Only one day has passed since the Quebec Finance Minister Raymond Bachand delivered the 2010-2011 budget speech and much has already been said in the media about Quebec’s proposal to implement “Voluntary retirement savings plans” (VRSPs).
The government is planning to amend Quebec’s legislative and regulatory frameworks to allow a new type of retirement savings vehicle for those who are not eligible for an employer-sponsored pension plan. VRSPs would essentially be based on the framework for “pooled registered pension plans” (PRPPs) that was announced by the federal government last December.
More details regarding VRSPs can be found in the document released by the government entitled “A Stronger Retirement Income System”.
The implementation of VRSPs will require significant changes to the heavy legal framework governing registered pension plans in Quebec. The bulk of the new rules will probably be found in the exemption regulations, much like what was done in respect of simplified pension plans, which are somewhat similar to VRSPs.
Amendments to the federal Income Tax Act will also be required to accommodate VRSPs in Quebec and PRPPs (if any) in other provinces. Notably, the federal government will have to create exceptions to the requirements for an employer-employee relationship and a minimum employer contribution.
We will monitor the March 22, 2011 federal budget closely to see if the required tax amendments will be made in the near future, and we will report on the proposed legislative changes as the different pieces of legislation are tabled.