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% of gross salary as of 1 January 2018;
- 4% of gross salary as of 1 January 2019.
The default contribution rate applies to employees who participate in
voluntary retirement savings plans (VRSPs) offered by their employer. It does
not apply to individuals who enrolled themselves in one or employers who decide
to make contributions for their employees.
The default contribution rate applies to employees who do not choose how much
to contribute within the 60 days following the date on which the notice
concerning their participation is sent.
- Employers subject to the Voluntary Retirement Savings Plans Act must offer a VRSP or a group retirement savings plan by:
- 31 December 2016, for employers with at least:
- 5 eligible employees on 31 December 2015; and
- 20 or more eligible
employees on 30 June 2016;
- 31 December 2017, for employers with at least:
- 5 eligible employees on 31 December 2016; and
- 10 or more eligible employees on 30 June 2017.
- Until the date to be determined by the government, an employer with at least 10 eligible employees on 30 June of a given year will have to offer a VRSP as of 31 December of that year, at the latest, if the employer had at least 5 eligible employees on 31 December of the previous year.
- As of the date to be determined by the government, an employer with at least 5 eligible employees on 31 December of a given year will have to offer a VRSP as of 31 December of the following year, at the latest.
Other employers can offer a VRSP on a voluntary basis.