Workers and VRSPs
A plan for everyone
Voluntary retirement savings plans (VRSPs) ensure all workers can be covered by a group savings plan. Although VRSPs are specifically intended for employees who do not have a pension plan, self-employed workers and anyone interested can sign up for a VRSP, where tax rules allow (consult your RRSP/PRPP Deduction Limit Statement or your most recent federal notice of assessment or reassessment). If you are self-employed or would like to contribute to a VRSP, enrolment is voluntary. Simply choose a VRSP registered with Retraite Québec and contact the plan's administrator.
Whether you're an employee, self-employed, a business owner or someone for whom saving is a priority, VRSPs are affordable and feature easy-to-understand investment options.
Six good reasons to contribute to a VRSP
You do not have to do anything to sign up. Your employer will do it for you. Also, you have the right to withdraw, opt out or suspend your participation by asking your employer.
If you are self-employed, you can sign up voluntarily. All you have to do is contact an authorized administrator.
The time when workers spent their entire career with one employer is long gone. No matter how many employers you have over the course of your working life, your VRSPs could follow you.
Any contributions made by your employer will be locked-in to provide you with a retirement income. If you leave your job, you can leave the amounts in that VRSP or transfer them to another plan.
You will be offered one default investment option and a limited number of other investment options, so you can more easily chose the option that best suits your needs.
You can choose or change your contribution rate to match your ability to save. If contributions are deducted from your pay and you have not chosen a rate, a default rate will be used. You can, however, adjust the rate at any time to meet your needs.
You can also stop contributing permanently or temporarily and remain a member of the VRSP. You will still have all the advantages with regard to the contributions you have already made.
Plan fees will be low. The conditions, whether for fees or administration, will be the same for all members (self-employed workers, employees, etc.). Low fees mean low administration costs, which translate into a greater cumulative value for your retirement savings.
Contributions to VRSPs are tax deductible, just like contributions to any other registered plan, such as an RRSP. They can be deducted directly from your pay, in which case the tax savings are immediate. As is the case for registered retirement savings plans (RRSPs), the amounts accumulated are not taxed until they are withdrawn.
If, for example, you are faced with one of life's little surprises, you can access your contributions. Since your contributions are not locked-in, you can withdraw amounts before you retire. If required, you can transfer the amounts to an RRSP and then use them for the Home Buyers' Plan (HBP) or a Lifelong Learning Plan (LLP) .
If your employer contributes to your VRSP, those contributions will be locked-in and will help provide you with a better income in retirement. You can access those contributions as of age 55 to draw a retirement income from your VRSP, if so provided by the plan.
What you must know
- Your employer is obligated to offer a VRSP
- Your employer has at least the required number of employees aged 18 or over who have a minimum of one year of uninterrupted service, as defined in the Act respecting Labour Standards;
- Your employer does not offer a registered retirement savings plan (RRSP) or tax-free savings account (TFSA) for which source deductions could be made, or a registered pension plan.
- Employers must automatically sign up eligible employees and deduct contributions.
- However, the VRSPs will be managed by an authorized financial institution that is subject to stringent rules and supervised by Retraite Québec.
- Default contribution rate:
- 2% of gross salary until the end of 2017;
- 3% in 2018;
- 4% as of 2019.
- Enterprises covered by the Act must offer a VRSP at the latest by:
- 31 December 2016,
if, on 30 June 2016, they have 20 or more eligible employees
- 31 December 2017,
if, on 30 June 2017, they have 10 to 19 eligible employees
- the date determined by the government,
which cannot be prior to 1 January 2018,
if they have 5 to 9 eligible employees.
Other enterprises can offer a VRSP on a voluntary basis.
Your employer can now offer a VRSP.
If you stop working, the contributions made by your employer can be transferred to the authorized retirement savings vehicle of your choice, such as an LIRA