Company RRSP matching and plan performance

[nzwasp]

I work for an American company in Canada and they base our RRSP match on what they give their employees for 401Ks and its shit.

When I first started it was a maximum 3% match on a 9% contribution rate but what I didn't know was it is only on a % of your total year income.

So when I first started in 2016 it my RRSP eligible income was 60K and if I contributed the full 9% or $5400 they would give me a match of $1800, and the match would be every payday. This year they have changed it to a match of 4.35% as long as you max out your contribution which is now 8% but its still on a % of my income. The income I now match on is 75K. But we use Manulife and when you set your contribution rate its against your entire income which is just a bit over 100K, also the match now is only for April to December and it happens once per year in the following January. Does anyone else have a more confusing RRSP match plan than this?

Also my performance of my plan (I think im in a growth portfolio on manulife) was -2.1% over the last 2 years. Does anyone else use manulife and are seeing a better return?

[Asian_defender]

that is confusing as shit. At my work its a pension contribution match.
Match 5% of your salary and the company will match 25% of that. You can chose to put in more but the cap for matching is 5%


Those returns are shit. Our company is with sunlife and we've seen positive returns even with the shitty markets and this is on a high risk portfolio
1% - 1 year
5% - 2 year
6.6% - 3 year

[nzwasp]

Ive started contributing to a robo invester for RRSP as well because Im a bit concerned that my company that I really enjoy working for definitely is cheap when it comes to RRSP plans. I also had to wait 18 months before I was even eligible to get a company match.

[lasimmon]

Manulife's returns were shit the last year or 2, I pulled my money from there to put into something under my control (left over from a company that pulled out of canada).

I don't follow what you described in the OP though.

[realazy]

What funds can you choose in your manulife group plan?

There are usually some pretty good mutual funds in group plans with discounted MERs. The Mawer International is one of those mutual funds, my group plan has the MER discounted to 0.9% which is pretty good for a managed fund.

[nzwasp]

[dandia89]

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go 20 - ML US Equity Index MAM or 25 - ML International Equity SL

No point putting it into bonds or canadian equity.

[nzwasp]

Thanks

[Xtrema]

FYI, you money isn't stuck in Manulife, you can always move it out if there are other firms that offer better returns.

Check the MER before you commit.

Also, depends on the reporting periods, there is close to a 15% swing on most indexes between end of Dec and now. TSX was 13700 Dec 24 and is 15700 today.

If you know you can afford to put into a group plan, try to do monthly payroll deduction so you can do cost averaging. In addition, you get less tax return at filing because you are not paying taxes during the year.

Say 9% of 75K is roughly $300 per pay check if you get paid 2x a month. Of that $300, roughly 30% would be comes from income tax that you would have to pay anyway, so you are really only contributing $200 of it. Tax refund sounds cool until you realize that you are basically lending that money to government @ 0% interest for the year.

[lasimmon]

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FYI, you money isn't stuck in Manulife, you can always move it out if there are other firms that offer better returns.

Check the MER before you commit.

Also, depends on the reporting periods, there is close to a 15% swing on most indexes between end of Dec and now. TSX was 13700 Dec 24 and is 15700 today.

If you know you can afford to put into a group plan, try to do monthly payroll deduction so you can do cost averaging. In addition, you get less tax return at filing because you are not paying taxes during the year.

Say 9% of 75K is roughly $300 per pay check if you get paid 2x a month. Of that $300, roughly 30% would be comes from income tax that you would have to pay anyway, so you are really only contributing $200 of it. Tax refund sounds cool until you realize that you are basically lending that money to government @ 0% interest for the year.

Depending on the work plan obviously.

[gwill]

Yours is crazy confusing.

My company matches up to 5% of what someone makes after 2 years employment. If I put in 5% theyll match it with 5. If you want to do 3% theyll do 3%. My only minor issue with them is they say they cant match any bonuses. There are lots of bonuses.

I'm not sure how true this is but I've taken it at face value. I think it's their way of limiting contributions.

[tonytiger55]

My last workplace was with Manulife. I contributed to try and get as much as I could. I did not put much in as the pay was shit. But enough to cover the match.
I was on the most aggressive portfolio of the choice of three they gave us. It was a targeted fund and there was fair gains over the last two years. 4-7% I think. No complaints.

