health insurance plans in Canada

There are three types of group health insurance plans in Canada: Traditional group health insurance plans, Health Spending Accounts (HSAs), and extended group health insurance.

Traditional group health insurance plans

In Canada, traditional group health insurance plans are typically provided by employers to their employees. These plans cover various health-related expenses that may cause financial strain for individuals or their families. The main types of traditional group health insurance plans in Canada include:

1. Extended Health Care (EHC) plans

EHC plans are the most common form of group health insurance plan that employers provide to their team members as an additional perk for their efforts. Most EHC plans cover a comprehensive range of healthcare facilities, such as vision care, physiotherapy, chiropractor visits, prescription drugs, and more.

2. Dental insurance plans

Apart from EHCs, many group health insurance plans also offer dental insurance benefits that protect the individual as well as their dependents from any unforeseen expenses.

Dental plans cover a range of dental care services, including routine check-ups, cleanings, x-rays, fillings, extractions, and more extensive procedures like crowns and orthodontics.

3. Disability insurance

Another form of group health insurance includes disability insurance that may also be offered to employees. Disability insurance protects an individual when their health problem prevents them from working a job and earning a steady income for their family.

Individuals with disability insurance will receive periodic payouts that will help them easily cover basic day-to-day expenses such as groceries, mortgages, children’s education, etc.

4. Employee Assistance Programs (EAPs)

EAPs help with individuals’ overall well-being and can be added as a lucrative perk to a group health insurance plan. They offer support services such as mental health counseling, legal advice, and financial planning for employees dealing with personal issues that might affect their performance at work.

Find out more about how group health insurance can help small businesses in Canada

Health Spending Accounts (HSAs) 

HSAs are unique health accounts that provide a mutually beneficial way for employers as well as employees to work with health insurance. Otherwise known as Health Care Spending Account (HCSA) or Health Reimbursement Account, HSA is more of an out-of-the-pocket payment that the employer bears for their employees.

Employers receive high tax rebates from providing HSA facilities for their employees. On the other hand, employees prefer this scheme as it automatically eliminates the burden of copay and deductibles. Most HSAs have a set amount of annual coverage for each employee and their dependents.

Extended group health insurance

Extended group health insurance covers a detailed list of medical complications and illnesses that can be covered under the group health insurance plan as added benefits for employees. With a wide array of features to choose from, employers may provide some or all of the benefits that can be covered under this plan. 

Some of the most prominent features of extended group health insurance may include the following:

• Prescription drugs: It may include coverage of prescription drugs such as medications for hypertension, thyroid, kidney problems, or even insulin shots
• Vision care: This covers the cost of regular eye checkups, prescription glasses or contact lenses, eye care essentials, and even surgery if required
• Paramedical services: This covers the cost of paramedical services such as ambulance charges, extensive therapy, additional medical supplies, etc
• Critical illness insurance: This ensures that employees or their dependents receive a lump sum amount of money on being diagnosed with a critical disease such as cancer, heart attack, stroke, etc
• Accident insurance: This safeguards employees as well as their families from financial turmoil in case of an injury or trauma due to an accident
• Travel insurance: This provides complete security to individuals and their dependents in case a medical emergency strikes while they’re traveling

Types of group health benefits 

In Canada, group health benefit plans typically fall into three main categories: employer-sponsored plans, benefits provided through professional associations, and government-sponsored benefits.

Employer-sponsored benefits

Employer-sponsored benefits are offered by an employer to the employees of an organization, forming a key part of an organization’s compensation package. Employers work with licensed experts, such as the ones at PolicyAdvisor, to obtain a group health plan that is tailored to meet the needs of the employee pool at the organization. 

Employer-sponsored benefits are typically part of an employee’s compensation package and are offered as a perk. This means that the employer pays most or all of the premium for the group health benefits being offered to their employees. Since these benefits are offered to a group of people, the premiums are lower as compared to individual plans since the insurer’s risk is distributed amongst the pool of employees. 

In some cases, the cost might be split between the employer and employees, especially if the latter chooses to add family members to their group health benefits plan. 

Why employees need to understand their work insurance policy

Key features of employer-sponsored plans

Some of the key features of employer-sponsored group benefits plans are:

✅ They can be paid for largely or in entirety by an employer

✅ Smaller organizations usually need 100% participation while larger ones will need 70%

✅ Employees can add family members to their group benefits for an additional cost 

❌ Employer-sponsored plans are typically not portable and only last for the term of employment

❌ Employer-sponsored plans have limited customization

❌ Some organizations might exclude part-time workers or employees on unpaid leave from these plans

Learn more about how group health insurance works

In the fast-paced and high pressure business world, companies use employee benefits to nurture their employees and ensure their well-being. 

This guide covers all you need to know about employee benefits (also known as group benefits and group health insurance). We’ve explained what they are, their types, structures and compliances, and how to build an employee benefits package. 

What are employee benefits?

Employee benefits are services and perks offered to employees over and above their salaries and wages. Employee benefits plans typically include a suite of benefits such as paid time off (PTO), health and dental insurance, disability and critical illness insurance, retirement benefits, and more.

Certain benefits such as pension plans and employment insurance are mandatory by law to ensure a basic level of financial security and protection for employees. Other benefits are voluntary and are offered at  the employer’s discretion to attract and retain talent, boost morale and differentiate themselves in the competitive job market. 

Know more about employee benefits plans in Canada

Why are employee benefits important?

Employee benefits help boost employee well-being and morale, and can increase job satisfaction and build loyalty. Here’s why employee benefits are important:

• Attracting and retaining talent
• Financial security for employees
• Aid in work-life balance 
• Ensure legal compliance for the employer 
• And more

Who is entitled to benefits in Canada?

