What is it?
The government has enacted a law, in force since July 1, 2014, which requires employers with five (5) or more employees to establish a group pension plan or VRSP. A VRSP is designed especially for small and medium-sized businesses that do not yet have a workplace savings plan in place.
Who must setup a VRSP?
An Employer is obligated to offer a VRSP if:
- You have a “Physical location” or establishment in Quebec
(even if your Head Office may be in another province)
- Employ five or more employees aged 18 or over who have a minimum of one year of uninterrupted
service, as defined by the Act Respecting Labour Standards.
- The employer is currently not offering a registered retirement savings plan (RRSP) or tax-free savings
account (TFSA) for which source deductions could be made, or a registered pension plan.
When do we need to comply?
The deadline to establish a VRSP depends on the number of eligible employees:
- Employers with 20 employees or more: December 31, 2016,
- Employers with 10 to 19 employees: December 31, 2017,
- Employers with 5 to 9 employees: not before January 1, 2018.
Why is it called “Voluntary” Registered Savings Plan if it’s obligatory for specific employers?
The voluntary nature of the plan refers to the employee not the employer. An employee has the right to opt out of the plan.
Why was this law passed?
The government’s objective is to help citizens save for their retirement. In Quebec, nearly two million workers do not have access to an employer sponsored pension plan, and 30% of Quebecers have no personal savings for their retirement.
What are the associated costs of a VRSP for the Employer? For the Employee?
Employer: There is no specific cost to setup a VRSP. The employer is required however to administer the plan. This means:
• Inform their employees of the plan,
• Automatically sign them up,
• Deduct the employee contributions and remit them to the VRSP administrator.
• The employer is not obligated to contribute to the employee’s savings plan.
Employee: There are no costs to the employee. The employee simply decides to stay enrolled (or opt out). If they stay enrolled, a specified amount is automatically deducted from their pay and directed into their savings plan.