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October 01, 2014
Quebec’s voluntary retirement savings plan favoured by small businesses

Nine out of 10 small businesses in Quebec favour the province’s new voluntary retirement savings plan (VRSP), an Ipsos Reid survey conducted for Manulife Financial shows.

The strong support for the VRSP among small business owners confirms other polling data suggesting that most business owners believe their employees have not taken adequate steps to save for retirement. 

Quebec was the first province to adopt the VRSP concept.  Quebec legislation requires employers with five or more employees to offer the workplace savings plan to employees with one or more years of service.  However, the plan itself would be administered by a third party organization such as a bank or insurance company.  

In this sense, the VRSP will function similar to a multi-employer pension plan.  Employees could contribute to the plan but would have the right to opt out of it.  Meanwhile, employers would be freed from the administrative complexity and costs associated with running a pension plan.

The Quebec plan mirrors the pooled registered pension plan (PRPP) scheme proposed by the federal government (see the January 2011 edition of the Coughlin Courier for details).  

“People don’t contribute enough into their RRSPs because they need to make a conscious effort to put money into it,” says Marie-Andrée Colgan, spokesperson for the Régie des rentes du Québec, the agency responsible for overseeing and registering the province’s VRSPs.  “An automatic deduction from their paycheque would make saving much easier.”

Quebec employers with 20 or more employees have until the end of 2016 to establish a VRSP in their organization.  Those with 10 to 19 employees have until the end of 2017 to implement the retirement savings plan.  The target date for employers with fewer than 10 employers is still to be set.

Alberta, Saskatchewan and British Columbia have also passed legislation similar to Quebec’s.  While Ontario has said it will develop its own version of the VRSP, it appears to be more focused on the development of the Ontario Retirement Pension Plan, a defined benefit pension plan similar to the Canada Pension Plan.

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