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CFIB's VRSP Plus Package: Lower fees for a more prosperous retirement


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Quebec: VRSP Plus Package
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A Voluntary Retirement Savings Plan (VRSP) is Quebec’s version of a Pooled Registered Pension Plan (PRPP). This new kind of pension plan is a flexible and low-cost solution to help employees save for their retirement with minimal administrative burden on employers; making it ideal for small business. And best of all, should you as the employer also choose to contribute by fully or partially matching employee contributions, your contributions are exempt from payroll taxes.

20 employees or more? In Quebec, if  you have 20 employees or more you are legally required tp provide them a VRSP, or one of the government-approved retirement alternatives. Employers with 10 to 19 employees on June 30, 2017 will be required to provide one by December 31, 2017.

If you have fewer than 20 employees, you needn’t wait. VRSPs make good business sense by helping you to attract and retain good employees, and demonstrate your concern for their long-term well-being; even if you choose not to make an employer contribution.

VRSP Plus Package — for a more prosperous retirement
With such a highly regulated product, CFIB had to get a little creative to get a better deal for its members. Understanding that the VRSP itself could not be easily altered, but funds can be transferred from a VRSP to an RRSP, Morneau Shepell has supplemented its standard VRSP for CFIB members, with preferred conditions on their TFSA and RRSP and streamlined the transfer process.

The result is an integrated retirement savings solution offering all the benefits of a VRSP combined with specially negotiated rates on complementary savings solutions.



Once a year, participants in the VRSP Plus Package have the option to transfer** their VRSP funds into a low-fee RRSP...

By transferring VRSP assets, with IMFs starting at 1.087%, to the very same investments in their RRSP Account, IMFs drop to:

  • 0.7% when the employer also contributes
  • 0.9% when the employer does not.

What’s more, participants can also transfer in their personal RRSP and TFSA savings to take advantage of the low IMFs; a benefit which over time, can add up to thousands of dollars.  


Check out the investment options and fees.

In Quebec, you have the choice of 3 solutions:
The 3 options below are offered by Morneau Shepell to CFIB members that are provincially regulated businesses in Quebec. 

But which solution is right for your business?  To help you answer that question, you need to be clear on your goal.  Is your primary goal to...

+You want to attract and retain the best employees and you're ready to make employer contributions

If so, the VRSP Plus Package with employer contributions is likely the way to go.

  • Unlike an RRSP, employer contributions to a VRSP are exempt from payroll taxes.
  • Retirement plans where employers commit to matching are more appreciated by employees and they participate more.
  • Lowest program fees: The RRSP and TFSA’s IMFs start at 0.7%*. While the IMF for VRSP savings starts at 1.087%*, employees can transfer out their VRSP savings** once a year into their RRSPI in order to take advantage of these low fees.  Plus, employees can also transfer in their personal RRSPs and TFSAs on which they are likely paying higher IMFs.
+You're not ready to make employer contributions, but do care about making the plan a success.

If so, the VRSP Plus Package without employer contributions is likely the way to go.

  • Unlike an RRSP, employer contributions to a VRSP are exempt from payroll taxes.
  • Retirement plans where employers commit to matching are more appreciated by employees and they participate more.
  • Lowest program fees: The RRSP and TFSA’s IMFs start at 0.7%*. While the IMF for VRSP savings starts at 1.087%*, employees can transfer out their VRSP savings** once a year into their RRSPI in order to take advantage of these low fees.  Plus, employees can also transfer in their personal RRSPs and TFSAs on which they are likely paying higher IMFs.

+You simply want to meet your legal obligations under the Quebec law, while minimizing the costs and administrative burden.

If so, either the VRSP Plus Package, or RRSP & TFSA solution can work, but the VRSP Plus Package will offer greater value to your employees.

  • In either case, Morneau Shepell has leading edge technology and support to make administration as easy as possible.
  • With either option, eligible employees must be offered the plan and you must plan for payroll deductions and contribution remittances.
  • In deciding whether to include the VRSP or not, you should be aware of the VRSP’s requirements, including the obligation to register the employees and document which have chosen to opt-out.
  • Benefits of choosing the VRSP Plus Package, include greater participation (because the VRSP is an opt-out plan) and lower fees for employees, as described above.

