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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 5 employees (aged 18 and over who have a minimum of one year of uninterrupted service, as defined in the Act respecting labor 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:
 

Number of company employeesDeadline for meeting obligations
20 or more eligible employees
(on June 30, 2016)
December 31, 2016
10 to 19 eligible employees
(on June 30, 2017)
December 31, 2017

5 to 9 eligible employees

Exact date will be confirmed by the Government.

Fewer than 5 employees

Not covered by the Act.

Note: Temporary Foreign Workers in agriculture are considered employees within the meaning of the Act respecting labor 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 (financial institution or insurance company) for your VRSP, you must:

  1. Inform your employees in writing 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.

 
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 for the duration of his or her 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

For more information:

  • Contact our CFIB Counsellors: they will be happy to answer your questions so you can make the best decision for your business!
  • Visit the Retraite Québec site where there is a lot of information.
  • Take two minutes and watch this informative video (in French only)!