The New Voluntary Retirement Savings Plans Act

On December 3, 2013, Québec’s National Assembly adopted Bill 39, entitled the Voluntary Retirement Savings Plans Act. Beginning on July 1, 2014, the government will gradually phase in these new plans, called “VRSPs”, which will give more than two million Québec workers access to a simple, low-cost retirement savings vehicle. Bill 39 is similar to an earlier bill, Bill 80, tabled by the previous government on June 12, 2012. The bill was adopted in the general context of the D’Amours Report¹ (tabled during the second quarter of 2013) and its recommendations. 

This new legislation provides that any employer² having a place of business in Québec may offer a VRSP to its employees but must do so if it has five or more eligible employees on December 31 of a given year, unless those employees have the opportunity of making contributions to a registered retirement savings plan or a tax-free savings account or belong to a category of employees that have a registered pension plan as defined in the federal Income Tax Act³. However, the employer will not have to make contributions to the plan on behalf of its employees, but may do so for those who participate. 

The phasing-in of VRSPs will occur in stages over the next few years, depending on the number of employees a business has, the first phase-in date being December 31, 2016. However, any employer may offer a VRSP to its employees as of July 1, 2014, the date the new legislation comes into force. 

Before making a VRSP available, employers must prepare a notice in writing to their employees, the content of which is specified in the new legislation⁴ and includes a statement of the employer’s intention to subscribe to a VRSP with an authorized administrator, the fact that eligible employees will be automatically enrolled in the plan but have the opportunity to opt out of it, the fact that the employer will provide the plan’s administrator with certain personal information concerning each employee, and the fact that an individual employee may determine his or her own rate of contribution to the plan. 

Any employer who subscribes to a VRSP must respect the obligations created by the new statute. In particular, the employer must automatically enrol in the plan any eligible employee and any employee who so requests, and also offer the plan to any eligible employee who has opted out of it⁵. The employer must also withhold the members’ contributions for each pay period from their salary, and then remit those contributions to the plan, as well as any contributions that it is paying on behalf of the members⁶. 

VRSPs are intended primarily for salaried employees at least 18 years of age who have accumulated one year of continuous service within the meaning of the Act respecting Labour Standards⁷. They will also be available for self-employed workers and any person whose employer has not subscribed to a VRSP⁸. 

The introduction of VRSPs will allow workers to save for their retirement in a structured format, through either salary deductions at source or low-cost regular pre-authorized withdrawals, and to enjoy benefits hitherto available only to members of group retirement savings plans. Participants can even determine their own rate of contribution⁹, failing which the rate will be determined by regulation. 

As for becoming a member of a VRSP, registration in the plan will be automatic for eligible employees, through their employer. The self-employed and certain other workers will need to contact an authorized administrator to register. 

In order to be authorized to administer a VRSP¹⁰, an administrator must be a licensed life insurer under the Act respecting insurance or a licensed trust company under the Act respecting trust companies and savings companies, or an investment fund manager registered in accordance with Title V of the Securities Act. The administrator must also be authorized by the Autorité des marchés financiers, Québec’s financial markets regulator. A list of authorized administrators that have registered VRSPs will be available as of July 1, 2014. 

VRSPs will be overseen by the Régie des rentes du Québec¹¹, Québec’s pension regulator (which will monitor their administration and operation), by the Autorité des marchés financiers¹² (which will monitor the performance of administrators) and by the Commission des normes du travail¹³, Québec’s labour standards regulator (which will ensure that employers respect their obligations).