Employee RRSP contribution or cash bonus?

Discover the benefits of offering your employees an RRSP+ with the Fonds de solidarité FTQ employer contribution program instead of a cash bonus program1.

Fonds de solidarité FTQ

Employee attraction and retention are at the heart of every employer's concerns. As a result, many employers—especially SMEs—want to enhance their benefits to not only meet their employees' needs, but also become more competitive on the market.

Rather than offering raises, some employers prefer to wait until the end of the year to pay employee bonuses based on their company's performance. However, there is a way to give your employees more while reducing your costs. Simply opt for the RRSP+ with Fonds de solidarité FTQ employer contribution program.

A worthwhile alternative to traditional bonuses

Generally speaking, companies that offer bonuses do so by paying their employees a lump sum at the end of the year. Since each employee's bonus must be added to their total salary to calculate applicable payroll taxes, they don't benefit from the full bonus amount. Plus, you end up spending more.

Fortunately, there is a solution that allows your employees to take full advantage of their bonus while also reducing your payroll costs. By setting up an RRSP+ with the Fonds contribution program for your employees, they'll not only benefit from your full employer contribution, but also receive the additional 30 percent tax savings 2 on this amount.

Planning to give each employee $1,000?

Here's a breakdown of the two scenarios3.

Traditional payroll bonus

Employer contribution to the employee's RRSP+ with the Fonds

Amount offered to the employee

$1,000

$1,000

Employer's payroll taxes4

$125

N/A

Actual cost to the employer

$1,125

$1,000

Gross amount paid to the employee

$1,000

$1,000

Employee contributions (QPP, QPIP, and EI)

$74

N/A

Tax savings

N/A

$300 2

Total gross profit for the employee

$926

$1,300

Did you know?

You can contribute to your employees' RRSP+ with the Fonds with every paycheque. Of course, you can vary the amounts for different employees, or choose a contribution amount based on your own pre-established criteria, such as job position or seniority. All this is optional and at your discretion.

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