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BlogNewsVRSP: This tool has the potential to create a wave of new clients.

VRSP: This tool has the potential to create a wave of new clients.

Thursday, May 5, 2016

As you are no doubt aware, Quebec made history by creating the Voluntary Retirement Savings Plan (VRSP). Quebec was the first province in Canada to implement a workplace retirement savings plan that is mandatory for employers with 5 or more employees with at least one year of continued service. The VRSP is Quebec’s version of the Pooled Registered Pension Plan (PRPP), a plan designed especially for small and medium-sized firms and the self-employed, two groups that rarely benefit from corporate pension plans.

Who is the VRSP for?

Companies in Quebec with five or more employees that do not already offer an employee group retirement plan will be required to set up a voluntary retirement savings plan. Companies with fewer than 5 employees, self-employed workers and savers will also be able to take out a VRSP, on a voluntary basis.

Companies of 5 employees or more that already offer a group RRSP or a group TFSA to their employees (with contributions made through payroll deductions) or a registered pension plan (RPP), will not be required to offer a VRSP.

Who is the VRSP for?

Employees of at least 18 years of age who have one year of continued service within the meaning of the Quebec Act Respecting Labour Standards.

When do companies have to comply with the requirement to offer a VRSP?

While the VRSP has been in effect since July 1, 2014, companies have a specific timeframe in which they must comply with the law, based on the number of employees in the company:

  • Companies with 20 or more target employees: Mandatory, by December 31, 2016;
  • Companies with between 10 and 19 target employees: Mandatory, on December 31, 2017;
  • Companies with between 5 and 9 target employees: The date will be determined by the government, but the VRSP will not become mandatory before January 1, 2018.

Advisors: Who can do what?

VRSP administered by an insurer

A VRSP opened by an employer for its employees, can only be distributed by:

  • Group annuity and insurance advisors
  • Group annuity plan advisors, or
  • Actuaries.

Advice, recommendations and comparisons are available to employers only, giving individual advice to employees is not permitted. The mandate is limited to enrolling employees.

To enable the industry to meet the rising demand for this new savings plan and to maximize the VRSP’s potential for success, the law stipulates that, for a limited time, or until December 31, VRSPs can be distributed to employers though:

  • Financial security advisors
  • Group insurance plan advisors

What are you waiting for to grow your income and your potential client base?

  • Start now by targeting companies with 20 or more employees.
  • Use the legal obligation to offer an VRSP to start the conversation.

Referrals

The Pro Vie Insurance service offer is your opportunity to tap into Pro Vie Group Insurance’s fine-tuned expertise in insurance and group annuities. Our objective is to support licensed and non-licensed insurance advisors at every level.

Sources:
Industrial Alliance
Autorité des marchés financiers
Act Respecting the Distribution of Financial Products and Services.
Voluntary Retirement Savings Plan Act

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