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Normandin Beaudry

Voluntary retirement savings plans (VRSPs): don’t get caught unprepared


There, in black and white

NB Bulletin Vol. 15 N. 9, July 2012

The countdown has officially begun. If Quebec Bill 80, An act respecting voluntary retirement savings plans, remains unchanged when it is adopted, employers with five or more employees will be required to offer a retirement savings plan as of January 1, 2013.

In addition to existing savings vehicles such as registered pension plans, Group RRSPs, deferred profit sharing plans (DPSPs) and simplified pension plans (SPPs), employers will now have access to a new type of plan, the voluntary retirement savings plan or VRSP.

Faced with this new alternative, employers, regardless of whether they currently offer a retirement savings plan, will have choices to make. And these choices will have administrative implications and an impact on management fees paid by employees. A solid understanding of VRSPs and other plans available on the market is the key to not getting caught unprepared.


Administrative implications

Even though VRSPs will be administered by financial institutions, a careful analysis of the bill indicates that the administrative burden would be greater than what was initially expected, particularly for small and medium-sized enterprises (SMEs).

The employer will be responsible for making the contributions to the administrator

  • A contribution deduction method must be introduced.
  • Employers who fail to make contributions will be required to pay interest and will be subject to a fine.
  • Tax disclosure implications remain to be clarified.

The employer will be responsible for offering the VRSP to all employees

  • Information on the VRSP must be sent to all employees.
  • Every two years, the employer must once again offer the VRSP to all employees who opted out of or terminated their membership in the plan.
  • A procedure for recording and monitoring members’ decisions must be implemented.

Investment fees

As the figure below illustrates, investment fees for group retirement savings plans (registered pension plans, Group RRSPs, DPSPs, SSPs, etc.) are lower than those for the individual savings market (individual RRSPs offered directly by brokers and financial institutions). The financial market thus suggests that investment fees associated with VRSPs should fall somewhere in the middle. Details concerning investment fees will be clarified in the regulations that are slated to be published this fall.

Comparison of estimated average investment fees by vehicle type:


Starting this fall, employers will most likely be solicited by several financial institutions encouraging employers to choose their VRSP. To make informed decisions that meet their needs, employers will need to compare not only the different VRSPs available to them, but also the other retirement savings vehicles currently on the market.

Administration and costs will be two key decision-making factors; however, fiduciary responsibilities, investment management and uniformity throughout Canada should also be considered. In addition, should not be left aside the distinctive employer brand and competitiveness of total compensation.

For interested parties, a public consultation period will begin on September 11, 2012.
Any citizen or organization that wishes to participate in the public hearingsmust submit a brief
to the Clerk of the Committee on Labour and the Economy no later than August 30, 2012.



Please feel free to contact us for additional information.

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