Employees, meet the VRSP!

You receive a notice from your employer when you arrive at work on Monday morning. You find out that a voluntary retirement savings plan (VRSP) will soon be offered to you and other eligible employees at your workplace.

That’s great news! But what does that mean for you? Let’s have a closer look at VRSPs.

So why set up a retirement savings plan at work?

A fair number of businesses offer their employees a group retirement plan, commonly known as a pension fund. There are several types, such as the defined contribution plan, the defined benefit plan, the simplified pension plan. And I could go on.

These plans make it possible for you to set sums aside for retirement by way of payroll deductions. By doing so, your savings pay off on every level: your contributions are tax deductible (short-term advantages) and you set aside amounts regularly for your future (long-term advantages). Let’s face it, it is much easier to save before the money falls into our hands.

Even today, not all workers have the opportunity to have savings deducted from their payroll through an employer-offered pension plan. Based the number of employees affected by the Voluntary Retirement Savings Plans Act, businesses that do not offer a plan are required, or will be required, to implement a VRSP or another group retirement savings plan that meets certain conditions. Since 31 December 2016, businesses with 20 or more employees must meet the requirements of the Act. Now, businesses with 10 or more employees are required to implement a plan by 31 December 2017.

For employers, implementing a VRSP is a simple way to ensure that they are in conformity with the law. It is also an efficient and advantageous method of saving for you!

Don’t miss the boat with VRSPs

Everyone agrees that, in addition to the Québec Pension Plan and the Old Age Security pension, savings are essential to ensure a comfortable standard of living in retirement. It is of the utmost importance to sit down and plan for retirement properly. Focus on a savings method that is best adapted to your personal situation, and one that will allow you to put money aside without compromising the standard of living you enjoy today. It is possible. The sooner you start saving, the bigger the amount will be when you retire, thanks to all the interest that you will accumulate over the years.

The VRSP is now an option. If ever you are offered a VRSP, evaluate your situation and use it to your advantage to better prepare for retirement.

As its name suggests, the VRSP is voluntary. If you are an employee who qualifies, under certain conditions, you can choose the type of deduction (fixed or percentage), or whether to increase or decrease your contribution rate. You can also choose to end or suspend your plan participation. Once you have received a notice of participation in the VRSP from the plan administrator, your employer will automatically register you, unless you notify him or her otherwise. Your contributions, determined according to a default rate, will be deducted directly from your pay. The default contribution rate will be 2% until 31 December 2017, and increase to 3% in 2018.

Your employer can also make voluntary contributions to the VRSP. Should that happen, it’s good news for you! It’s a great way to improve working conditions, and gives you all the more reason to register. Should you employer choose not to contribute, don’t worry. Your savings in the plan can significantly improve your standard of living when you retire. For a clearer idea, get an estimate by using our VRSP Calculator.

To find out more, the Retraite Québec website provides a wealth of valuable information on VRSPs. Check it out at www.retraitequebec.gouv.qc.ca/vrsp.