Su Life Fiacial VRSP FREQUENTLY ASKED QUESTIONS 1. GENERAL INFORMATION What is a Volutary Retiremet Savigs Pla (VRSP)? VRSPs are Quebec s versio of the Pooled Registered Pesio Pla (PRPP) itroduced by the federal govermet. VRSPs, like PRPPs, fuctio as defied cotributio pesio plas, but are admiistered by a life isurer, trust compay or ivestmet fud maager, rather tha by a pesio committee. VRSPs are a ew type of workplace retiremet pla that allows small to mid-sized busiesses to participate i a simple, low-cost retiremet savigs program for their employees. VRSPs will be made available to both full-time ad part-time employees, ad the self-employed. All compaies i the provice of Quebec with five or more eligible employees must offer a VRSP to members of their staff who do ot curretly have the opportuity to cotribute to a Registerd Retiremet Savigs Pla (RRSP) or a Tax Free Savigs Accout (TFSA) through payroll deductio, or are ot members of a workplace pesio pla. Other compaies may, of course, offer the pla o a volutary basis, at their discretio. Whe will the VRSP officially lauch? The VRSP Act came ito effect July 1, 2014. Who is eligible to participate i a VRSP? Employees who : work solely i Quebec or work both i Quebec ad outside Quebec for a Quebec employer, or who are residets of Quebec ad work outside Quebec for a Quebec employer; are 18 years of age or over; have at least oe year of uiterrupted service (may iclude seasoal ad cotract employees who work full-time or part-time). The employer must erol all eligible employees icludig those with less tha oe year of uiterrupted service who ask to be erolled i the pla. The employer is ot required to automatically erol eligible employees who cotribute to a group RRSP or group TFSA through payroll deductio or who are members of a pesio pla. Self-employed workers, employees whose employer is ot required to offer a VRSP apply to joi the VRSP. 1
What is the differece betwee a VRSP ad a traditioal workplace pla? The VRSP differs from a traditioal workplace pla i the followig ways : The VRSP is admiistered by a life isurer, trust compay or ivestmet fud maager, rather tha by a pesio committee. The admiistrator is resposible for providig all reportig. Legislatio for the VRSP is separate from the provicial pesio legislatio. The pla is desiged as a simple solutio, with correspodigly limited customizatio by the employer. Eligible employees are automatically erolled i the pla, with the optio to opt out withi 60 days of the date the otice of membership was set to them by the admiistrator of the pla. A default cotributio level ad ivestmet optio apply to ay employee who does ot choose a cotributio level or make a ivestmet choice. Who will regulate VRSPs? There are three Quebec agecies resposible for regulatig VRSPs : The Autorité des marchés fiaciers (AMF) authorizes admiistrators (providers) of VRSPs. The Régie des retes du Quebec oversees VRSPs ad esures that they are admiistered ad operated i accordace with VRSP legislatio. The Commissio des ormes du travail is resposible for overseeig the duties of employers with respect to eforcig compliace with the law. What type of licece do I eed to start offerig VRSPs? There are two types of liceces eligible to sell VRSPs : Represetatives authorized to provide group auities (certificate 2a or 2c) ca sell a VRSP to employers. Fiacial securities advisors (certificate 1a) ca offer a VRSP to self-employed workers ad idividual members. I aticipatio of high demad, util Jauary 1, 2018, represetatives i isurace of persos (certificate 1a) ad group isurace represetatives authorized to provide oly group isurace plas (certificate 2b) will be able to offer a VRSP to employers. Oly advisors licesed i group auity plas (certificate 2a or 2c) may offer or provide advice o other group pla optios with respect to products issued by life isurers. Fiacial security advisors (certificate 1a) ad advisors i group isurace plas (certificate 2b) may offer VRSPs oly util Jauary 1, 2018. They may ot offer other types of group plas or make trasfers from aother type of pla to a VRSP, as this would require them to advise regardig products for which they are ot licesed. 2