To be fair two years is a very short time frame.

Though yesterday I initiated transfers to my personal RRSP. The reason being, the manulife was a specific target fund for the company. This is fine. BUT..The company has fucked up big time over the last few years and is reorganising. Even the reorganisation is fucked up. The recruitment policy is messed up, they are not attracting young workers, the current workforce is ageing. I don't have faith in the company to have a sustainable workforce with low turnover rate.

[Brent.ff]

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go 20 - ML US Equity Index MAM or 25 - ML International Equity SL

No point putting it into bonds or canadian equity.

hrmm..my work rrsp is auto directing to like 50% canadian equity..and has been getting smoked cause of it. I've been doing their 'retirement age' portfolio where they're supposed to change how aggressive you are, with how close to retirement (a long way for me, so quite aggressive now), but have an investment fee of 0.87%... dunno where to go with it! Returns were decent for the last three years, until the slaughter of last fall

for reference for OP, i put in 3%, they match 3% and give another 3% on top

[arcticcat522]

Manulife with work here too. They only match up to 1.5%. Since its relatively small, I use it as aggressive as I can. I made my own "portfolio." A large portion is in small cap Canadian stocks

[dandia89]

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hrmm..my work rrsp is auto directing to like 50% canadian equity..and has been getting smoked cause of it. I've been doing their 'retirement age' portfolio where they're supposed to change how aggressive you are, with how close to retirement (a long way for me, so quite aggressive now), but have an investment fee of 0.87%... dunno where to go with it! Returns were decent for the last three years, until the slaughter of last fall

for reference for OP, i put in 3%, they match 3% and give another 3% on top

0.87% is higher than most ETFs, but it's not the worst.

it's totally a personal thing, but i don't like holding much in canadian equity. us/international are more diverse and my job is dependent on the canadian economy. don't want to be overinvested in canadian work.

[Mitsu3000gt]

I am pretty sure that Manulife plan has a management fee of almost 2% - that is ridiculous. I would get out of that ASAP if you have a choice. Most good ETFs (i.e. Vanguard) have fees around 0.25% or less (VGRO/VBAL/VCNS are only 0.22-0.24% + a dividend).

A 2% fee ads up to huge money over the long term. If you have $100K in there you are paying them $2000/yr for literally nothing and you pay it whether or not you make any money. Imagine how much more money you could make if you invested an extra $2K/yr in another ETF. Over 20 years at a 5% return you are paying ~$66K in fees. I find that hard to wrap my head around.

Where I work I have the option to use RBC's "recommended" plan which is similarly bad, or I can choose to go self directed - you might have the same option.

[msommers]

Man if 2% is ridiculous, my Sunlife MER of 2.43% is a rip-off

[Mitsu3000gt]

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Man if 2% is ridiculous, my Sunlife MER of 2.43% is a rip-off

Well you can do the math haha - if you are going to keep that investment for a long time, that is a ton of money you are pissing away. 2.43% is very high. Not everyone has a choice to move it though if it's through your company.

[swak]

I'm with Great-west at work, and matching is at 2% (currently) goes up to 8% with seniority. Company matches dollar for dollar up to that precentile.
Return last year was -6% though lol in an aggressive portfolio.

I only put 3% in and other investments with IG - which has a much better rate of return.
Can't beat 100% return with employer matching though, so regardless if its "shit", cap that out!!!

[dandia89]

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I am pretty sure that Manulife plan has a management fee of almost 2% - that is ridiculous. I would get out of that ASAP if you have a choice. Most good ETFs (i.e. Vanguard) have fees around 0.25% or less (VGRO/VBAL/VCNS are only 0.22-0.24% + a dividend).

A 2% fee ads up to huge money over the long term. If you have $100K in there you are paying them $2000/yr for literally nothing and you pay it whether or not you make any money. Imagine how much more money you could make if you invested an extra $2K/yr in another ETF. Over 20 years at a 5% return you are paying ~$66K in fees. I find that hard to wrap my head around.

Where I work I have the option to use RBC's "recommended" plan which is similarly bad, or I can choose to go self directed - you might have the same option.

i did call manulife to confirm but all the management fees are around the 0.07-0.42% range. the higher side being for canadian equities.

Edit: after some googling, sounds like your company can negotiate with manulife. perhaps my company got some better rates.