High Cost Group RRSPs

So my new company offers a group RRSP. It’s free cash so I can’t turn that down. But I am not too impressed with the investment selections available. Basically they are just a bunch of mutual funds and a few “managed portfolios” classified by risk profile. Nothing here that isn’t giving at least 2% in MERs to some company. I might just go for the managed portfolio option, somewhere between balanced and aggressive, so that I don’t have to worry about anything. I will definitely be calling HR and talking about what alternatives they could be doing instead. Like offering some low-fee index mutual funds instead. I definitely will not be putting any of my own money into the group RRSP. Instead I will put the rest of my allotment into my E*Trade account where I will continue to purchase low-cost passive index ETFs.

Update (June 28, 2007): I might have jumped the gun on that post a bit. Assuming that the mutual funds are all high MER funds. It turns out if I don’t choose anything on the initial form, they will just put it in a high interest savings account. Then, when I get online access you can supposedly play around from there all you want. Since I don’t have time to call HR and find out more about the investments options I might just do that for now.

Update (July 10, 2007) : Looks like there are some somewhat low-cost options available. Nothing as low-cost as index ETFs though.

8 thoughts on “High Cost Group RRSPs”

  1. Dave: I am surprised that your Group RRSP has high cost funds. Did you ask the plan administrator exactly what MER each fund charges? The reason I am wondering is because funds available through my group RRSP charge fees that are about half of what a retail investor will pay for the exact same fund.

  2. Dave – what’s the deal with the rrsp? Do they make contributions for you? or do they match? You should ask about low cost alternatives but don’t hold your breath. You can always transfer assets to your discount broker once a year or so.

    Deborah – checked out your website – looks good but where’s the feed?

    CC – it depends on how big the assets are – if it’s a smaller company with younger employees (like Dave) then there might not be much discount.

  3. CC: I should check what the exact MERs are. They aren’t listed, so I just assumed that they were high. I would make sense if they were a bit cheaper.

  4. FourPillars: They make contributions for me (5% of salary). Free money. No matching. If I can transfer assets to my own broker every year that would be cool.

  5. I would definetely be talking to HR to see if some modifications could be made so you have some control over it. Sounds like a good deal though, 5% of even $40,000 is still $2,000 (166.67/month) extra money. And I assume you have some experience and earn a bit more than the $40k starting…

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