Voluntary Retirement Savings Plan is a new Bill (Bill 39) passed by the Quebec Government that will be in effect as of July, 2014.
VRSPs are intended for Quebec companies with five or more employees that do not currently offer their employees a group retirement plan.
The time frame to comply with the obligation to offer a VRSP is:
Companies with 20 or more employees December 31, 2016
Companies with 10 to 19 employees December 31, 2017
Companies with 5 to 9 employees January 1, 2018
CONTRIBUTIONS AS AN EMPLOYER;
The employer can contribute for its employees, but will not be required to do so.
Employees who are age 18 and over with one year or more continuous employment will be automatically be subscribed to the VRSP by their employer. However, the employee has the right to unsubscribe from the plan.
WHY DID QUEBEC CREATE THIS NEW GROUP RETIREMENT PLAN?
A large number of Quebec workers do not have access to a group retirement savings vehicle through their employer. The VRSP makes it convenient through payroll deductions and because the savings in the VRSP are pooled with the savings of many others, investment management fees are generally lower than the fees an individual would pay in an investment account.
WHAT ARE THE EMPLOYERS RESPONSIBILITIES BEYOND OFFERING ACCESS TO A VRSP?
1. Deduct money from employees earning via payroll deductions and send it to the administrator on a regular basis
2. Notify its employees within 30 days of contract being signed, that the VRSP will be established
3. Notify the administrator if an employee terminates employment, dies or retires
4. The employer is responsible for selecting the organization that will be the administrator of the VRSP.
INDIVIDUAL SAVERS CAN CHOOSE THEIR OWN ADMINISTRATOR.
WHAT IS THE COST OF A VRSP TO AN EMPLOYER?
No cost, unless the employer wishes to move the VRSP from one administrator to another. Employees may not be charged a fee.
CONTRIBUTION AS AN EMPLOYEE:
HOW MUCH MONEY CAN BE DEPOSITED INTO A VRSP EACH YEAR?
Contributions are subject to the same annual cap as RRSP’s which is lesser of 18% of earned income or $23,820 (2013)
WHAT ARE THE TAX ADVANTAGES OF A VRSP TO AN EMPLOYEE?
Contributions to a VRSP are deductible from income before income tax is applied in the same manner as contributions and is not included in an employee’s taxable income. Tax is not paid on this money until withdrawn
HOW IS THE MONEY INVESTED?
1. Can be invested in a pooled fund
2. Administrator may also offer other investment options with varying degrees of risk
WHO CAN BE SELECTED TO ADMINSTRATE THE VRSP?
Bill 39 currently states possible VRSP administrators include insurance companies, trust companies, and investment fund manager. Administrators will be issued a license by the Autorite des Marches Financiers.
FEIG FINANCIAL SERVICES provides guaranteed lifetime invoice for its clients and will insure that the following responsibilities are met:
1. Meet with employers and employees to provide retirement planning education
2. Take all appropriate information to set up and register the VRSP plan
3. Meet individually with all employees to determine their investment goals and risk tolerance
4. Provide liability and debt management service to create cash flow to enable deposits into the retirement plan
5. Provide turnkey service to Employers
We invite you to contact us to discuss the advantages and benefits of VRSPs.