What is RRSP matching?

In Season 3 of 'The Office' Michael Scott says "a boss' salary isn't just about money. It is about perks. For example, every year I get a $100 gas card. Can't put a price tag on that." While everything Steve Carrell's character says should be taken with no more than a grain of salt, perks are an important factor when considering the compensation of a position. A common perk that Canadian employees may benefit from is employer RRSP matching.

What is RRSP matching?

RRSP matching is a program for employers to contribute to employees' retirement savings, in which the employer contributes dollar-for-dollar, up to a certain amount of percentage of the employee's salary. For example, if your company offers 2% RRSP matching, this means an employee can contribute up to 2% of their income per pay cheque towards an RRSP, which the company will also match and contribute on their behalf. Even if the employee decides to contribute more per cheque, the company is only obligated to match according to the program’s cap.

Why do employers offer this?

Employers that want to attract top talent must be able to offer competitive advantages over competing employers. RRSP matching is a benefit that allows employers to retain and attract new talent, to create an edge over other companies seeking talent. In addition, these programs benefit the well-being and future insurance of employees, by encouraging saving for retirement and saving extra money for emergencies. In the end, happier employees make for more productive and accurate work, benefiting the company.

Should I seek a position that offers RRSP matching?

While RRSP matching is an attractive offering it is only a piece of an entire compensation package. When evaluating multiple job offers, ensure that you complete calculations to compare the total value of your compensation, based on how much you plan to contribute to your RRSP during your employment with the company. Some positions may offer high salaries and forgo an RRSP program, while others may offer lower salaries in exchange for an RRSP program.

In the end, the best option is to speak to a personal finance professional - as well as your HR manager to review your compensation package to ensure you are aware of all the perks you have available, and how you can maximize the money you take home from your hard work.

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