Manulife RRSP: a guide for employers and employees

A registered retirement savings plan (RRSP) is one of the most effective ways for Canadians to save for retirement. Contributions made to an RRSP are tax-deductible, allowing the investments to grow on a tax-deferred basis until they are withdrawn. This means that an individual can build a retirement fund while reducing their taxable income, making RRSPs a strategic choice for long-term planning.

But not all RRSPs are created equal, and often, the key to maximizing the benefits is choosing the right provider.

In this article, Wealth Professional Canada puts the spotlight on Manulife’s RRSP offerings. We will give you an overview of how these products work, including the features that separate them from industry rivals. We also talked to Manulife leaders to provide insights into some of the plans they offer.

If you’re an employee or employer exploring your options, this guide can help give you an idea if Manulife RRSP suits your or your team’s retirement goals. To the financial advisors, planners, and portfolio managers who typically visit our website, this piece can be a good resource to send to your clients.

How does Manulife RRSP work?

Just like any other registered retirement saving plan, Manulife RRSPs are designed to help Canadians save for retirement while accessing tax benefits. Contributions to an RRSP provide immediate tax relief, which is a significant incentive for participating employees. In addition, the investments grow tax-free until these are withdrawn in retirement when a person’s tax rate is likely lower.

Employees can contribute directly to their RRSP accounts through payroll deductions if enrolled in a group plan. This also enables them to automate their savings easily. Employers may also offer matching contributions to further enhance the growth potential of the retirement fund.

Manulife RRSPs offer a range of investment options, including mutual funds, guaranteed investment certificates (GICs), and market-based funds. This variety allows plan members to tailor their investments based on their risk tolerance and financial goals.

Manulife also provides user-friendly online tools that let employees track their RRSP accounts and make changes to their investment allocations. These include retirement calculators, financial planning guidance, and personalized account management. Members can also access educational resources to help them make informed decisions.

Manulife Wealth, the financial services giant’s wealth management arm, has a network of more than 1,000 independent advisors across the country. These experts work with clients to provide advice on RRSPs, including how they fit into the client’s overall financial goals and the investments held within their plans.

Gain a deeper understanding of how RRSPs work in this guide.

What types of RRSPs does Manulife offer?

Manulife offers several types of RRSPs designed to meet the varying needs of businesses and their employees. These include:

Group registered retirement savings plan

This is the standard Manulife RRSP provided to employees through their employers. Contributions are made through payroll deductions, making it easy for employees to build their retirement fund. Contributions are tax-deductible. Investment earnings grow tax-free until withdrawal.

Members can access customized solutions that can help them choose which investments to grow their retirement fund regardless of their investment knowledge or interest level. Plan participants can also use the funds to:

• buy a first home through the Home Buyers’ Plan (HBP)
• pursue further education through the Lifelong Learning Plan (LLP)

Learn more about how first-time home buyers can use the RRSP in this guide.

FutureStep group registered retirement savings plan

FutureStep is a specialized group RRSP where members can go for a deferred profit-sharing plan (DPSP). This allows employers to share company profits with their employees in a tax-efficient manner. The plan is designed for employers with at least two employees and a minimum annual contribution of $10,000.

The plan can be appealing to small and medium-sized businesses because it provides a cost-effective way to offer competitive retirement benefits. The DPSP portion is funded solely by the employer. Contributions are tax-deferred until withdrawal.

Personal registered retirement savings plan

The Manulife Personal Plan caters to individuals who have left a group RRSP. The plan allows them to continue contributing to their retirement savings independently. The Personal Plan RRSP offers the same investment options and access to management tools as the group plans. This lets members maintain their retirement goals without interruption.

Manulife has a transition solutions team to assist members going through a career transition or retirement. Members can also access a range of tools and resources from the secure plan member site.

Pooled Registered Pension Plans

Though not exactly an RRSP, a pooled registered pension plan (PRPP) functions like a Manulife RRSP. It is designed for businesses, self-employed individuals, and employees without access to workplace pension plans. PRPPs are easy to manage, have lower administrative costs, and provide the benefits of pooled investment growth. These features make PRPPs suitable for small and medium-sized businesses.

Québec-based employers can access the voluntary retirement savings plan (VRSP), which is the province’s version of the PRPP.

What investment options are available for a Manulife RRSP?

