Voluntary Retirement Savings Plans (VRSP): what are your obligations?

VRSP: four small letters that are becoming more and more important to your business! If you have 10 employees or more, you must offer them a Voluntary Retirement Savings Plan (VRSP) - it’s the law! Find out what your obligations are and how to set up your VRSP.

Why VRSPs?
A VRSP is the retirement savings tool best suited to the reality of small and medium-sized businesses and their employees. It is inexpensive, simple to administer, and has affordable management fees for employers who choose to contribute.

Am I obliged to offer a VRSP?
You will be required to offer a VRSP to your employees if you answer "yes" to the following three questions:

• Is your company located in Quebec?*
• Do you have at least 10 employees (aged 18 and over who have a minimum of one year of uninterrupted service, as defined in the Act respecting labour standards)?
• Do you currently not offer any registered retirement savings plan that is accessible to all (such as an RRSP, a Tax-Free Savings Account (TFSA) for which a deduction from salary could be made, or a registered pension)?

* If your business is under federal jurisdiction, you do not have to offer a retirement savings plan to your employees.

The size of your business determines when your obligation has or will come into effect:
 

**At least 10 eligible employees on June 30 and at least 5 eligible employees on December 31 of the previous year. 

Note: Temporary Foreign Workers in agriculture are considered employees within the meaning of the Act respecting labour standards and would be eligible for the VRSP.

The benefits of a VRSP
The VRSP was created to make it easier for small business owners to offer an attractive retirement savings solution to their employees who wish to benefit from it. 

You, as an employer, are not required to contribute to the VRSP. If you decide to contribute, your contributions are exempt from payroll taxes, which is not the case for contributions to your employees' RRSPs or TFSAs, for example.

How to set up your VRSP
After choosing an administrator for your VRSP, you must:

1. Inform your employees in writing at least 30 days prior to the implementation of the plan. 
2. Register all your employees.
3. Collect contributions from your employees on their payroll and remit them to the administrator. According to Revenu Quebec the contributions rates are as follows:
   1. 2% of gross salary until the end of 2017
   2. 3% of gross salary starting January 1, 2018
   3. 4% of gross salary starting January 1, 2019
4. The contribution rate only applies to employees who are participating in a VRSP offered by their employer. it does not apply to individuals who have registered themselves for a VRSP, or to employers who choose to contribute to an employee's VRSP. 

Fast facts about the VRSP

• While you do not need to contribute to the VRSP, a contribution from you could keep your employees loyal and motivate them to join!
• Your employees have the freedom to opt out of the plan or contribute 0%. If that is the case:
  • You must keep the waiver notice of the worker who is unsubscribing (or planning to contribute 0%) for the duration of their employment.
  • You will have to invite them to contribute again every two years, in December.
• Your non-covered employees may join your plan, but it is their responsibility to inform you.
• The VRSP is also available to the self-employed.
• You must inform your employees of the relationship you have with the insurance company or financial institution who is administering your VRSP.

RVER - Tout le monde a droit à une meilleure retraite (video only available in French)

Employers who do not meet their responsibility to offer a plan conforming to the requirements laid out in the Voluntary Retirement Savings Plan Act may be subject to a complaint made to the CNESST and could receive a fine. 

For more information:

• Contact our CFIB Advisors: they will be happy to answer your questions so you can make the best decision for your business!
• Visit the Retraite Québec website.