Quebec: Change in VRSP rules
The rules for Voluntary Retirement Savings Plans (VRSP) are about to change, as originally planned. Quebec employers who have 10 to 19 employees must set up a VRSP or an equivalent group retirement savings plan for employees by December 31, 2017. Prior to this, only employers who had 20 or more employees were required to do so. Penalties may be imposed on employers who do not fulfill their obligation.
For employers with 5 to 9 employees, the VRSP Act has not yet been amended to specify the date by which they also must offer a VRSP. A number of companies with fewer than 10 employees have decided to offer the VRSP even though there is no legal obligation to do so.
Note that as of January 1, 2018, the default VRSP contribution rate will rise from 2% to 3% of gross salary. The default VRSP contribution rate applies to employees who are participating in a VRSP offered by an employer, but who have not determined their contribution rate by the deadline.
Quebec is the only province to require employers to offer a VRSP if they do not have other types of plans – in other provinces, providing such plans, called “Pooled Registered Pension Plans” (PRPP), is optional.
According to Retraite Québec, nearly 8,000 companies had set up a VRSP by September 30, 2017. To that can be added a large number of employers who have an equivalent group retirement savings plan, such as a group RRSP. Based on our informal information, we believe that a majority of employers will have complied with the VRSP Act by the end of 2017. It is recommended that all employers who do not have other plans set up a VRSP (or PPRP), whether they are required to or not.