Any full-time employee in Canada is entitled to receive employee benefits and perks from their company. Although the benefits may vary from one company to another, companies are legally required to offer government-mandated benefits such as CPP, sick days, PTO, etc. Most companies also offer health and dental, AD&D, etc., to their employees.

Even small businesses are expected to provide their workforce with some employee benefits and perks within their budget.

Do employers have to provide employee benefits in Canada?

There are certain mandatory employee benefits that all employers are required to provide by law. These are:

• Employment insurance 
• Canada Pension Plan (CPP)
• Workers’ compensation insurance
• Paid time off (PTO)
• Vacation benefits

Apart from the mandatory benefits, many employers offer supplemental benefits like health and dental plans, life insurance, disability insurance, etc. These are optional benefits that are part of an employee benefits package and are offered at the sole discretion of the employer. 

What are the standard employee benefits in Canada?

Standard employee benefits in Canada include pension plans, maternity and paternity leaves, paid time off (PTO), employment insurance, workers’ compensation insurance, vacation benefits, and sick leaves. Some of the standard optional employee benefits that some employers choose to offer are group health plans, wellness programs, additional days off, and others. 

Types of employee benefits

Mandatory employee benefits in Canada can be categorized into two types:

1. Benefits mandated by law
2. Benefits offered on an optional basis

Mandatory employee benefits in Canada

There are certain group benefits that are mandated by law in Canada. In most provinces, the Employment Standards Act defines the rights of employees and the responsibilities of employers. Failing to offer these mandatory benefits can lead to legal action and fines.

Employment Insurance (EI)

Employment Insurance (EI), run by the Federal Government, is a program that offers temporary financial support to employees who are unable to work due to one of the following reasons:

• An illness 
• To care for a newborn or adopted baby (paternity and maternity leave)
• Compassionate care leave
• Loss of job through no fault of their own

Unemployed workers can receive up to 55% of their average weekly earnings as EI. As of January 1, 2024, the maximum yearly insurable earnings in Quebec and the rest of Canada is $63,200 which means an unemployed worker can get $668 per week. 

Here are the key features of employment insurance:

• If an employee is unable to work due to an illness or other reasons, they can claim EI for up to 45 weeks 
• EI depends on the unemployment rate in their province at the time of filing the claim 
• It also depends on the number of insurable hours an employee has accumulated in the past year (52 weeks) 
• Workers can receive EI for up to 26 weeks for unemployment due to sickness, 15 weeks for maternity, and 15-35 weeks for compassionate care

The program is administered by Service Canada, a government agency, and individuals typically apply for benefits online or by phone. They must continue to meet eligibility requirements while receiving benefits, such as actively seeking employment and reporting any income earned during the benefit period.

Pension plan 

The Canada Pension Plan (CPP) is a retirement savings plan that provides a stable income during retirement for individuals and their families.In addition to retirement benefits, the CPP also offers disability and survivor benefits. 

The CPP makes pension contributions mandatory for most employees. The pension contributions are typically split equally between the employer and the employee. Employees can opt to receive  a reduced pension amount as early as the age of 60, although the full benefits start to pay out, once they reach the age of 65 years. Any employee earning less than $3,500 per year is exempt from this contribution along with their employer. Similarly a self-employed individual may voluntarily opt-in to the program.

Under the CPP, employers and employees pay 5.95% of a worker’s salary in annual contributions which is capped at $3,867 per year. 

While all of Canada follows the CPP, Quebec has its own pension plan called the Quebec Pension Plan (QPP), applicable only to the province of Quebec. It requires employers and employees to contribute 5.4% of a worker’s salary and caps it at $3,867 per year. 

Holidays

Holidays are mandatory for any individual to sustain a healthy work-life balance. The Canadian government strictly asks companies to provide abundant holidays for the overall well-being of the employees. This allows employees to rejuvenate and spend quality time with their families while still being paid what they deserve.

Here is a list of the most prominent holidays celebrated across Canada:

1. New Year’s Day
2. Good Friday
3. Victoria Day
4. Canada Day
5. Labour Day
6. National Day for Truth and Reconciliation
7. Thanksgiving Day
8. Remembrance Day
9. Christmas Day
10. Boxing Day
11. Civic Day
12. Easter Sunday

Workers’ compensation insurance

Workers compensation is a form of social insurance that provides financial and support services to employees who experience work-related injuries or illnesses. Every province has a Workers’ Compensation Board (WCB) that manages and regulates the compensation  offered to employees. The WCBs also decide the premiums that employers need to pay. 

While most organizations need to register with their provincial WCBs, there are certain categories that are exempt from paying workers’ compensation insurance. The province-based exemptions are listed below:

• Alberta: Self-employed individuals 
• British Columbia: Athletes, coaches, and stunt persons 
• New Brunswick: Small businesses with less than two employees
• Newfoundland and Labrador: Workers at private residences and athletes 
• Nova Scotia: Self-employed individuals and businesses with less than two employees
• Ontario: Owners and directors of an organization, financial institutions, law firms, and real estate agencies
• Prince Edward Island: Artists, entertainers, volunteers, clergy, company directors, door-to-door salespeople, newspaper delivery people, professional athletes, and coaches
• Saskatchewan: Farming and ranching industries
• Quebec: Self-employed individuals, athletes, police officers, firefighters

Vacation benefits 

Based on where an individual is working in Canada, their vacation entitlement will vary. They can be accrued in one go or prorated for an employee. The following table gives an overview of the provincial vacation entitlement in Canada:

Maternity and parental leave

Employees are entitled to 17 weeks of maternity leave that can be taken up to 13 weeks before the expected date of delivery. Employees who adopt a child are entitled to 63 weeks of parental leave. The leave can be taken by one parent or shared between both parents. 

