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

If your Quebec company employs at least five eligible employees and does not offer any group retirement savings plan, you may be required to offer a Voluntary Retirement Savings Plan (VRSP). It’s the law.

Here is a clear, up-to-date overview of your obligations, deadlines, and steps to implement a VRSP in your business.

Why a VRSP?

The VRSP is designed to reflect the realities of small businesses and their employees and became law through the Voluntary Retirement Savings Plan Act.

This group plan provides:

• simple administration
• regulated management fees
• low-cost implementation for the employer
• the option (but no obligation) for the employer to contribute

Do I have to offer a VRSP?

You must offer a VRSP if all of the following conditions apply:

• Your business is located in Quebec
• It has at least five (5) eligible employees:
  • aged 18 or older
  • with at least one (1) year of continuous service, full-time or part-time, within the meaning of the Act respecting labour standards
• You currently do not offer any group retirement plan accessible to all employees (e.g., a group RRSP, a group tax-free savings account (TFSA) with payroll deductions, or a registered pension plan)

Please note:
Federally regulated businesses are instead subject to the PRPP and are not required to offer a VRSP. Temporary foreign workers in agriculture are considered employees under the law and may be eligible for the VRSP.

When do your obligations take effect?

The benefits of a VRSP for employers

 Even though you are not required to contribute, offering a VRSP can be an attractive incentive for your business:

• No mandatory employer contributions
• Employer contributions (if offered) are tax-deductible and not subject to payroll taxes
• A valued tool for engaging and retaining employees
• Minimal internal management: the administrator handles most of the obligations

How to set up a VRSP

After choosing an authorized administrator (financial institution or insurance company), you must:

1. Inform your employees in writing at least 30 days before the implementation of the plan
2. Automatically register all targeted employees
3. Collect contributions from your employees on their payroll and remit them to the administrator within the specified deadlines

The default contribution rate is currently set at 4% of gross pay, but each employee may:

• Change their contribution rate
• Reduce it to 0%
• Opt out of the plan

Important:

• You must keep the waiver form submitted by an employee who opts out or contributes at 0% for the entire duration of their employment
• You must invite these employees to participate again every two years, in December
• Non-targeted employees may enroll in the plan, provided they submit a request to you
• The VRSP is also available to self-employed individuals
• You are required to inform your employees of any relationship you have with the administrator of the VRSP

Consequences of non-compliance

An employer who fails to meet their obligations is subject to fines and administrative measures.

The CNESST is responsible for ensuring compliance with the Voluntary Retirement Savings Plans Act, and a complaint may be filed against a business at fault.

Need further assistance?

You have questions or need personalized support? Our Business Advisors are here to help:

1-833-568-2342 | hrnow@cfib.ca

Not a CFIB member? Join today to unlock a wide range of valuable resources designed specifically for small business owners.