Tuesday, September 6, 2016

VRSPs are gaining ground with employers!

Our faithful blog readers might remember that the Voluntary Retirement Savings Plans Act came into effect in July 2014. The Québec government created VRSPs because in Québec, more than half of workers do not have a pension plan through their employer. These workers need some help to put money aside. VRSPs make it easier to save, but for them to be successful, employers have an important role to play.

Just a few weeks away from the initial deadline (31 December 2016 for businesses with 20 or more employees), how is the rollout of VRSPs going in Québec? Great! Our statistics show that the number of plans being set up has increased steadily in the past few months.

The Voluntary Retirement Savings Plans Act requires businesses that have more than five employees and do not offer a pension plan to implement a VRSP. As of 30 June 2016, no fewer than 2226 businesses had already set up a VRSP. The number of VRSP members even tripled in the past year to 15 864.

These employers have chosen VRSPs for their advantages over other plans. For example, employers do not have to contribute to a VRSP. However, if they do so, their contributions can be deducted from the business’s taxable income and do not trigger payroll taxes, unlike group RRSP contributions. That’s quite an incentive!

Want to hear more good news? A number of businesses took action early and offered a VRSP well before the deadline. Their initiative is helping to build a better retirement for thousands of workers. And since Retraite Québec is all about ensuring Quebeckers’ financial security in retirement, we can’t help but be satisfied with this development.

The success of VRSPs is not specifically limited to how many employers and employees participate. Businesses can also choose to implement another type of plan, such as a simplified pension plan or a group RRSP. The important thing is to offer a better retirement for the greatest number of workers possible by making saving a habit (save early and often!), regardless of the type of plan.

To achieve that goal, Retraite Québec will be reaching out to employers with 20 or more employees that do not offer a group savings plan to remind them of the deadline and their VRSP obligations. The campaign will start in late September 2016.

Businesses subject to the Act must offer a VRSP by:
  • 31 December 2016, for businesses with 20 or more eligible employees 
  • 31 December 2017, for businesses with 10 to 19 eligible employees 
  • the date set by the government, for businesses with 5 to 9 eligible employees (not before 2018) 

For more information on VRSPs, check out www.rver.gouv.qc.ca.