Act now.

Give your business a competitive advantage and your employees the opportunity to save for retirement.

Why wait for the government deadlines?

The Voluntary Retirement Savings Plan (VRSP) is designed especially for small and medium-sized businesses that do not yet have a workplace savings plan in place. The VRSP is a great product for business owners to help maintain and improve employee morale, retain their best people and attract the best workers.

VRSPs are not like other defined contribution pension plans. The role for you as an employer will be minimal with fewer responsibilities than traditional plans require:

  • Simply notify your employees 30 days before you set up a VRSP with Manulife.
  • Complete the eApplication.
  • Provide employee information and your company banking details to Manulife.
  • Deduct contributions from your employees’ pay and remit those contributions to Manulife.
  • Notify Manulife when you have an employee leave your company (for any reason).

80%of Quebec employees believe saving through a workplace VRSP would make it easier for them to reach their retirement goals1.

1Manulife workplace savings survey 2012

Which companies are required to set up a VRSP?

In Quebec an employer is required to set up a VRSP if they do not currently offer a workplace savings plan and have a specific number of eligible employees. Eligible employees are defined as employees with one year of uninterrupted service with the company and are at least 18 years of age.

A Quebec employer, based on the number of eligible employees, must set up a VRSP by the date outlined in the chart below.

Number of eligible employees Eligible employee count as of Date plan must be set up
20 + June 30, 2016 December 31, 2016
10-19 June 30, 2017 December 31, 2017
5-9 To be determined Exact date yet to be determined by the government (Date will not be before January 1, 2018)

Learn about the key product features being introduced by the government:

What is a VRSP?

A Voluntary Retirement Savings Plan (VRSP) is a new type of group savings plan. It is a defined contribution pension plan with some differences that make it simpler than a traditional defined contribution pension plan. The VRSP offers tax advantages, for both employers and employees that are similar to those offered by a traditional pension plan.

Which employees can participate?

Any employee who is 18 years of age or older and who has one year of uninterrupted service is automatically enrolled in the VRSP. All other employees may elect to join by notifying their employer.

Upon receiving their notification of enrolment into the plan, the employee will have 60 days to opt out of participation in the plan.

Does the employer have to contribute?

No, employers are not required to contribute to the organization’s VRSP. However, you may choose to do so. Aside from the benefits of employee retention and attraction, if any employer chooses to contribute, these tax benefits are available:

  • Employer contributions are not subject to payroll taxes
  • Employer contributions are a deductible salary expense and may therefore be deducted from income for tax purposes
What are the tax advantages of a VRSP to an employee?

Employee contributions to a VRSP are deductible from income before income tax is applied in the same manner as Registered Pension Plan contributions. As well, money contributed by the employer to the VRSP is not included in an employee’s taxable income and the employee does not pay income tax on this money until it is withdrawn (ideally at retirement).

How are employees enrolled in the VRSP?

An employer will automatically enroll his/her eligible employees by providing the administrator (Manulife) with the required employee information to establish a VRSP account. The administrator in turn sets up an account for each employee. Employees will have 60 days to notify Manulife if they do not want to participate in the VRSP.

Do employees have to stay in the plan?

No, an employee may terminate his/her participation in the VRSP within the first 60 days of receiving notification of enrolment into the plan. Additionally, after the 60-day opt-out period ends, employees remain a member of the plan but have the option to reduce contributions to zero if:

  • Employee has at least 12 months of contributions in the account,
  • You are making contributions on behalf of your employees, or
  • The employee has reached their annual contribution limit as set out by CRA.
How much can employees contribute each year?

An employee can contribute up to his/her Registered Retirement Savings Plan contribution limit, which is typically 18 percent of the previous year’s earned income to a maximum dollar amount set by Canada Revenue Agency (CRA), plus any carry forward room the employee may have.

The default contributions rates as set out in the VRSP regulations are:

  • 2% of gross earnings from July 1, 2014 – Dec 31, 2017
  • 3% of gross earnings from Jan 1, 2018 – Dec 31, 2018
  • 4% of gross earnings from Jan 1, 2019 onwards

Employees may change their contribution rate at any time but not more than twice per 12-month period, unless you agree to a greater frequency.

Can the employee withdraw money from the plan?

Employer contributions are locked in and cannot be withdrawn until retirement. If the employee is age 55 or older, they do have the option to transfer to another locked-in vehicle. Employee contributions are not locked in and can be withdrawn at least once every 12 months.

However regulations state locked-in funds can be withdrawn in certain situations (i.e., a disability).

What happens if an employee terminates employment?

Employees are entitled to the full value of their account. The employee may opt to continue in the plan or transfer their savings to another retirement savings vehicle. Amounts that are locked in will remain locked in.

If an employer already offers a group RRSP to their employees, do they have to establish a VRSP?

No. As long as any employer with 5 or more eligible employees offers a workplace savings plan to all employees within the deadline provided in the regulations, the employer is fulfilling the government mandate.

Need help?

Manulife's VRSP support team is here to help