Sick leave

Different provinces have varying rules when it comes to sick leave. Some of the key features of sick leave as an employee benefit are:

• Sick leave is not pro-rated. A set number of sick leave days are given to the employees at the beginning of each year 
• Employees who join in the middle of a year are entitled to the entire number of sick leave for that whole year 
• Sick leave cannot be cashed out and is not carried over to the next year

The following table has the sick leave entitlement for each province in Canada:

Optional employee benefits

Although they’re optional employee benefits, employers shouldn’t really treat them lightly. Optional employee benefits are what truly attract and retain employees and should ideally be a crucial part of any organization’s hiring strategy. 

Group health benefits 

Canada has provincial health insurance that is offered to every citizen. So the question is—why should an employer offer health insurance at all? It’s because provincial health insurance only covers some essential medical services while group health benefits are more comprehensive in nature. 

Group health benefits are cheaper than individual health insurance. They’re purchased by an employer and offered to all full-time and/or contractual workers.

Group health benefits typically include:

• Prescription drugs
• Paramedical services 
• Dental and vision care 
• Medical equipment 
• Some elective surgeries 
• Care homes and nurses 
• Health spending account 
• Medical emergency travel

Learn more about why group health insurance matters

Group RRSPs are playing a bigger role in how Canadians save for retirement, and Manulife stands out as one of the most reliable group insurance providers. With a strong track record, diverse investment options, and user-friendly digital tools for both employers and employees, Manulife makes retirement planning straightforward and accessible.

In this article, we’ll cover how Manulife Group RRSPs work, their key features, available investment choices, and more.

What is Manulife Group RRSP?

The Manulife Group RRSP is a workplace retirement savings plan that gives employees a simple, tax-efficient way to save for retirement through payroll deductions. Employers can add value by matching contributions and offering a structured savings plan.

What are the types of Group RRSPs offered by Manulife?

Manulife offers two main types of Group RRSPs to help employers support their employees in building long-term financial security: the Standard Group RRSP and the FutureStep Group RRSP.

These plans are designed to suit businesses of all sizes, from large corporations to small and mid-sized companies, by providing flexible, tax-efficient savings options and user-friendly administration.

Standard Group RRSP

This plan is offered to employees through their employers, with contributions made via payroll deduction. Employees benefit from immediate tax savings and the convenience of automatic contributions.

The plan includes access to a broad selection of investment options, as well as online tools to help employees manage their accounts and plan for retirement with confidence.

FutureStep Group RRSP

Designed specifically for small to medium-sized businesses, the FutureStep Group RRSP includes a Registered Retirement Savings Plan (RRSP) along with an optional Deferred Profit Sharing Plan (DPSP) component funded entirely by the employer.

It provides access to high-quality investment options, user-friendly online administration, and educational resources typically reserved for larger organizations.

What is the FutureStep® Group RRSP Plan by Manulife?

The FutureStep Group RRSP is a workplace savings plan designed for small and mid-sized Canadian businesses. It combines a group RRSP with an optional Deferred Profit Sharing Plan (DPSP), offering a flexible and cost-effective retirement savings solution

What are the key features of Manulife FutureStep® Group RRSP?

The Manulife FutureStep® Group RRSP offers a simple, flexible, and tax-efficient retirement savings solution for Canadian employers and employees. Whether you’re a small business owner or part of a growing organization, Manulife’s Group RRSP provides a wide range of features that make retirement planning easier and more effective.

Here are the key features of Manulife’s FutureStep® Group RRSP plan:

• Easy online plan setup and administration
• Comprehensive employee support and retirement education
• Flexible investment options for all experience levels
• Competitive, low investment management fees (IMFs)
• Immediate tax savings for employees
• Strong recruitment and retention benefits for employers

Easy online plan setup and administration

Manulife designed FutureStep® to simplify retirement plan management. Employers can quickly apply online, set up the plan seamlessly, and enjoy hassle-free ongoing administration. Manulife’s secure website allows easy submission of contributions and provides clear, accessible reports. Support is available in both English and French through the customer service centre.

Comprehensive employee support and retirement education

Employees receive top-tier resources to help them plan and save for retirement. This includes online retirement planning tools, personalized annual statements, and access to the Steps Retirement Program®, Manulife’s leading educational platform. Licensed financial education specialists offer ongoing guidance, while online enrolment and account management make participation simple.

Flexible investment options for all experience levels

FutureStep® accommodates employees with different investment knowledge and preferences:

• Target Date Funds (Ready-made, No investment involvement): Automatically adjust asset allocation based on retirement timing
• Asset Allocation Funds (Guided, Minimal investment involvement): For employees who want some involvement but less complexity
• Market-based funds and Guaranteed Interest Accounts (Do-it-yourself, Investment involvement required): For experienced investors managing their own portfolios

Competitive, low Investment Management Fees (IMFs)

Manulife’s group plan investment fees tend to be lower than those of individual mutual funds or bank-managed accounts. Lower fees help employees’ savings grow faster over time.

Immediate tax savings for employees

Employees receive immediate tax savings because payroll contributions lower their taxable income. As a result, they pay less income tax while consistently growing their retirement savings.

Strong recruitment and retention benefits for employers

By offering the FutureStep® Group RRSP, employers enhance their compensation packages, making their workplaces more attractive to top talent. The plan can foster employee loyalty by supporting long-term retention through financial security.

Who is eligible for the FutureStep® Group RRSP plan by Manulife?

The FutureStep Group RRSP is designed for businesses with at least two employees and a minimum combined annual contribution or asset transfer of $30,000 over a three-year period.

How to enroll in a Manulife Group RRSP?

