How much does a group retirement plan cost an employer?

Owners usually expect a group plan to come with an invoice. In most modern setups it doesn’t. Here’s every cost, in the order of how much it matters.

Cost 1: your contributions

This is the big one, and you control it completely. You choose the formula and the cap. A worked example:

• A team of 8 employees, each earning $60,000. Total payroll: $480,000.
• You match dollar for dollar up to 4% of pay.
• If every employee contributes the full 4%, your maximum cost is $480,000 × 4% = $19,200 a year.
• If only half of them take the full match, it’s $9,600.

Because you set a cap, the cost is predictable. You can budget it to the dollar. Many of the businesses I work with land somewhere around 3% to 4% of payroll in total. How to choose your number is in how much an employer should match.

Cost 2: CPP and EI, depending on where the match goes

A match paid into a Group RRSP is treated like pay. You owe the employer share of CPP on it, and EI too unless the plan restricts withdrawals while the employee works for you. Using 2025 rates, that adds roughly 5.95% for CPP and 2.3% for EI on employees below the yearly ceilings. On the $19,200 above, that’s about $1,140 of CPP and $440 of EI.

A match paid into a DPSP carries no CPP and no EI. The same $19,200 costs $19,200. The details are in CPP and EI on group plan contributions.

Cost 3: setup and administration fees

On the platforms I use, there’s typically no setup fee and no ongoing admin fee charged to the employer. The cost of running the plan is built into the investment management fee, which members pay from their accounts. If someone quotes you a setup charge, ask what it covers and why it isn’t included in the fee.

Be clear about what “free to the employer” means. It means your employees are paying for the plan through that fee. That’s normal, and it’s why the fee deserves your attention. A fair fee is the single biggest thing you can do for their balances.

Cost 4: your time

Most of the administration happens online. Your part is uploading contributions with payroll, adding new hires, and reviewing the plan once a year. For a small team, that’s minutes a month. If your bookkeeper dreads the plan, it’s set up wrong.

What you get back

Employer contributions are a deductible business expense, which lowers their cost after tax to the corporation. The bigger return is harder to put on an invoice: better hiring and longer tenure. I make that case in whether a group plan is worth it for a small business.

Payroll figures use 2025 federal rates for illustration: employer CPP 5.95% up to the Year’s Maximum Pensionable Earnings, and employer EI of 1.4 times the 2025 employee rate of 1.64%. Rates and ceilings change every January. General information, not tax advice.

Common questions

Is there a setup fee for a group RRSP?
On many modern platforms there is no setup fee and no ongoing admin fee for the employer. The cost of running the plan is included in the investment management fee that members pay.

Who pays the fees in a group retirement plan?
Usually the employees, through an investment management fee deducted from their account balances. The employer pays its own contributions and any payroll taxes on them.

Are employer contributions to a group plan tax deductible?
Yes. Employer contributions to a Group RRSP and to a DPSP are generally deductible business expenses, within the applicable limits.

Can I set a fixed budget for a group retirement plan?
Yes. You choose the match formula and a cap, such as dollar for dollar up to 4% of pay, so your maximum annual cost is known in advance.

Is a DPSP cheaper than a Group RRSP match?
For the employer, yes. DPSP contributions are not subject to CPP or EI, while a Group RRSP match always attracts CPP and usually EI.