Differences Between Similar Products
Jul 3, 2011 by khristine
What is the Difference between RRSP and RSP?
“All days are not the same. Save for a rainy day. When you don’t work, savings will work for you.” By M.K. Soni
Just like the ant in the story “The Ant and The Grasshopper”, everybody anticipates the coming of the time when they can no longer work for a living. And instead of having future financial problems, numbers of people are attracted to saving up for retirement which is actually a smart thing to do. In Canada, the government provided its citizens various ways on how to save up money for the coming retirement years and these are through RSP and RRSP.
Some people say that RSP is no different from RRSP because of instances that both are used interchangeably by banks and government agencies that offer them, which adds to the general confusion. Nevertheless, there exists a thin line of distinction between the two forms of retirement savings program which is easily determined by its name.
RSP is an acronym for Retirement Savings Plan, while RRSP is for Registered Retirement Savings Plan. At this point, can you now clearly see the difference? For one thing, the word “Registered” is not placed in RRSP for nothing if it is not going to separate it from RSP.
Since RRSP is a registered retirement savings program, therefore its beneficiaries are entitled to various benefits offered by the Canadian government. This is in contrast to RSP given that it is not registered. RSP program only cover the retirement plans of its beneficiaries but does not include assistance like insurance, pensions and other special tax benefits which can be availed under RRSP.
And in terms of financial security, RRSP is assumed to be safer and secured as it is registered with the State. However with RSP, there is no guarantee and is viewed to be somewhat risky.
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