When the Quebec Minister of Finance first announced its intention to create the Voluntary Retirement Savings Plan (VRSP) in 2012, there was a lot of hype. Many praised the government for putting in place measures to help Quebecers save for retirement. Banks and insurers rushed to get their new VRSP products to market; and employers scrambled to learn more about their new obligations.
VRSPs officially launched in July 2014 with the requirement that all Quebec businesses counting 20 full-time employees or more offer a VRSP, or an equivalent group retirement savings plan, by December 31, 2016. Since that date, there has been little talk of VRSPs. So little that many have not realized that a new requirement took place at the end of this year.
Effective December 31, 2017 Quebec employers who have 10 to 19 employees are now also required to set up a VRSP. Penalties ranging from $500 to $10,000 may be levied on employers who do not fulfill their obligation.
What is a VRSP?
VRSP is a group retirement savings plan offered by employers to help employees save for retirement through payroll deductions. Employers are not required to contribute and plan administration is outsourced to a third party such as a bank, insurance company or trust.
Quebec businesses that already offer all their employees the possibility of contributing to a retirement savings plan through payroll deductions are not be obligated to offer a VRSP.
In other provinces, the federally-endorsed Pooled Registered Pension Plan (PRPP) is available, however is optional.
Quebec is the only province to require employers to offer a VRSP if they do not have an alternative in place.
Is the VRSP right for your business?
While the VRSP may appear to be the default option for employers, it’s important to consider other types of savings vehicles as well. Depending on the employee profile and your business objectives, other types of savings plans may be better suited.
Request a consultation to learn more.