The short answer
A Group RRSP is simpler to run and gives employees more flexibility. A defined contribution pension plan (DCPP) is more tax-efficient for the employer, locks savings in for retirement, and carries more governance responsibility. Many employers land in between with a Group RRSP paired with a DPSP, and smaller employers who want a true pension can join a multi-employer DC plan like the LINK MEPP instead of sponsoring their own.
Payroll costs
This is the difference most employers overlook. Employer contributions to a Group RRSP are treated as employment income, so they're subject to CPP and EI premiums (and, in some provinces, payroll or health taxes). Employer contributions to a DCPP or a DPSP are not. On a 5% match across a 100-person team, that difference adds up to real money every year, and it also means more of each contribution reaches the employee's account.
Access to savings
Group RRSP money belongs to the employee and can generally be withdrawn at any time, subject to tax and any plan rules. DCPP contributions vest immediately in Alberta, Ontario, and federally regulated plans, but they're locked in: when an employee leaves, the balance typically moves to a locked-in retirement account (LIRA) or another pension plan, and can only be accessed as retirement income, subject to limited unlocking rules. Some employers see locking-in as a feature, since it keeps retirement savings for retirement.
Contribution room
Group RRSP contributions use up the employee's RRSP room directly in the year they're made. DCPP contributions (employer and employee) create a pension adjustment (PA) that reduces the employee's RRSP room for the following year. The total tax-sheltered room is similar either way; the mechanics differ. DCPP contributions are capped at the lesser of 18% of compensation and the money purchase limit, which is $35,390 for 2026.
Governance and administration
A Group RRSP has no pension regulator, no annual information return, and no pension committee requirement, though CAPSA Guideline No. 3 still applies. A DCPP is registered with a pension regulator (in Alberta, the Superintendent of Pensions under the EPPA; in Ontario, FSRA under the PBA; federally, OSFI under the PBSA) and comes with governance, investment policy, member statement, and filing obligations. The LINK MEPP removes most of that workload, because LINK is the plan sponsor.
Retention and vesting
Group RRSP contributions are the employee's immediately. If you want vesting on employer contributions, a DPSP can hold them for up to two years before they vest. DCPP contributions vest immediately in most jurisdictions, so vesting isn't a retention tool there, but the long-term nature of a pension still tends to support retention.
How to decide
Choose a Group RRSP if simplicity and employee flexibility are your top priorities. Add a DPSP if you want payroll tax savings and vesting on the employer match. Choose a DCPP if you have the scale and appetite for pension governance and want savings locked in for retirement. And if you want pension benefits without the governance, consider the LINK MEPP. LINK supports all four, so you can start with one and evolve as you grow.