On March 12, 2014, the Quebec government released
draft regulations (pdf) that are required to complete the new
legal framework for the establishment of voluntary retirement
savings plans (VRSPs) in Quebec effective July 1, 2014.
The Quebec government adopted Bill 39 (the VRSP Act) last December, which
defines the main characteristics of the VRSP design. One
particularly important characteristic is that employers with five
or more employees who have at least one year of continuous service
and who do not have a registered pension plan or a registered
retirement savings plan or a tax-free savings account for which
payroll deductions could be made will have to
automatically enroll those employees in a VRSP (although
there is a transition period during which enrolment will remain
VRSPs are Quebec's version of the pooled registered pension
plan (PRPP) design developed by the federal government. VRSPs, like
PRPPs, function as defined contribution pension plans, but are
administered by a financial institution, rather than the
The draft regulations prescribe a number of VRSP requirements,
the registration of VRSPs and amendments thereto;
the information required to be included in a VRSP and the
related participation agreement and member information
the default contribution rate for VRSP members;
the types of investment options allowed under the plan;
transfers of amounts to and from VRSPs; and
division of benefits between spouses in case of a relationship
Most importantly, the draft regulations set out the criteria for
determining whether a VRSP is being provided to its members at
"low cost" within the meaning of the VRSP Act. According
to the draft regulations, the administrator of a VRSP would not be
compliant unless the total of the fees charged directly or
indirectly to members, including management, administration and
trailer fees, is less than or equal to: (i) 1.25% for the default
investment option; and (ii) 1.5% for the other options.
In addition, the fees charged in respect of a VRSP could not be
higher than the fees charged by the administrator under its PRPP.
Under the federal PRPP regime, the fees charged to PRPP members are
expected to be at or below those incurred by members of a DC plan
that provides investment options to 500 or more members. The same
requirement would thus be applicable by reference where an
administrator offers both a PRPP and a VRSP.
The draft regulations are open for public comment during a
45-day period. Considering that we are currently in the middle of a
provincial election, the exact timing for their adoption remains
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