What’s different about the VRSP for CFIB members?
In truth, the VRSP itself is no different than Morneau Shepell’s standard VRSP offering to all Quebec business.

  • The plan is professionally managed
  • It is easy for employers to administer
  • It offers participants the same, attractive investment options
  • The Investment Management Fees (IMFs) are identical to those for any other Quebec business (since by law, each VRSP administrator must charge the same fees to the employees of every employer).

It’s actually what Morneau Shepell has packaged with the VRSP in its “Plus Package” that makes their exclusive offering to CFIB members special!


Wondering if you should make employer contributions?
Members have told CFIB they want to be able to make this decision for themselves, and not be forced by governments to contribute. That’s why CFIB lobbied so hard for the VRSP. It’s your decision!

In making that decision, you should know that when employers commit to matching, all or part of their employees’ contributions, retirement plans are:

  • More valued by employees
  • Have more participants, and
  • On average, encourages employees to invest more.

If you can afford it and it makes sense for your business, you should consider investing in your employees’ retirement. When you choose to make employer VRSP contributions within the VRSP+ Package, it’s a better deal for you and your employees:

  • For you: Unlike an RRSP, employer contributions into a VRSP are exempt from payroll taxes.
  • For your employees: They get the lowest IMFs of the program, starting at 0.7%* on their RRSP and TFSA assets (including transfers out of their VRSP into the RRSP, locked-in or not).

Why are IMFs lower when employers contribute?
In large part because there is more money invested. The result is a win/win scenario:

A win for employers
You invest in your employees’ future (exempt from payroll taxes in the case of a VRSP), helping you to attract and retain good employees.

A win for employees
Employee themselves contribute more, better preparing them for retirement.

Your contributions combined with the increased contributions of your employees, result is more investments; providing Morneau Shepell with greater efficiencies that they pass along to participants in the form of lower IMFs.

And it should be pointed out, if you as a business owner choose to personally participate, you too benefit from the lower IMFs on your retirement investments.

One size does not fit all
Offering employees multiple retirement savings solutions — VRSP, RRSP and TFSA — gives them maximum flexibility, increasing participation and employee satisfaction. And packaging an RRSP with the VRSP was the only way to provide CFIB members the best of both worlds:

  • tax free employer contributions, and
  • lower IMFs allowing employees to keep more of their retirement savings

Providing your employees with an RRSP and TFSA option will also allow them to transfer their higher-fee, personal RRSPs and TFSAs into a lower-fee Morneau Shepell plan.


Some employees might also max-out the allowable contributions to their VSRP/RRSP, so providing the additional TFSA option allows all employees to maximize their savings, and satisfaction with the group retirement plan.  TFSAs can also meet other savings needs not met by an RRSP.

While the VRSP Plus Package provides the best overall value and flexibility, some employers may still choose to offer only the RRSP and TFSA. In such a case, participants would pay the same fees as with the VRSP (IMFs starting at 1.087%*). Such low IMFs for an RRSP or TFSA are exceptional for small businesses and less than half what many individuals pay for “retail” investments.

Whether it’s the VRSP Plus Package, or just the RRSP/TFSA combination alone, either solution:

  • Meets your obligations under the VRSP law (when contributions are made through payroll deductions), and
  • Provide lower IMFs helping both you and your employees enjoy a more prosperous retirement.

* Sales taxes are applied to Investment Management Fees (IMFs). IMFs and taxes are deducted from the participants’ accounts monthly. Morneau Shepell VRSP IMFs, within the VRSP+ Package or not, start at 1.087% before sales taxes. IMFs of investment options are available here.

** Minimum amount of $1,000 required for the transfer to take place.

l Employer contributions to a VRSP and their associated investment earnings generally remain locked-in until retirement. Employer contributions to a VRSP and their associated investment earnings remain similarly locked-in after being transferred out of a VRSP.

  

You can also call 1 855 877-5723

 

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