SPP or RRSP? What’s best for you?
With many employers, the choice is between having pension contributions go into SPP or into an RRSP account. This comparison chart can help you decide what’s right for your future. We’re confident you’ll agree that SPP is the smart and simple choice.
The way it works…
Contributions
Plan structure
How the benefit is determined
How investments are managed
Management priorities
Oversight and accountability
SPP
Pooled together to provide the target benefit
Contributions made by multiple employers from many industry sectors to reduce risk -- if one employer becomes insolvent, the plan is still funded
Based on plan formula and contribution rate
Managed by pension investment professionals with access to a wider range of investment options. Typically higher returns and lower fees keep the plan financially healthy
Run by members, for members so your interests are our priority
Overseen by the SPP Board—USW members who are accountable to plan members
RRSP
Go into an individual account that you must manage
Contributions made by a single employer and depend on the financial position of that employer/sector -- higher risk for each plan member
Based on contributions and how well you manage your investments
You choose your own investments and when to buy and sell them. You can hire an advisor but you are responsible for all decisions made. It might sound attractive at first, but the reality is that you are often not provided with full information that you can understand, and Canadian investment management fees are some of the highest in the world
Run by a bank or other financial institution
Overseen by brokers, banks and financial institutions—accountable for sales and to the company shareholders
The peace of mind for plan members…
Benefit
Potential to outlive savings
Market risk
Involvement
Protection
SPP
Predictable monthly pension
payments for life
Cannot outlive your savings
You don’t bear the risk of the market ups and downs, the plan does--and it’s shared among all members to reduce the risk
Hands-free. No accounts to manage, professionals look after all of this for you.
Strict pension regulations and the Trust’s governance and policies provide protection for members
RRSP
Unpredictable lump-sum balance in your account that you must turn into an income stream
Potential to outlive savings if you withdraw too much or the markets fall
You bear the entire risk of the market performance -- ups and downs directly impact your account balance and resulting retirement income
Hands on. You choose investments, track RRSP limits, and manage your account.
Depends on the RSRP plan set-up, but typically limited protection for plan members
The plan features and details…
Withdrawals (protection of retirement income)
Survivor benefits
(if member dies)
(if member dies)
Portability
Retirement age
Taxation
SPP
Cash withdrawals not permitted after age 55 to protect your retirement income
Survivor pensions available if chosen by your spouse, or lump-sum death benefit (if pension not yet started)
Can transfer benefits out of the plan before age 55 if your membership in the Plan ends.
Benefits can be taken as early as age 55 (reduced) or full benefits at age 65 (not reduced)
Employer contributions not taxable to you, Pension Adjustment reduces your RRSP contribution room
RRSP
Cash withdrawals permitted, account balance can be depleted by current spending
Account transfers to spouse, beneficiary or estate in the event of member death
Can transfer account balance to personal RRSP any time
Account balance available at any age. Withdrawals must start by age 71
Employer contributions not taxable to you, employer contributions reduce your RRSP contribution room
Steelworkers Pension Plan
149 Main Street East
Hamilton, ON L8N 1G4
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