VRSP Newsletter

Hesitating about contributing to your

employees’ VRSP? 

If you've decided to set up a voluntary retirement savings plan (VRSP) for your company, or if you will soon do so, you are not required to contribute for your employees. You can, however, benefit from a number of advantages if you do. Here are a few.

Competitive advantage

Employers that contribute to their employees’ VRSP have an advantage over their competitors. This additional benefit can help you attract and retain talented employees. In addition, satisfied employees are generally motivated, dedicated, productive employees that will contribute to your company’s success.

Tax advantages    

There are two interesting tax advantages: the employer’s contributions for employees are not subject to employer payroll taxes, and they are deductible from the company’s taxable income.

Locked-in contributions

Unlike employee contributions, which are not locked-in, employer contributions are locked-in and therefore cannot be withdrawn by the employee, with a few exceptions. This means you can be assured that your contributions will indeed help employees to increase their savings for retirement.

Flexibility

If you decide to contribute to your employees’ VRSP, three options are available for determining your contribution amount. Your contribution can be:

-          A fixed amount for all employees

-          A fixed percentage of your employees’ pay

-          A percentage of your employees’ contributions

Contributions can also be paid based on pre-defined employee categories (managers, administrative support, production employees, etc.). You can also create employee categories based on months/years of continuous service or months of participation in the VRSP.¹ If you prefer, you can make optional discretionary contributions a maximum of two times per year instead of committing to making regular contributions.

As you can see, many advantages and options are available to you if you decide to contribute to your employees’ VRSP. 

¹ Employer contributions must not be discriminatory in nature.