Executive benefits and key-person planning
A more considered approach to retaining key people.
Some employees are central to the continuity of a business. For certain employers and executives, planning designed for a specific role, rather than for the workforce as a whole, is another way to think about long-term retention. This page explains the terms and when the conversation may be worth having.
Executive benefits is the category. An RCA is one tool within it.
Both are distinct from a group retirement program. The differences matter because the rules, obligations and suitability are different for each.
Group retirement
A broad-based program
Retirement savings offered to eligible employees generally, through a Group RRSP, DPSP or pension plan, with one set of rules for each class.
Group retirement →Executive benefits
The broader category
Benefits or arrangements designed for specific senior roles rather than the whole workforce. This can include enhanced insurance limits, individual arrangements or supplemental retirement planning.
Retirement Compensation Arrangement
One specialized tool within it
A specific type of employer-funded arrangement defined in Canadian tax legislation, with its own funding, trust and reporting rules. It exists to provide retirement benefits beyond what registered plans allow, for particular people.
Descriptions are general. The design, funding and tax treatment of any executive arrangement depend on the specific structure and should be reviewed by qualified legal and tax professionals before any decision.
When one key departure would be particularly costly.
Suitability depends on the circumstances. This is not a universal strategy for every senior employee or high earner.
- 01 A senior executive or founder whose departure would be costly to the business.
- 02 A long-term retention or succession objective that ordinary compensation does not address.
- 03 An employer evaluating supplemental retirement strategies for a small number of key people.
Start with the design questions.
An executive arrangement is a business decision before it is a product. These are the questions Your Friend With Benefits works through with you, and with the specialists the design requires.
- 01 Which person, or role, are we trying to retain or reward, and for how long?
- 02 What business outcome is the arrangement meant to protect?
- 03 What funding, legal and tax obligations would the business take on?
- 04 How would benefits, vesting and conditions operate in practice?
- 05 Which licensed, legal and tax professionals need to be part of the design?
Let's determine whether this belongs in your retention strategy.
The conversation starts with the business objective and a careful review of the rules, the risks and the alternatives. Your Friend With Benefits does not provide legal or tax advice; the right specialists are brought in where the design needs them.