The new Voluntary Retirement Savings Plan (VRSP) is meant to encourage Quebeckers to save for retirement. As of July 1, 2014, small and medium-sized enterprises (SMEs) may offer their employees a VRSP. However, on December 31, 2016, the plan becomes mandatory for certain SMEs.
What is the VRSP?
The VRSP is a new retirement savings plan that was announced by the Government of Quebec in the provincial budget tabled on March 20, 2012. Its purpose is to create an opportunity for some 2 million Quebeckers without access to a group RRSP to contribute to a retirement savings plan through payroll deductions. The plan will provide greater financial security for more Quebeckers at retirement age.
Eligible employees will automatically be enrolled in the VRSP. For the purposes of the Act, ‘eligible employees’ are wage-earners working in Quebec on a full- or part-time basis, with at least one year of uninterrupted service, and who do not have a registered retirement savings plan with the business that employs them. However, because this is a voluntary plan, any employee is free to opt out.
Workers participating in this plan will be able to tailor their contributions according to their ability to save. Employers may also contribute on behalf of their employees.
Does the requirement to set up a VRSP affect me?
It will be mandatory for businesses with 5 employees or more that do not already offer retirement savings plans with payroll deductions* to put a VRSP in place. The number of eligible employees will be reviewed every year on December 31. Businesses not subject to this requirement may also set up a VRSP on a voluntary basis.
Only businesses under provincial jurisdiction will be affected. Businesses that operate under federal jurisdiction, such as banks, shipping companies, airlines, interprovincial and international road and rail transport companies, radio and television broadcasting firms, grain elevators, uranium processing firms as well as numerous First Nations activities will not be subject to the VRSP legislation.
For more information on the VRSP, please contact your FBL specialist.
*(group RRSP, defined benefit plan, defined contribution pension plan, group TFSA)