- 2% of my salary regardless of my contribution
- 4% of my salary matched to my contribution
What this means is that even if I didn't contribute anything to my Registered Retirement Savings Plan (RRSP) my company would kick in 2% of my salary. My company will also match the contributions that I do make up to 4% of my salary.
For example if I decide to contribute 5% of my salary into my RRSP out of my own pocket, my company will then contribute 2% (automatically), and 4% to match me. Therefore I'll end up with a contribution of 11% of my salary. Since my company is kicking in 6% out of this 11%, I am essentially starting out of the gate with an investment return of a whopping 120%
A recent survey by Sun Life Financial found that 1 in 5 people who have access to this type of program don't participate. About 40% of employed Canadians have access to this type of program, but only 80% participate. What that means essentially is that 1 in 5 people are saying 'no' to free money. Reasons for this varied from no desire to, to no money to spare, but the weirdest reason was the following "they preferred to invest on their own". I would be interested to know what these folks were investing in on their own that was worth passing up a guaranteed return of 25% to 150%, before the money is even invested.