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Features

The voluntary retirement savings plan (VRSP) is a group retirement plan created by the Government of Quebec to help Quebecers save for retirement.

The VRSP is accessible to employees who don’t have an employer pension plan, to self-employed workers and to individual savers. It allows two million Quebecers to finally have access to a private group retirement plan.

A simple and flexible solution

Simple

Managed by a third party, thereby considerably limiting the employer’s administrative burden and responsibility
Default provisions to facilitate decision-making
Limited number of investment options
Automatic enrolment of employees

Flexible

Employer contributions are optional
Members can change their contribution rate/amount
Members can continue to contribute to the same plan, even if they change employers
Members can withdraw their contributions
Self-employed workers and individual savers can participate

The VRSP is a solution that benefits everyone!

Automatic employee enrolment: proven effective

Many countries have already experimented with automatic enrolment in pension plans. Participation rates are sometimes as high as 90%, given the human propensity for inertia. Since employees not wishing to contribute to the plan must follow a procedure to opt out, most stay enrolled.

Optional enrolment plan	VRSP
Do nothing; save nothing!	Do nothing; save anyway!

Automatic enrolment applies to employees age 18 and over with at least one year of continuous service in accordance with the Act respecting labour standards.

Contribution rate/amount

Each employee can set his or her own VRSP contribution rate or amount. For employees who do not indicate a rate or amount, the following default rates apply:

2% of the gross salary from July 1, 2014 to December 31, 2017
3% of the gross salary from January 1, 2018 to December 31, 2018
4% of the gross salary after January 1, 2019

Self-employed workers and individual savers wishing to participate in a VRSP are required to set a contribution amount rather than a rate. Their contributions are withdrawn directly from their bank account through pre-authorized payments.

Depending on the investment rate of return, a 4% contribution rate should allow middle-income earners who begin contributing to the VRSP at the age of 25 to enjoy retirement income equivalent to approximately 60% of their end-of-career work income.

Withdrawal of accumulated amounts

Plan members can withdraw their contributions and the investment income. They have to add the withdrawal amount to their taxable income for the year of the withdrawal.

Employer contributions are locked in until the plan member reaches age 55, unless the member terminates employment. However, they are immediately vested.

Advantageous tax treatment

Contributions	Tax treatment
Employer contributions	not subject to payroll taxes tax deductible not considered a taxable benefit for employees not taxed until withdrawn by the employee If providing contributions, the employer cannot contribute in excess of the member’s RRSP contribution limit except if requested to do so in writing by the member
Plan member contributions	tax deductible deducted net of taxes directly from the member’s pay (employees only) not taxed until withdrawn from the plan subject to the same contribution limits as RRSPs, i.e., 18% of the employee’s annual earned income from the previous year with a maximum of $26,230 in 2018 (VRSP contributions reduce the RRSP contribution margin)

Employer’s role

If you are an employer, your responsibilities are to:

Notify each employee of your intention to subscribe to the Industrial Alliance VRSP.
Enrol your eligible employees and any other employees who request to be enrolled and inform iA Financial Group of any opt-out notices received.
Deduct contributions from plan member paycheques and remit them to iA Financial Group for deposit in the members' accounts.
Inform iA Financial Group when anyone leaves the company to enable us to keep track of enrolments and contributions.