VRSP: Final push before the first deadline

Adèle Manseau | Desjardins Group

As you may know, companies employing 20 or more people have only a few more weeks to offer them a voluntary retirement savings plan. Companies with 10 to 19 employees have a little more time—they have until December 31, 2017. Small companies with between 5 and 9 employees will not be required to do so until 2018; the government has yet to announce the actual date.

Are you in the first category and feeling the time crunch? Maura Pisetta, a retirement plan advisor with Desjardins Group, answers a few questions commonly asked by entrepreneurs.

1- Which plans comply with the Voluntary Retirement Savings Plans Act?

In addition to VRSPs, group RRSPs, group TFSAs, where contributions are deducted directly from the salary, and pension plans are products that will allow employers to meet the requirements set out in the Voluntary Retirement Savings Plans Act.

See if you need to offer a VRSP.

2- I already offer a group retirement savings plan; do I have to offer a VRSP too?

If you already offer a group retirement savings plan, you don’t need to offer a VRSP if you meet the following conditions:

  • You offer the group retirement savings plan to all eligible employees (who are at least 18 and have provided 1 year of uninterrupted service, as defined under the Act respecting labour standards)
  • Your employees contribute to the plan through salary deductions

If your plan doesn’t currently allow all employees to contribute, you have 2 options:

  • Have the rules of the plan changed to allow all employees to contribute, or
  • Set up a VRSP for these employees

3- The number of employees I have varies and is often under quota. Should I offer them a VRSP anyway?

To find out if you should offer the VRSP at the end of 2016, you’ll need to count how many employees worked for you on June 30, 2016. Because variation in employee numbers is often due to seasonal work (e.g., fruit picking, ski resorts), keep the following in mind when making your calculation:

  • The Voluntary Retirement Savings Plans Act applies to employees who meet the following 3 conditions:>
o Are 18 or older
o Are an employee, as defined under the Act respecting labour standards
o Have provided uninterrupted service to the employer for 1 year, as defined under
the Act respecting labour standards.

To fully answer this question, we should take a closer look at what uninterrupted service means:

  • Uninterrupted service means the period during which the employee is considered to be bound to the employer. The period may include a work contract for a set period of time (e.g., 3 months of work that is renewed annually), which describes the employment patterns of many seasonal workers.
  • Since the work stoppage is due in this case to the job type, these individuals are still considered to be company employees while the contract is suspended. Suspension periods must also be included when calculating 1 year of uninterrupted service.
  • Consequently, even if these employees are not physically present at work on June 30, 2016, they are still considered to be employed under the uninterrupted service definition set out in the Act respecting labour standards.
  • If your company fits this description, you’ll need to count these people as employees on June 30, 2016.

4- Will I be penalized if I am not compliant in time?

An employee’s complaint filed with the Commission des normes, de l’équité, de la santé et de la sécurité du travail may result in a fine, costing the at-fault employer between $500 and $10,000. The Commission is responsible for monitoring employers required to offer a group retirement savings plan and will respond to employee complaints to enforce the Voluntary Retirement Savings Plans Act. The amount fined will double in the event of a recurrence.

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