Do you pay CPP and EI on group RRSP and DPSP contributions?

Owners mix these two vehicles up constantly. The same dollars reach your employees either way. What changes is how much also goes to payroll taxes.

At a glance

Why the DPSP is exempt

A DPSP contribution isn’t taxed as income to the employee when you make it. It’s taxed only when they withdraw it. Because it isn’t treated as current pay, it isn’t pensionable or insurable. No conditions, no exceptions.

Why the Group RRSP match isn’t

Your match into a Group RRSP is a taxable benefit. It goes on the employee’s T4 as income, and they get an offsetting RRSP deduction. Because it counts as pay, CPP applies every time. EI is the one exception: if the plan restricts employees from withdrawing your contributions while they’re still employed, the match is not insurable. A standard Group RRSP where employees can withdraw anytime saves you neither.

What the difference costs

Take a $5,000 annual employer contribution for one employee earning below the 2025 ceilings:

• Employer CPP at 5.95%: about $298.
• Employer EI at about 2.3% (1.4 × the 1.64% employee rate): about $115.
• Total: about $413 a year, for one person.

Small on its own. Now run it across a team of eight for ten years: roughly $33,000 in payroll taxes that a DPSP would not have triggered, before any rate increases.

Two caveats so nothing is ambiguous. If an employee already earns above the yearly CPP or EI ceiling, there’s no extra employer cost on that portion. Between the first and second CPP ceilings, the second tier of CPP applies at a lower rate of 4%.

What employees’ own contributions look like

When an employee directs part of their pay to a Group RRSP, that money is still their salary. CPP and EI apply to the salary as usual. What changes is income tax: payroll can reduce the tax withheld because of the RRSP deduction.

Your options

1. Route the match to a DPSP. Exempt from both. Usually the best fit if the company has profits and the employees aren’t 10%+ shareholders. See Group RRSP vs. DPSP.
2. Keep the match in the Group RRSP but restrict withdrawals while employed. Saves EI, not CPP. Employees lose access to that money until they leave.
3. Keep a fully accessible Group RRSP match. Simplest for employees, most expensive for you.

Illustrative, using 2025 federal rates: employer CPP 5.95% up to the Year’s Maximum Pensionable Earnings, second tier CPP 4% up to the second ceiling, and employer EI at 1.4 times the employee rate of 1.64%. Rates and ceilings change every January. Sources: Canada Revenue Agency payroll guidance on group RRSPs and DPSPs. General information, not tax advice.

Common questions

Are DPSP contributions subject to CPP?
No. Employer contributions to a DPSP are not pensionable earnings, so no CPP is payable on them.

Are DPSP contributions subject to EI?
No. Employer contributions to a DPSP are not insurable earnings, so no EI premiums are payable on them.

Is an employer Group RRSP match subject to CPP?
Yes, always. The match is a taxable benefit and counts as pensionable earnings.

When is a Group RRSP match exempt from EI?
When the plan restricts employees from withdrawing the employer contributions while they are still employed. Without that restriction, EI applies.

Do employee contributions to a Group RRSP reduce CPP and EI?
No. Employee contributions come out of salary, and CPP and EI apply to the salary as usual. The contributions do reduce the income tax withheld.