VRSPs are
only available in Quebec. They were introduced to make it easier for employees of small businesses to save for retirement. The VRSP solution offered by Desjardins is 100% online, making it an easy and convenient choice for you and your employees.
Legal deadline to offer a VRSP
Employers who have
at least 5 employees on December 31 of a year
AND at least 10 employees by June 30 of the following year are required to subscribe to a VRSP
by December 31 of the same year.
(For example: if you have 5 employees
on December 31, 2019 and you have 10
on June 30, 2020, you must subscribe to a VRSP * by
December 31, 2020.)
From the date of your online request, a maximum of three months is required to set up your VRSP.
*It’s also possible to offer a different group retirement savings plan. Call our Customer Contact Centre to determine which one is best for you.
Advantages
| For employers | For employees |
|---|
- No fees
- Lots of plan set-up support
- Educational materials for plan members
| - Low management fees
- Contributions accumulate tax-free
- The employer can also make contributions
- Immediate tax savings, since contributions are deducted at source
|
Contributions
| Employer | Employee |
|---|
- No minimum rate
- Locked in
- Non-taxable as not subject to payroll taxes
- Vested immediately
| - Subject to annual RRSP contribution limit
- Employees can keep contributing, even after they leave the company
- Spousal contributions not permitted
- Not locked in
|
Details
| Administration | Investments |
|---|
- Plan must be registered with
Retraite Québec and with the Canada Revenue Agency
- Regulatory fees paid via Desjardins Insurance
- No annual meeting required
| - Employees responsible for their investment choices
- Investment policy not required
|
Employers
All employers who have a physical workplace in Quebec are required to offer a VRSP to their employees there. As prescribed by the law, your deadline for setting up a VRSP depends on how many Quebec employees you have.
Employees
All employees who:
- Are 18 or older
- Are an “employee” as defined in the
Act respecting labour standards
- Have 1 year of "uninterrupted service" as defined in the
Act respecting labour standards
Employers who haven’t set up a plan yet
Employers are legally required to offer a VRSP to employees with at least 1 year of uninterrupted service—by certain deadlines. If you don’t already offer all your employees the opportunity to contribute via payroll deductions to a group RRSP, a simplified pension plan (SPP), a defined contribution plan (DC plan) or a group TFSA, you must:
- Choose a VRSP provider
- Offer the VRSP to all employees and let them know about the plan’s features
- Enrol all employees with at least 1 year of uninterrupted service in the plan
- Set up payroll deductions
- Offer employees who’ve opted out of the VRSP the opportunity to re-enrol in the plan (every 2 years, in December)
Employers with an existing plan
If you’re already offering your employees a retirement savings plan, you’re required to offer a VRSP to any employees who aren’t eligible for the existing plan. You also have to set up payroll deductions for all plans.
If you don’t want to offer a VRSP, you have the option of setting up a group RRSP, a simplified pension plan (SPP), a defined contribution plan (DC plan) or a group TFSA instead.
20 or more employees
Employers with 20 or more employees have been able to offer VRSPs to their employees since July 1, 2014.
10 to 19 employees
Employers with 10 to 19 employees have been able to offer VRSPs to their employees since July 1, 2014.
5 to 9 employees
The government still hasn’t set a VRSP deadline for employers with 5 to 9 employees. Even though these employers aren’t legally required to set up a VRSP, they’ve been able to do so since July 1, 2014.
Compliance deadline for employers
Once all the specific VRSP deadlines have passed, if you had 5 or more employees the previous year, you’ll have 1 year to set up a VRSP or another approved product for your employees. Once you’ve set up a VRSP and employees are enrolled in the plan, you have to keep the plan in place, even if you no longer have 5 or more employees.
Employer contributions
You don’t have to contribute to your VRSP, but you can if you’d like.
Employer contributions are locked in and can be transferred to a supplemental pension plan, a life income fund (LIF) or a locked-in retirement account (LIRA) when the plan member’s employment ends or they turn 55.
Employee contributions
Employees choose the contribution rate for their VRSP. If no rate is chosen, 4% of the gross salary will apply by default.
Employees who contribute to a VRSP can change their contribution rate twice a year, or more often at your discretion. Only employees who’ve contributed to a VRSP for more than 12 months can set their contribution rate to 0% (certain exceptions apply).
Employee contributions aren’t locked in. Employees can make VRSP withdrawals before they retire, but they’ll have to pay provincial and federal income taxes.
Employees can’t withdraw money from their VRSP under the Home Buyers’ Plan (HBP) or the Lifelong Learning Plan (LLP). They can get around this by transferring the required amount from their VRSP to an RRSP, and then making an RRSP withdrawal (transfer fees apply).
All employees are automatically enrolled in your VRSP. They can opt out within 60 days of enrolment, before payroll deductions begin.
Everyone participating in a Desjardins VRSP has access to the same investment options.
Default option
The Desjardins VRSP offers a default investment option. It uses a Lifecycle Path to adjust the level of investment risk based on the employee’s age. If an employee doesn’t choose an investment option, their contributions will automatically be invested here.
Other options
Employees can also choose from 5 à la carte funds: our DGIA Money Market Fund or 4 Desjardins Fund portfolios with a range of risk levels.
Much like RRSP contributions, VRSP contributions can be deducted from taxable income for provincial and federal tax purposes. Contributions grow tax-free until they’re withdrawn. Total VRSP and RRSP contributions are subject to the annual RRSP contribution limit, a maximum of 18% of the previous year’s earned income. Employer contributions are deducted from the company’s taxable income and aren’t subject to payroll taxes.
Investment fees
Fees may be charged directly or indirectly to plan members, including trailer fees and management and administration fees for each investment option. Investment fees can be no higher than: 1.25% of the average plan assets for the default option (Lifecycle Path) and 1.5% for all other options.
Administration fees
VRSP administrators can also charge administration fees for: transfers to another plan, withdrawals, financial planning and advisory services, transfers of benefits between spouses and statements of benefits.
Note
This text is for information purposes only. Refer to the policy for all conditions, exclusions and restrictions.