Enrolling in and managing a Manulife FutureStep® Group RRSP is straightforward for both employers and employees. Employers begin by setting up the plan through a licensed group benefits advisor, customizing the design to fit their company’s needs. 

Employees can then easily enroll and manage their accounts through a secure online portal or mobile app, accessing all the tools they need to save, invest, and track progress.

To enroll into a Group RRSP plan, as employers, you need to follow these key steps:

• Choose your plan design: Select features such as contribution options and eligibility criteria
• Decide on employer matching: Determine if and how much the employer will match employee contributions
• Customize investment options: Work with Manulife to set up the investment lineup that best suits your workforce
• Provide company and administrative details: Submit essential business information such as legal company name, business number, fiscal year-end, and contact details for authorized signatories and plan administrators
• Set contribution frequency and method: Choose how often contributions will be submitted (weekly, bi-weekly, or monthly) and specify the payment method (e.g., Pre-Authorized Debit)
• Define plan eligibility and enrollment rules: Decide who can join (full-time, all employees), any waiting periods, and contribution formulas
• Establish communication preferences: Specify the languages and channels (digital, email, written) for member communications
• Complete compliance and documentation: Review and approve all submitted information; sign plan documents to activate the plan within designated timelines

Employee Assistance Programs (EAPs) are often associated with mental health support, crisis counselling, and workplace conflict resolution. However, their role today has expanded well beyond mental wellness. EAPs provide free access to financial advisors, legal consultations, eldercare support, and emotional counselling.

In this article, we’ll discuss the benefits of EAPs in retirement planning and how they can help retirees prepare financially, emotionally, and legally for life after retirement. 

What are Employee Assistance Programs (EAPs)?

EAPs are employer-sponsored programs designed to support the well-being of employees. They’re an important part of an employee benefits package. While initially focused on mental health and substance abuse interventions, today’s EAPs offer a broader scope of services, including:

• Confidential mental health and counselling services
• Financial advice and budgeting tools
• Legal assistance for wills and estate planning
• Referral services for eldercare and housing
• Work-life balance and stress management resources

What are the benefits of Employee Assistance Programs (EAP) for retirement?

Employee Assistance Programs (EAPs) help employees prepare for retirement by offering practical, personalized support. They provide access to financial and legal advice, emotional counselling, and lifestyle planning. These services empower employees to retire with confidence and clarity, often at no extra cost.

EAPs support retirement planning by offering a wide range of services like:

• Free financial and legal consultations

EAPs offer access to professionals who can guide employees on retirement savings, pensions, wills, and legal documents, helping them make informed decisions

• Debt and credit management 

Employees can get help managing debt, improving credit scores, and creating realistic budgets for a stable financial future post-retirement

• Estate and tax planning 

EAPs provide resources and expert advice to help employees organize their estate, minimize tax liabilities, and plan how their assets will be distributed among their dependents

• Emotional support for retirement transition
  Retirement can bring emotional challenges. EAPs offer counselling and mental health support to help employees cope with identity changes and life adjustments
• Pre-retirement education workshops
  These workshops educate employees about retirement options, government benefits, income strategies, and lifestyle changes to prepare them mentally and financially
• Eldercare and lifestyle planning services
  Employees nearing retirement often care for aging parents or spouses. EAPs provide resources for caregiving, housing, and health planning to ease that burden

How much do EAPs cost in Canada?

In Canada, the cost of providing Employee Assistance Programs (EAPs) typically ranges between $3.00 to $4.00 per employee per month, with an average estimate of around $3.50 per employee per month. For example, a small business with 10 employees would pay approximately $420 annually for EAP coverage.

On an annual basis, EAP costs can range from $12 to $40 per employee per year, depending on the provider, level of service, and pricing model used.

Common EAP pricing models include:

• Per employee per month (PEPM): Fixed monthly rate per employee, often with service tiers
  
• Value-based pricing: Cost tied to employee usage or engagement rates
  
• Flat-rate pricing: A set annual fee based on company size
  
• Per-visit pricing: Charges based on actual usage of services
  
• Hybrid models: Combine fixed fees with usage-based components

EAPs are generally free for all employees, as the employer bears the full cost to support employee mental health, well-being, and productivity. This investment is seen as affordable and can save money by lowering absenteeism, reducing disability claims, and improving work performance.

Can EAPs help with legal planning for retirement?

Yes, EAPs often include legal consultation services that are crucial for retirement preparation. From will and estate planning to tax support and real estate advice, these services help employees navigate legal challenges and reduce costly expenses as they plan for the future.

Assistance with will and estate planning

EAPs often include access to legal professionals who can help employees create or update their wills. This ensures that assets are distributed according to their wishes, and it can help avoid potential legal disputes or complications after their passing.

Drafting of powers of attorney and health directives

EAPs can support you in preparing key documents like a power of attorney, which lets someone you trust make decisions if you’re unable to, and a health directive, which outlines your medical care preferences. These documents are critical for ensuring that an individual’s wishes are respected during times of illness or emergency.

Legal advice on housing, real estate, or downsizing in retirement

As retirement approaches, many individuals consider relocating or downsizing their homes. EAPs offer legal advice to navigate housing decisions, whether it’s selling property, understanding real estate contracts, or managing the logistics of a move. This support helps retirees make informed decisions that align with their financial and lifestyle goals.

Tax planning support, including discounts on filing services

EAPs often connect employees with tax experts who can help them plan smart ways to save for retirement and withdraw money in a tax-efficient way later on. Some programs also offer discounts on tax preparation services, ensuring employees receive professional support at an affordable rate.

What emotional and psychological support do EAPs offer for pre-retirees?

Retirement brings more than financial changes. It can trigger stress, uncertainty, and emotional challenges. Employee Assistance Programs (EAPs) give pre-retirees the tools to manage this transition. 

