Investment
From Paycheque to Pension: Unlocking the Power of DCPPs, DPSPs & RRSPs
Why Employer Matching Might Be the Best Raise You’ll Ever Get
When we talk about building wealth, most people think about saving more, investing smarter, or cutting expenses. But there’s one strategy that’s often hiding in plain sight: taking full advantage of employer matching contributions.
If your employer offers a Defined Contribution Pension Plan (DCPP) or a Deferred Profit Sharing Plan (DPSP), you’re sitting on a golden opportunity. These plans are designed to help you save for retirement—and when your employer matches your contributions, it’s like getting free money added to your investment account.
Let’s break it down.
With a DCPP, both you and your employer contribute a set percentage of your salary. Often, employers will match your contributions up to a certain limit—say, 5% of your income. If you earn $80,000 and contribute $4,000, your employer might add another $4,000. That’s an instant 100% return before your money even hits the market.
With a DPSP, only the employer contributes—typically from company profits. You don’t put in a dime, but you still benefit from tax-deferred growth. These contributions are subject to vesting rules, meaning you may need to stay with the company for a certain period (often two years) to keep the funds.
Case Study: Emily works for a mid-sized engineering firm. Her employer offers a DCPP with 5% matching. She earns $90,000 and contributes $4,500 annually. Her employer matches that with another $4,500. Over 20 years, assuming a 6% annual return, her matched contributions alone grow to over $330,000. That’s not just a retirement plan—it’s a wealth engine.
Case Study: Carlos works for a logistics company with a DPSP. His employer contributes $3,000 annually. After three years, Carlos leaves the company and transfers $9,000 into a LIRA. He didn’t contribute anything himself, but now he has a locked-in retirement account growing tax-deferred.
Why This Matters
Employer matching is one of the few guaranteed returns in investing. It’s not subject to market volatility, and it doesn’t require complex strategies. All you have to do is show up and contribute.
Yet many Canadians leave this money on the table—either by not enrolling, not contributing enough to trigger the full match, or not understanding the value of vesting periods.
Final Thought
If your employer offers matching contributions, max them out before anything else. It’s the fastest, safest way to accelerate your retirement savings. Think of it as part of your compensation—not optional, but essential.
We help you uncover these hidden opportunities and build a retirement strategy that’s not just smart—it’s optimized.
