Quebec Weighs in on Retirement Savings

Quebec Weighs in on Retirement Savings

The Quebec provincial budget was tabled in March with a retirement savings plan announced similar to the federal government's proposed Pooled Registered Pension Plan (PRPP). The Voluntary Retirement Savings Plan (VRSP) shares many of the goals of the PRPP and is based its framework. It is designed to provide an opportunity for Quebeckers who don't have access to a pension plan to participate in a low cost savings vehicle that is easy to access and administer. The focus in Quebec is very much on reducing management costs to participants through oversight and economies of scale, in order to maximize investment returns.

Bothe the VRSP and PRPP are still in the planning stages. However, it is interesting to note key differences so far between the two initiatives:

• VRSPS will be available to every citizen age 18 or over, whether they are employees, self-employed or savers. PRPPs are intended for employees and the self-employed.
• The proposed framework indicates that employers may choose to offer PRPPs, although it may be mandatory in certain jurisdictions. VRSPs will have to be offered by employers to employees who are not covered by a pension plan.

Both types of plans allow employees to opt out, if desired, and both build in portability among plans. Contributions will be deductible for both PRPPs and VRSPs, and employer contributions are not mandatory.

It will be interesting to watch these plans develop, especially when it comes to mandatory participation by employers and how that may differ among provinces. The PRPP and VRSP have the potential to significantly change the retirement savings landscape for consumers and those who provide financial products and advice.

ADDITIONAL EDUCATIONAL RESOURCES: DFA-Tax Services Specialistô