As part of Quebec’s 2012 Provincial Budget, the government announced new measures to help employee’s better save and plan for retirement. One of these measures was the introduction of Voluntary Retirement Saving Plans (VRSPs), a low-cost pension plan, which was introduced as the Voluntary Retirement Savings Plans Act in December 2013. Here are some facts companies should know:
- The implementation of a VRSP is mandatory for companies with 5 employees or more, who are aged 18 and over with one year of uninterrupted service, as defined in the Act respecting Labour Standards. Companies with less than 5 employees can subscribe on a voluntary basis.
- The new rule was in effect as of July 1, 2014, although the government has made the compliance period more flexible by proposing an application sequence based on the number of employees in the company:
- Companies with 20 or more affected employees: obligation by December 31, 2016
- Companies with 10 to 19 affected employees: obligation by December 31, 2017
- Companies with 5 to 9 affected employees: date to be determined by the government, but the obligation will not be prior to January 1, 2018
- No employer contribution is required. The employer is simply obliged to implement the plan, inform the employees and administer it in conjunction with their plan provider. If the employer does decide to contribute, this contribution will generally be locked-in.
- At implementation, all employees must be automatically enrolled; however they can opt out within 60 days.
- Employees can determine their own contribution rate as well as their own investment options. Should they fail to determine their contribution rate within the first 60 days of being enrolled the default rate is 2% of their earnings for 2017, which will increase to 3% in 2018 and 4% in 2019. Employees can change the contribution rate or withdraw at any time.
- Companies who already have in place other group retirement savings plans such as a Group RRSP or pension plan are exempt and do not have to implement a VRSP, however are subject to many of the same rules, such as the mandatory enrollment of employees to the plan while allowing employees the same opportunity to opt-out .
- VRSPs will be managed by authorized financial institutions, subject to stringent rules and supervised by the Régie des rentes du Québec.
Further details are available on the CNESST website (in French only). For assistance in putting a plan in place, contact your group insurance or group savings provider, or contact a member of the Pvisio HR Consulting team who can provide you with names of some reputable brokers.