Manulife provides a range of investment options for its RRSP offerings designed to cater to various investor needs. These include:

• Guaranteed funds: These funds provide Manulife RRSP holders a low-risk option by offering guaranteed returns and protecting the principal investment. They are ideal for conservative investors who prioritize capital preservation over growth.
• Asset allocation portfolios: These portfolios are pre-constructed by professional fund managers. They are designed to provide a balanced mix of asset classes, including equities, fixed income, and cash. They are suitable for investors who prefer a diversified approach but want to leave asset selection and rebalancing to the experts.
• Retirement date funds: Also known as target-date funds, these are managed to become more conservative as the target retirement date approaches. The investment mix adjusts automatically over time. This makes retirement date funds a simple, one-decision option for plan members who prefer a “set it and forget it” approach.
• Avenue portfolios: These offer a flexible and diversified investment option that includes a mix of asset classes tailored to various risk profiles. Avenue portfolios allow Manulife RRSP members to select a portfolio that aligns closely with their investment style and retirement timeline.
• Market-based funds: These funds include an assortment of investment choices such as Canadian, US, and international equities, bonds, and other market-linked investments. They are designed for investors who are comfortable with market fluctuations and seek higher growth potential in the long term.
• Multi-manager investment platform: This platform offers a customized investment experience by providing access to multiple fund managers within a single plan. It also provides plan sponsors and members with flexibility in selecting and managing funds backed by Manulife’s selection and monitoring process.

“Manulife Wealth advisors can recommend a wide variety of investment options to be held within an RRSP,” said Julie Seberras, head of wealth planning at Manulife Wealth. “These are subject to the advisors licensing, [and include] stocks, bonds, ETFs, mutual funds, and guaranteed products.”

Manulife Bank, Manulife’s banking arm, meanwhile, offers two investment options for its RRSP offerings, according to Kerry Reinke, vice-president of product at Manulife Bank.

 “There is a daily high-interest savings account (Registered Advantage Account) that is fully liquid and GICs ranging from 30 days to five years,” he said. “With two investment options available, the client has the ability to choose between locking in the funds for a guaranteed rate of return or keeping their funds liquid while still earning a competitive interest rate.

“With the added benefit of CDIC coverage, both options offer clients a secure place to invest their retirement savings.”
Curious about how your RRSP contributions will grow in the next few years? This online RRSP calculator can provide an accurate estimate.

What are the pros and cons of Manulife RRSP?

Manulife RRSPs offer unique benefits, but they also have certain limitations. It is essential for employers and employees to consider these pros and cons when choosing an RRSP to match their needs.

Pros of Manulife RRSP

Access to competitive fees and employer matching

Most Manulife RRSPs feature competitive fee structures that help members keep more of their money invested and growing over time. Some group RRSPs also allow employer matching contributions, effectively providing more money to boost retirement savings.

“Unlike the majority of the marketplace, Manulife Bank does not charge any fees on transfer outs for the Registered Advantage Account,” said Reinke when asked what set Manulife RRSPs apart from industry rivals. “This makes it an ideal solution for parking funds in a registered vehicle to meet CRA deadlines, while taking the time to decide or wait out market fluctuations prior to transferring funds into long term options with Manulife.”

Extensive investment platform

Manulife offers a broad range of investment options within its RRSPs, including mutual funds, ETFs, segregated funds, and guaranteed interest accounts. This extensive platform enables investors to create a diversified portfolio that suits their risk tolerance and financial goals.

“Manulife Wealth’s advisors are independent and have a robust product shelf of investments to address the varied needs and objectives of their clients,” said Seberras. “This product shelf is available to Manulife Wealth clients regardless of the investable assets that the client may have.”

Integration with financial wellness tools

Manulife provides digital tools and resources for plan members. These include the member secure website, Steps Retirement Program, investment education hub, and i-Watch fund monitoring service. These tools empower plan members to make informed decisions about their investments and retirement strategies. They also enhance their overall financial planning experience.

Cons of Manulife RRSP

Complex fee structures

While Manulife offers competitive fees on some investment options, the overall fee structure can be complex and varies depending on the specific funds chosen. This can lead to higher costs for certain actively managed investments, which may affect overall returns if not carefully managed.

Limited investment customization in group plans

For group RRSP participants, investment options may be a bit limited compared to what is available to individual investors. This limitation can restrict the ability of members to fully customize their portfolios to their specific needs. This can also be a drawback for those looking for more personalized investment strategies.

Withdrawal restrictions and tax implications

Withdrawals from Manulife RRSPs are fully taxable as income, which can have a significant impact on retirement planning if not managed strategically. Unlike TFSAs, where withdrawals are tax-free, RRSP withdrawals can also affect eligibility for federal income-tested benefits and credits.

Find out how to withdraw funds from an RRSP in this guide.

How can you find the right RRSP for your needs?

For those searching for an RRSP that fits their financial goals, the Manulife experts have these pieces of advice:

“Always be sure to do your research and understand the features offered on each product,” Reinke said. “The key points one wants to seek out are liquidity, fees, and rates of return. It is always recommended that you work with your advisor to ensure you are investing in the most optimal product that meets your unique and individual needs.”

“Determine what level of advice is appropriate for you to help navigate whether an RRSP is the best account type for your objectives, tax situation, and savings strategy and which investments are most suitable,” Seberras added. “RRSPs are an important aspect of a financial plan, and it is important to understand how they will help you achieve your retirement goals.”

Visit our Retirement Solutions News Section for more tips and strategies on how to maximize your registered retirement savings plans. Be sure to bookmark this page to access breaking news and the latest industry updates.

Do you have experience with a Manulife RRSP? How was it? Let us know in the comments.