RRSP Matching and Refusing Free Money

I was inspired to write out my thoughts on this after reading Bridget’s post on Short Term Gain for Long Term Pain.

RRSP Matching at my Workplace

My workplace offers a 100% employer RRSP matching up to varying percentages of one’s salary based on seniority. The matching starts after one year of seniority and the percentage matched increases.

I had all my funds picked and all my paper work filed with HR weeks before my one year mark. Free money? Yes, please 🙂

Now I know that not everyone is as gung ho about personal finance as me. But imagine my shock and horror when I found out that most of my co-workers around me were not contributing to their RRSP’s. Especially when the company matched their contributions, 100%!

Free Money

I was one of the most junior staff members on my team at that time, but some of my co-workers and managers who had more seniority and higher salaries (hence, even more free money) did not contribute to their RRSP through our company. *palm to forehead*

I mean, if someone handed you $1,000 or $2,000 would you refuse it? Hell, no!

I tried to explain to a co-worker that the money she contributes via the company matching is not taxed, so even if she contributed $100 a month, her paycheck would not decrease by $100 since she’s taxed on less money. And even if she didn’t know what to put her money into, she could invest in low risk funds and still get the company match – it’s practically a 100% return. Alas, money can be such a touchy topic, I dared not go further unless she asked me.

Excuses, Excuses

I usually keep my mouth shut about personal finance, but after we got out of a learning session for RRSP, people just started talking about it. I heard comments like, “I have trouble spending less than I earn”, or “I need my entire paycheck, I can’t give up a couple hundred a month”, or “It’s so complicated, I don’t know where to start.”

I am not saying that I am better than these people for taking advantage of my company matching. I just wished they saw what an opportunity they have for money that is already part of their compensation package. Even if they put in just 3%, the company matches it all, and they’ve already contributed 6% to their retirement – easy peasy.


This didn’t happen at work, but I know people refused to contribute to employer matching RRSP since they did not get a tax shelter for the money the employer matched. *palm to forehead*

Yes, free money still counts towards your taxable income. But it’s free!

I digress.

Different Priorities

Maybe we all just have different priorities. Or maybe they want to contribute and just don’t know how to go about doing it. I know that I found it over whelming to start and that’s why I am so thankful I found this wonderful PF community online.

My priority is to reach financial freedom, and I will continue to take advantage of my employee matching (and saving aggressively) to get there.

Does your work place have employee RRSP matching? Do you take advantage of it?


P.S. Are you following me on Twitter @fab_frugirl?



Filed under Finance, Random

6 responses to “RRSP Matching and Refusing Free Money

  1. Our company does a match, and I definitely take advantage of it! And in the U.S. I think that both the match and your personal contribution is tax-deferred.

    You may not be saying you’re better than these people, but *I* am! 🙂

    It makes me crazy when people at work talk about finances and they’re being stupid. Like taking a loan from their 401(k) (which is almost ALWAYS a bad idea), or one new hire that hadn’t yet signed up for the 401(k). We told him to SIGN UP NOW!

    And an added weirdness of our company plan: if you were hired after a certain date, they don’t give you a pension anymore. Instead, they contribute an extra percentage of your paycheck into your 401(k) account, regardless of if you’re contributing anything. And percentages increase with your age and seniority. It’s pretty cool. And actually, that new hire discovered that because he had been an intern in past years, he was already getting that “pseudo-pension” money! Sweet!

    • LOL! I can be quite “judgey” when it comes to finances and people are just throwing away money. I’m trying to reel it in a bit 😛
      Free money is always great. As long as it’s not stolen or anything.

  2. we don’t have an RRSP matching at work but my money goes into a pension fund (so it’s the same in my mind). It doesn’t stop me from investing separately in my own RRSP fund though. I actually set it up so the money goes directly into a savings account & then goes into my RRSPs. I don’t ever see it so I don’t miss it!

  3. I completely agree! At my work they match up to 4% of the salary on my level. The program is voluntary after 1 year and mandatory after 2 years of employment. I am going to be with the company for a consecutive year in the middle of September and cannot wait!!!

    I too was completely shocked when I heard people COMPLAINING that they had to partake after 2 years…I mean really?!

    • I can imagine that people wouldn’t like to be forced into saving. I’m sure there would be an uproar if my company was “forced” to put money into our RRSP, too! They would feel like someone was taking away money from them!

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