Through one-on-one counselling and practical resources, EAPs help individuals face retirement. EAPs typically offer:

• Support for retirement-related anxiety, fear of change, or identity loss
  
• Help transitioning from full-time work to retirement life
  
• Relationship counselling to ease changes in family dynamics
  
• Tools and exercises to find purpose and fulfillment in retirement

Can EAPs help with life transitions and eldercare planning?

Yes, EAPs provide valuable support for life transitions, including retirement and eldercare planning. They offer pre-retirement workshops and transition seminars to help employees prepare for the change. EAPs also give access to services like identity theft protection and provide referrals for housing, long-term care, and eldercare resources. 

How can I make the most of EAP services for retirement planning?

You can make the most of Employee Assistance Programs (EAPs) by using available resources early and consistently. Combining EAP services with your employer’s retirement plans helps you reduce costs, minimize risks, and transition smoothly into retirement. 

• Map out a retirement timeline with EAP-provided financial advisors

Start your retirement planning early by working with EAP financial experts to create a clear timeline. This allows you to plan key milestones, assess your financial position, and adjust your approach as your goals evolve.

• Coordinate with your employer’s Group RRSP, PRPP, or pension plan

Maximize your retirement savings by integrating EAP advice with your employer’s Group RRSP, PRPP, or pension plan. This ensures you make the most of employer contributions and tax benefits.

• Use EAP legal experts to align your estate plans with your retirement strategy

Align your estate planning with retirement goals by consulting EAP legal professionals. This will help you create or update your will, set up powers of attorney, and plan for the efficient transfer of assets.

• Revisit EAP services yearly as your retirement needs evolve

Regularly review your retirement strategy with EAP services to ensure your plan remains relevant to your current needs. Annual check-ins allow you to adjust your plan based on changes in your financial situation, goals, or life circumstances.

• Proactive use of EAP resources can drastically reduce professional service costs and retirement risk

By using EAP resources proactively, you can avoid costly external consultations and reduce the risk of missteps in your retirement planning, making the process more affordable and secure.

What are the benefits of EAPs for employers and employees?

Employee Assistance Programs (EAPs) offer valuable benefits for employees and employers by addressing key issues that impact workplace productivity and employee retention. By providing comprehensive support, EAPs help improve workplace focus, strengthen employer branding, and reduce long-term costs.

• Boosting employee productivity and morale

Financial stress is one of the leading causes of employee distraction. EAPs that support retirement planning directly address these concerns, reducing absenteeism and improving focus by helping employees manage future anxieties effectively

• Strengthening employer branding and talent retention

Offering robust EAPs shows that an employer values long-term employee well-being. This commitment not only attracts top talent but also fosters loyalty, reduces turnover, and particularly appeals to older workers who prioritize retirement readiness

• Cost-effectiveness and reduced liability

EAPs encourage proactive retirement and financial planning, which can help reduce long-term disability claims, lower health benefit costs, and ease workforce transitions. These benefits contribute to overall cost savings and minimize employer liability over time

Small business owners in Canada are constantly looking for ways to attract and retain top talent, reduce operational costs, and improve employee satisfaction. One of the most effective ways to achieve these goals is by offering group benefits. 

While many small businesses hesitate due to cost concerns or lack of knowledge, the benefits of group insurance far outweigh the challenges. In this blog, we’ll take you through the top 10 benefits of group insurance for small businesses in Canada.

What are the benefits of offering group insurance for Canadian small businesses?

A group insurance plan provides numerous advantages that make it an ideal choice for small business owners. From affordable small business group health insurance to valuable group life insurance benefits, these plans deliver comprehensive coverage options that support both employers and employees.

Here are the key benefits of offering group insurance for small businesses in Canada:

• Cost-effective healthcare coverage
• Attracts and retains top talent
• Tax advantages for employers
• Improved employee health and productivity
• Customizable coverage options
• Group life insurance benefits
• Disability coverage and income protection
• Administrative simplicity
• Access to additional wellness programs
• Scalability as your business grows

Group insurance plans provide cost-effective healthcare coverage that helps small businesses manage expenses while offering quality benefits

One of the most significant group insurance advantages for small businesses is the affordability of health coverage. By pooling employees under a small business group health insurance plan, insurers spread the risk across a broader group, leading to lower premiums compared to individual insurance.  

Additionally, small business health insurance plans often come with volume discounts, making quality coverage accessible even for companies with tight margins. This enables small businesses to compete with larger firms when offering attractive benefits packages.

Offering group insurance helps attract and retain top talent by demonstrating your commitment to employee wellbeing

In today’s job market, prospective employees evaluate more than just salaries, they consider the full range of benefits offered. The availability of group benefits clearly communicate that your company prioritizes employee wellbeing, making your small business more appealing to qualified candidates.

Moreover, comprehensive group healthcare plans greatly enhance employee retention. When staff and their families have access to reliable health coverage, they are less inclined to seek employment elsewhere. This reduces turnover costs and helps preserve valuable institutional knowledge.

Employers can take advantage of valuable tax benefits when they provide group insurance plans to their workforce

One of the key group insurance advantages for Canadian small businesses is the favourable tax treatment. Employer-paid premiums for group insurance plans are generally tax-deductible as business expenses, providing financial relief while enabling businesses to offer valuable benefits.

The Canadian tax system encourages investment in employee health by allowing these deductions, making group insurance plans an attractive choice for budget-conscious small business owners.

Access to group insurance improves employee health and productivity by encouraging preventive care and timely medical treatment

Offering medical insurance for small businesses is more than a perk; it’s a strategic investment in productivity. When employees can access preventive care and timely treatment through group healthcare plans, they tend to take fewer sick days and perform better overall.

