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New Provincial Programs in Retirement Planning: Understanding the VRSP

It is commonly accepted that most Canadians are not saving enough for retirement. Even worse, it is widely accepted that CPP and QPP are not as well funded as people in their 20s and 30s would want them to be. By the time these young workers retire, the benefits in the federal pension plans won't exist at the same level that they do now. But Canadians aren't taking it upon themselves to save for retirement on their own.

Instead, they are looking to their employers to help bridge the gap. That's why Quebec recently launched new legislation requiring small business owners to offer Voluntary Retirement Savings Plan (VRSP) programs. Other provinces, such as BC and Alberta, are poised to follow soon after, with similar programs preparing to launch in 2015.

As the legislation is finalized and the new programs launch, many employers across the country are asking what it means for them.

What Is a VRSP?

A VRSP is a voluntary group savings plan similar to the pension plans offered by many larger corporations. Employees can contribute up to their RRSP contribution limit (usually about 18% of last year's earned income), and employers can choose whether or not to contribute.

Like other retirement plans, VRSP contributions are taken from pre-tax dollars, so employees receive some tax benefits for participating. In addition, VRSPs are designed to be quick and easy - employees simply identify their retirement horizon and their risk tolerance, and they subsequently are placed into a group of funds that matches their preferences. In addition, because it is a group savings plan, fees are minimal.

Alternatively, small business owners may have heard of Pooled Registered Pension Plans (PRPP). vrsp call outThe PRPP is the federally-endorsed program that parallels Quebec’s VRSP program. Unlike VRSP, PRPP is not obligatory, but it is available to Canadians across the country.

Who Needs to Participate?

In Quebec, the legislation obligates each company that does not offer a workplace plan to participate, and the date of compliance is dependent on the number of eligible employees.

Number of eligible employees

Eligible employee count as of

Date plan must be set up


June 30, 2016

December 30, 2016


June 30, 2017

December 30, 2017



TBD (Not before January 1, 2018)


Expectations are high for a strong participation rate, as employees will be automatically enrolled and will have to consciously choose to opt out. In other words, employees have to take action not to participate.

Why Start Now?

Business owners across the country should begin looking into these programs and asking questions. Jean-Francois Beaulieu, Chief Sales Officer of Hub International Quebec, expects that some business owners will enroll right away, while others will wait until closer to the deadline.

"Enrolling now in a VRSP enables employees to begin saving for retirement immediately. Small business owners looking to attract top talent should realize this is a selling point for prospective employees," said Beaulieu. "Those who offer a VRSP now, rather than waiting until all business owners are required to do so, can attract that talent before it is snatched away. VRSPs are simple and inexpensive to offer but are attractive to savvy employees."

Where to Start?

Hub International has a history of working with its suppliers to assist small business owners, and it is prepared to do the same in relation to VRSPs.

According to Terri DiFlorio, President of Hub Financial, Hub wants to make it easy for small business owners to provide VRSPs to their employees. She believes that Hub's primary responsibility is to provide a simple way for its clients to take action. Once the clients have signed up, their employees simply begin saving.

Hub has worked extensively with suppliers to offer the best VRSP program, and in fact, brings several options to clients. Hub works with key suppliers that make the process as simple as possible for small business owners, so that employees can sign up seamlessly online, while being supported by experienced professionals who manage the administration of the plan.

"If we're bringing a supplier to our clients, we have to be really, really sure it's the best option," said DiFlorio. "This is new ground for our clients and we are committed to being trusted advisors and helping our clients navigate through their options."

Hub's advice across the board is to start now. By doing so, companies can ensure that they are on track to offer stronger retirement planning options to employees, while competitively attracting and retaining top talent.

Find answers to your questions by asking a Hub advisor