Quebec unveils voluntary pension plans

Quebec has announced it will introduce voluntary retirement savings plans (VRSPs), targeted at small and medium-sized enterprises and the self-employed. VRSPs will come into force on Jan. 1, 2013.

The announcement came as part of the Quebec budget, tabled yesterday.

Read: An advisor’s guide to the PRPP

“Workers will automatically be enrolled in the plan by their employer and a set of default parameters will be offered to them,” explained Finance Minister Raymond Bachand.

“A worker will be able to change his contribution rate and continue contributing to the same plan if he changes employer. He will be able to dispose of the funds accumulated, withdraw them before retirement and leave the plan at any time. In addition, as with an RRSP, contributions to a VRSP may be deducted from taxable income for Quebec and federal tax purposes; the amounts accumulated will not be taxed as long as they are not withdrawn.”

Companies with five employees or more that currently do not offer a pension plan will have to offer a VRSP to their employees by Jan. 1, 2015. They will not be required to contribute to VRSPs, and the plans will be administered by third parties.

“Our objective is to simplify things: easier for the worker, simpler for the employer,” said Bachand.

Despite the Quebec government’s claims that the new VRSPs will be easy for employers to administer and employees to contribute to, not everyone agrees.

Martine Hébert, vice-president of the Canadian Federation of Independent Businesses said she fears it will “create bureaucratic nightmares for both employees and employers,” reports the Montreal Gazette.

And Michel Arsenault, president of the Fédération des travailleurs et travailleuses du Québec, said few employees will be able to afford contributing to VRSPs and the government should instead look to beefing up the Quebec Pension Plan.

This article originally appeared on BenefitsCanada.com.