The VRSP will go into effect on July 1, 2014!

Friday, November 22, 2013

Last week, the Quebec government finished studying Bill 39, Voluntary Retirement Savings Plans Act. The VRSP will take effect on July 1, 2014.

We will take the opportunity to highlight some features of the VRSP and to answer questions that some of you have been asking.

Who is the VRSP intended for?

Quebec companies with five or more employees that do not currently offer their employees a group retirement plan will be required to implement a VRSP.¹

Companies with fewer than five employees, as well as self-employed workers and individual savers, will also be able to subscribe to a VRSP on a voluntary basis.

What will be the time frame to comply with the obligation to offer a VRSP?

Although the VRSP will go into force on July 1, 2014, the companies in question will be granted a grace period to comply with the law. The government has made the compliance period more flexible by proposing an application sequence based on the number of employees in the company:

• Companies with 20 or more affected employees: obligation by December 31, 2016
• Companies with 10 to 19 affected employees: obligation by December 31, 2017
• Companies with 5 to 9 affected employees: date to be determined by the government, but the obligation will not be prior to January 1, 2018

Will the employer be required to contribute for its employees?

The employer can contribute for its employees, but will not be required to do so.

Will the employees be required to participate in the VRSP offered by their employer?

Employees who are age 18 and over with one year or more of continuous employment within the company will automatically be subscribed to the VRSP by their employer. However, these employees will be able to waive their right to participate and to unsubscribe from the plan.

What are the advantages of the VRSP compared to other types of group retirement plans?

The low cost is certainly the main advantage of the VRSP. The members will benefit from significant economy of scale on administration fees since all the savings from all the members will be grouped.

The VRSP is a simple and flexible solution both for employees and employers. This new savings instrument significantly reduces the employer’s administrative burden since most of the administrative tasks that are usually required by a retirement plan will be carried out by the administrator.

A default investment option and contribution rate will be established, which will greatly facilitate the members’ decision-making.

With the VRSP, saving to prepare for your retirement will be easier than ever!

Why does the Quebec government require companies to implement a VRSP?

In Quebec, nearly two million workers do not have access to a retirement plan at work, and 30% of Quebecers do not have any personal savings for their retirement. This situation is a cause for concern and that is why the Quebec government has decided to implement a new group retirement savings plan accessible to all Quebec workers.

If you have any questions, you can contact our VRSP team, which is already in place to answer your questions at .

Keep an eye out for our upcoming newsletters, we will keep you posted!

¹ Companies with 5 employees or more that already offer a group RRSP or TFSA to all their employees who can contribute through payroll deductions or an RPP will be exempt from the obligation to offer a VRSP.