Such plans promote regular health check-ups and early intervention, helping identify potential issues before they escalate. This proactive approach reduces absenteeism and minimizes productivity losses.

Group insurance plans offer customizable coverage options tailored to meet the specific needs of your employees and budget

Modern group insurance plans are highly flexible, enabling small businesses to tailor coverage according to workforce needs and budget. Employers can often choose from a variety of benefits and dollar amount accessible, including:

• Extended health coverage
• Dental care
• Vision care
• Prescription drug coverage
• Paramedical services (massage therapist, chiropractor, acupuncturist etc.)
• Mental health support

This flexibility ensures you only pay for the benefits that matter most to your employees, maximizing the value of your small business group health insurance.

How to choose the right group insurance plan for your small business?

Choosing the right group insurance plan is a crucial decision for small businesses in Canada. With various options available, it’s important to understand your company’s unique needs, budget, and employee preferences to select a plan that offers the best coverage and value. 

Consider these key steps to select the best group insurance plan for your small business:

• Understand your business and employee needs: Assess employee demographics, preferences, and coverage requirements
• Set a budget: Balance premium costs with coverage quality and consider tax benefits
• Evaluate coverage options: Choose plans with essential services, a broad provider network, and extra benefits like wellness programs
• Check eligibility and compliance: Ensure your business meets size and enrollment criteria
• Compare plans: Review multiple providers for coverage, costs, and customer service
• Understand renewals rates: Most plans operate on a cyclical basis and rates are reviewed at the end term based on plan usage
• Speak with a licensed advisor: Consult our insurance advisors to find the most suitable and affordable plan

Offering group insurance has become an essential part of attracting and retaining talent, even for small businesses in Canada. However, every team is different, with unique needs when it comes to insurance. Small businesses can customize their group insurance plans by selecting flexible coverage options, adjusting contribution strategies, and including benefits that reflect their employees’ diverse needs.

In this blog, we’ll explore the key ways small businesses can customize their group insurance plans, the advantages of doing so, and the best ways to get started with a plan that works for both the employer and their employees.

What is group health insurance in Canada?

In Canada, group health insurance provides extended health coverage that employers offer as part of an employee benefits package. Both employers and employees usually share the cost, making it more affordable than buying individual plans.

According to the Canadian Life and Health Insurance Association (CLHIA), over 26 million Canadians receive extended health benefits through group insurance. For small businesses, a customized plan offers a smart way to attract and keep talent while meeting specific team needs.

While government healthcare covers essential medical services, group health insurance helps pay for extras. These include dental care, vision, prescription drugs, paramedical services like physiotherapy, and mental health support.

Why is customizing group insurance important for small businesses?

Customizing group insurance helps small businesses offer meaningful benefits while staying cost-effective. It also helps boost employee satisfaction, improve retention rates, and provide tax advantages.

Standard insurance packages often include unnecessary features that do not align with the employee’s requirements. With customization, businesses can cut out the unnecessary features and focus on what their team actually values, like dental, mental health, vision care or more.

Here are the key benefits of customizing group insurance:

• Cost control: Businesses can set clear budgets by adjusting coverage levels, percentage of benefits paid, and the shared cost between employee and employer
• Improved employee satisfaction: Employees feel valued when they receive benefits that matter to them
• Higher retention and recruitment: Competitive, tailored benefits help attract and retain quality staff
• Scalability: Plans can evolve as the business grows or as employee needs change
• Tax advantages: Group health benefits are often tax-deductible for employers and tax-free for employees
• Support for diverse workforces: Custom options allow coverage for part-time, contract, or remote staff
• Enhanced productivity: Better health coverage can lead to healthier, more engaged employees

What types of benefits can be included in a customizable group insurance plan?

There are different types of customizable group insurance plans in Canada that offer a variety of benefits such as health, dental, vision coverage, accidental death and dismemberment (AD&D), mental health support, and more to meet the specific needs of a business and its employees. These plans allow businesses to choose the most appropriate coverage while staying within budget. 

• Core health coverage
• Prescription drug coverage
• Dental care (e.g., check-ups, cleanings, fillings, orthodontics)
• Vision care (e.g., eye exams, glasses, contact lenses)
• Life insurance (basic or enhanced)
• Accidental death and dismemberment (AD&D)
• Mental health support (e.g., therapy, counseling, stress management)
• Wellness programs (e.g., gym memberships, health screenings, smoking cessation)
• Critical illness insurance (optional add-on)
• Short-term and long-term disability insurance (optional add-on)
• Travel insurance (e.g., emergency medical, trip cancellation)
• Employee assistance programs (EAP)
• Health spending accounts (HSA) or wellness spending accounts (WSA)
• Employee & family assistance programs (EFAP)
• Chronic disease management programs
• Health and lifestyle coaching (e.g., nutrition counseling, fitness coaching)

Can a small business offer different plans to different employees?

Yes, a small business can offer different group insurance plans to different employees. Employers often create plan variations, or “classes”, based on employment categories, such as full-time vs. part-time, management vs. non-management, or permanent vs. contract staff. 

This approach is legal in Canada, as long as the plan differences are based on objective job-related criteria and not discriminatory under the Canadian Human Rights Act. For example, offering enhanced coverage to executives or long-term employees is a common practice and helps attract and retain top talent.

However, employers should document their plan structure clearly and communicate it transparently. Unequal treatment without a valid reason can create dissatisfaction or legal risk.

Is it mandatory for small businesses in Canada to offer group health insurance?

In Canada, small businesses are not legally required to offer group health insurance to their employees. While employers are obligated to provide statutory benefits, such as Employment Insurance (EI), the Canada Pension Plan (CPP), and workers’ compensation, providing health, dental, and life insurance is optional. 

