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VRSP: The deadline is fast approaching

For any Quebec employer that had 20 or more employees as at June 30, 2016, the deadline for setting up a Voluntary Retirement Savings Plan (VRSP) or other type of retirement plan that involves pay deductions is December 31, 2016. There are only a few weeks left for these employers to comply with VRSP legislation.

Here is some important information for these employers:

  • Retraite Quebec has confirmed that the deadline applies to the date on which the contract comes into force. Since contracts normally take effect 30 days after the notice is sent out to employees, employers must join a VRSP by the end of November.
  • The Commission des normes, de l’equite et de la sante du travail (CNESST) is responsible for overseeing employers’ compliance with the requirement to offer a retirement savings plan. Before imposing penalties ranging from $500 to $10,000 on employers that fail to comply, the CNESST will first try to make them aware of and encourage them to meet their obligations. Also, it will only intervene if employees complain that their employer has not complied with this provision of the Act.
  • Even though the risk of being penalized in early 2017 is low, it is recommended that employers provide a retirement plan.
  • Employers who already offer their employees a pension plan must ensure that all employees are eligible to join that plan. If some classes of employees are not eligible, they must be given the opportunity to participate in a retirement plan. In such cases, employers must decide whether to make them eligible to join the existing plan, or set up another plan. If an employer has 20 or more employees, and even only one employee is not eligible, the employer must still set up a plan by the end of 2016. Only the single employee in question will be able to participate in the VRSP. Even if other employees wish to join the VRSP, they are not entitled to do so.
  • Employers may choose among a number of retirement savings vehicles, including an RRSP, DPSP, SPP, RPP, TFSA and VRSP. Each vehicle has its own features, administrative requirements and employer obligations. It is important to review each type of plan before making a decision. There has been a certain negative response to the VRSP because of its administrative requirements, to the point where some employers have refused to even consider it. However, employers should be aware that other retirement savings vehicles also have administrative and fiduciary requirements.

NOTE: Morneau Shepell is a VRSP provider approved by Retraite Québec.


News & Views - November 2016 (PDF)