However, many small businesses choose to offer group insurance as a competitive benefit to attract and retain employees. Providing these benefits can improve employee satisfaction, promote wellness, and even offer tax advantages, making it a valuable option for growing businesses.

Where can I get the best group insurance quotes in Canada?

Finding the right group insurance plan for your small business starts with comparing quotes from multiple trusted providers. With so many options available in the Canadian market, it helps to have expert guidance and access to a wide range of plans—all in one place.

At PolicyAdvisor, we partner with 30+ top insurance providers across Canada to bring you competitive group insurance quotes tailored to your needs. Our licensed insurance experts take the time to understand your business, your budget, and your team’s needs. 

We will guide you through available options, explain the details, and help you choose the best-fit plan—whether it’s basic health coverage or a fully customized package with wellness and mental health support.

Retirement planning is one of the most important financial decisions Canadians will face. Whether you’re early in your career or thinking about life after work, choosing the best way to save for retirement can significantly impact your future.

Two of the most common workplace retirement savings options are pension plans and Group Registered Retirement Savings Plans (Group RRSPs). Both of these options offer tax advantages and potential employer contributions, but they work differently and serve different needs.

In this article, we’ll help you understand the key differences, advantages, and potential drawbacks of each retirement savings plan so you can make an informed decision based on your financial goals.

Understanding Pension plans and Group RRSPs

If your employer offers both a pension plan and a Group RRSP, it’s important to understand how each works before deciding where to contribute. While both provide tax advantages and may include employer contributions, they differ significantly in structure, flexibility, and long-term benefits.

What is a pension plan?

A Registered Pension Plan (RPP) is an employer-sponsored retirement savings program designed to provide long-term income after retirement. In Canada, RPPs are formal plans regulated by federal or provincial pension legislation, ensuring strong oversight and protection for members.

There are two main types of RPPs in Canada:

• Defined Benefit (DB) Pension Plan: This offers a guaranteed retirement income plan based on salary and years of service. The employer typically handles investments and assumes the risk
• Defined Contribution (DC) Pension Plan: In this plan, contributions from the employers and employees are fixed, but the eventual retirement income depends on investment returns

What is a Group RRSP?

A Group RRSP is a retirement savings plan sponsored by an employer, but structured like a personal RRSP. Employees contribute through automatic payroll deductions, often with employer matching contributions to boost the retirement savings fund.

How do employer matching contributions impact the overall savings in a group RRSP?

Employer matching contributions significantly boost the total retirement savings within a Group RRSP. These contributions are added on top of the employee’s regular payroll deductions, essentially increasing the amount saved without additional effort from the employee. 

Over time, this compounding effect, especially when invested wisely, can result in a substantially larger retirement fund, making employer matching one of the most valuable features of a Group RRSP.

How can employers improve Group RRSP participation?

Employers can improve Group RRSP participation by implementing a well-designed plan combined with ongoing education and monitoring.

Key strategies include automatic enrollment to increase initial sign-ups, employer matching to incentivize contributions, providing digital tools to educate and motivate employees, and regularly reviewing participation data to fine-tune the program. 

Here’s what employers should do:

• Automatic enrollment: Automatically enroll employees with an opt-out option
• Employer matching: Offer matching contributions to encourage saving
• Education tools: Provide simple tools that show how savings grow over time
• Regular reviews: Monitor participation and improve the plan as needed

A well-executed Group RRSP strengthens your benefits offering and helps employees take confident steps toward a financially secure retirement.

Which are the top Group RRSP companies in Canada?

Canada’s Group RRSP market is dominated by several leading financial institutions such as Manulife, Desjardins, Sun Life, Canada Life, RBC, and BMO. Each of these insurers offer unique features to meet employees’ retirement savings needs.

• Manulife Group RRSP: A top choice for employers seeking a digitally advanced solution, Manulife’s plans benefit from the firm’s investment management strength and user-friendly digital platforms
• Desjardins Group RRSP: Known for strong client support and deep market penetration in Quebec, Desjardins offers diverse investment options, seamless plan administration, and educational tools to help employees understand their savings strategy
• Sun Life, Canada Life, RBC, and BMO: Sun Life, Canada Life, RBC, and BMO offer reliable Group RRSP programs, each varying in fee structure, fund lineup, administrative support, and financial literacy tools. Their extensive national networks and employer resources make them competitive options

How to choose the right retirement plan for your employees?

Choosing between a pension plan and a Group RRSP requires you to align with your workforce needs and long-term organizational goals. Here are some questions to consider:

• What are the demographics of your workforce?

Younger, mobile employees often prefer the flexibility of Group RRSPs, while older, long-tenured employees may value the stability of a pension

• How competitive is your benefits strategy?

In industries where talent competition is high, offering modern retirement solutions like Group RRSPs with matching employer contributions can boost recruitment and retention

• What is your budget and administrative capacity?

Group RRSPs are often easier and less expensive to administer than traditional defined benefit pension plans, making them ideal for small businesses and startups

Ultimately, Group RRSPs are well-suited for organizations seeking flexibility, lower liability, and simplified management without compromising employee value.

Should employees prioritize a Group RRSP or a pension plan?

For employees, choosing the right retirement savings tool depends on their financial goals, risk tolerance, and career plans. Here’s how you can decide between pension plans and Group RRSPs:

• When is a pension better?

If you value guaranteed retirement income and plan to stay with one employer long term, a defined benefit pension may provide more security.

• When is a Group RRSP better?

If you prefer investment control, want portability, or may change jobs often, a Group RRSP offers more flexibility and autonomy.

Many Canadians benefit from a combined approach, participating in an employer-sponsored plan while also contributing to a personal RRSP or TFSA. This strategy spreads risk and enhances long-term retirement security.

A Group Registered Retirement Savings Plan (Group RRSP) is a workplace savings program in Canada that is offered through employers and helps employees build their retirement fund. Many Canadians may wonder how a group RRSP really works, and if this benefit is the right fit for their financial goals, especially after retirement.

In this blog, we’ll break down the ins and outs of group RRSPs, explore their benefits and limitations, and help you decide whether joining a group RRSP makes sense for your financial future.

What is a group RRSP?

A Group Registered Retirement Savings Plan (Group RRSP) is a retirement savings plan set up by an employer for their employees. It works a lot like a regular RRSP, but with a few added benefits that come from being part of a group.

Your employer partners with a financial institution to offer the plan. As an employee, you choose to join the group RRSP, and once you’re in, a portion of your paycheque is automatically deducted and deposited into your Group RRSP account. These contributions are tax-deductible, which means your taxable income will be lower.

Is a group RRSP better than an individual RRSP?

Both group retirement savings plans and individual RRSPs serve the same core purpose of helping Canadians save enough money for their retirement in a tax-advantaged way. However, they differ in how they’re set up, managed, and accessed. 

Your employer arranges a group RRSP and often includes helpful features like payroll deductions and matching contributions. An individual RRSP, on the other hand, gives you full control but requires more initiative.

Difference between a group RRSP and an individual RRSP

How does a group registered retirement savings plan work?

If an employer is looking to start a group RRSP for employees, they should start by setting up a plan from a reliable provider. Next, the employees need to enroll themselves in the plan, choose their contribution amount, and set up automatic deductions. 

Employers may even match part or all of the contributions that employees choose, boosting their cash value growth. Lastly, the provider invests the funds and monitors the savings until the employee decides to withdraw them upon retirement.

• Employer sets up the plan: An employer partners with a financial institution to offer the group RRSP
• Employees enroll and choose a contribution amount: Employees can decide how much of their salary to contribute. Most employees contribute 3-6% of their gross salary through bi-weekly payroll deductions that align with pay
  periods
• Automatic payroll deductions: The employer deducts the contributions directly from the employee’s gross pay before applying tax
  
• Employer may match contributions: Some employers match part of what their employees contribute, usually up to a certain limit
• Funds are invested: You then invest the contribution in the investment option of your choice, available within the plan (e.g., mutual funds), enabling tax-deferred growth until retirement

What happens to my group RRSP if I change jobs?

When you leave your job, you don’t lose the money you’ve contributed to your group RRSP. However, any employer contributions may be subject to a vesting period—the minimum period of time that an employee must be employed at a company to completely own the employer’s contribution towards their retirement. 

In Canada, most companies that offer retirement benefits set a vesting period of up to two years, meaning you must work with your current employer for at least two years to receive their contribution to your RRSP account.

Once you’ve left your existing job after completing the vesting period, you usually have a few options:

• Transfer the funds to a personal registered retirement savings plan or another registered account to maintain the tax-deferred status. Transferring is typically the smartest choice if you want to avoid unnecessary taxes
• Leave the funds in the group-registered retirement savings plan if the provider allows it. However, in this case, you won’t get new contributions as you’ve already changed jobs
• You can withdraw the funds, and the government will tax them as income

What are the tax advantages of participating in a group registered retirement savings plan in Canada?

One of the biggest advantages of participating in a group retirement plan is the group RRSP tax deduction. This benefit lowers your taxable income right away, giving you upfront financial relief. Here are some of the tax benefits of group registered retirement plans:

• Immediate tax savings: Your employer takes contributions from your pay before calculating taxes, which automatically reduces your income tax
  
• Group RRSP tax deduction: Every dollar you contribute lowers your annual taxable income, helping you keep more of your earnings for yourself
• Tax-deferred investment growth: Interest, dividends, and capital gains within the plan grow without being taxed, helping you build a substantial retirement fund
• Lower taxes in retirement: You’ll likely be in a lower tax bracket when you retire, so your withdrawals could be taxed at a reduced rate

Can I withdraw money from a group retirement savings plan before retirement?

Yes, you can generally withdraw money from a group retirement savings plan, especially if it’s a group RRSP, but there are a few important things to consider. 

A group RRSP allows early withdrawals, but any amount you take out will be subject to withholding tax and must be reported as income on your tax return. This could bump you into a higher tax bracket depending on how much you withdraw.

Withdrawing early from your group RRSP will reduce your retirement savings. Also, the contribution room —the maximum amount an employee is allowed to contribute to their RRSP in a given tax year without facing penalties —is not re-added. 

This means once you contribute a certain amount to your RRSP, you use up that portion of your lifetime RRSP limit, and even if you withdraw the money later, you cannot contribute it again. Hence, it’s best to consider withdrawing early from your group RRSP as a last resort.

How to get maximum benefits from a group registered retirement plan?

If you are looking to make the most out of your group retirement plan, make sure to contribute regularly and set up automatic deductions to never miss a payment. You should also increase your contributions annually to maximize cash value growth. Utilize the low fee structure of a group RRSP and continue to monitor your plan from time to time to ensure that your savings plan is up to date.

• Contribute regularly: Set up automatic payroll deductions to ensure consistent contributions. This will ensure that you are able to accumulate your desired amount into the savings plan
• Increase contributions over time: As your income grows, consider increasing your contributions to maximize your retirement savings
• Review the plan annually: Regularly assess your group retirement plan and make adjustments as needed to stay on track with your retirement goals
• Take advantage of low fees: Group RRSPs often have lower management fees than individual RRSPs, helping your investments grow more efficiently over time
• Review contribution room and limits: Monitor your annual RRSP contribution limit to avoid over-contribution penalties. Group RRSP contributions count toward your total RRSP room, so it is essential to monitor your limits regularly.