Is there a deadlie for settig up a VRSP? As of July 1, 2014, the ew law makes it madatory for Quebec employers who do ot curretly offer a workplace savigs pla to all eligible employees to offer a VRSP by the followig dates : Number of eligible employees Deadlie for offerig VRSP 20 or more o Jue 30, 2016 December 31, 2016 10 to 19 o Jue 30, 2017 December 31, 2017 5 to 9 To be determied, but ot prior to Jauary 1, 2018 2. SUN LIFE FINANCIAL S VRSP What are the characteristics of Su Life s VRSP? Easy to set up, simple to admiister ad straightforward for employers ad employees to uderstad, our VRSP will deliver ivestmet choices you ca cout o with dedicated customer service makig this a completely tur-key optio for the almost two millio Quebecers who curretly do ot have a workplace savigs pla. What is the compesatio structure for sellig a VRSP? Su Life Fiacial offers a competitive compesatio structure that icludes a upfrot pla participatio commissio of $150 whe a employer is added to the pla ad a accout maagemet commissio of 1/12 th of 0.20% of the mothly closig asset balace. How log do employees have to complete their iitial fud selectios? Su Life determies the lieup of fuds that employees ca choose from ad ivests their cotributios accordig to their istructios. Employees have 60 days from the date their otice of membership is set to them by Su Life to make their fud selectios. After 60 days, cotributios will be ivested i the default fud. The default ivestmet optio for the VRSP is the Su Life Target Date Segregated Fuds. Target date fuds automatically reduce risk as the ivestor approaches the fud maturity date (life cycle fuds). If a member does ot select a fud(s) for their cotributios, cotributios will be ivested i the target date fud with a maturity date just prior to their 65th birthday. Employees ca chage their fud selectios at ay time o Su Life s member website or by callig our Customer Care Cetre at 1-877-SUN-LIFE (1-877-786-5433) betwee 8 a.m. ad 8 p.m., Moday to Friday. 3
What are the ivestmet optios Su Life will offer through its VRSP? Su Life will be providig a low-cost, oe-stop ivestmet solutio that will make ivestig easy. Su Life Target Date Segregated Fuds allow employees to select the fud based o the date closest to their retiremet. The maturity date for all fuds is Jue 30. The fees o the Su Life Target Date Segregated Fuds are 1.087% before tax ad 1.25% icludig applicable sales tax. Target date fud lieup Su Life Retiremet Segregated Fud Su Life 2020 Target Date Segregated Fud Su Life 2025 Target Date Segregated Fud Su Life 2030 Target Date Segregated Fud Su Life 2035 Target Date Segregated Fud Su Life 2040 Target Date Segregated Fud Su Life 2045 Target Date Segregated Fud Su Life 2050 Target Date Segregated Fud I additio to the Su Life Target Date Segregated Fuds, we will offer the followig traditioal ivestmet optios : Guarateed / Moey Market SLA 3 Year Guarateed Fud SLA 5 Year Guarateed Fud Bod/Fixed Icome Su Life BlackRock Caadia Bod Idex Segregated Fud The fees are 1.287% before tax ad 1.48% icludig applicable sales tax. Caadia Equity Su Life BlackRock Caadia Equity Idex Segregated Fud The fees are 1.28% before tax ad 1.48% icludig applicable sales tax. Foreig Equity Su Life BlackRock Global Equity Idex Segregated Fud The fees are 1.305% before tax ad 1.50% icludig applicable sales tax. 4
3. EMPLOYER-SPECIFIC INFORMATION Do all my cliets have to offer a VRSP to their employees? Employers who do ot already offer to all of their eligible employees a RRSP or TFSA with payroll deductios, or a pesio pla, ad who have five or more eligible employees must offer a Volutary Retiremet Savigs Pla (VRSP) or aother form of group pla by a future date defied by the umber of eligible employees at the orgaizatio. If I have a cliet with fewer tha f ive eligible employees, are they required to offer a VRSP? Cliets with fewer tha five eligible employees have the optio to offer a VRSP but are ot required to do so. However, if the employee cout of a employer who iitially had five or more eligible employees falls below the threshold of five eligible employees, the employer must cotiue to offer the VRSP to ewly eligible employees ad, every two years, to those who have opted out or those who have chaged their cotributio rate to 0% uless all eligible employees have opted out of the pla. Is there a cost to employers to offer a VRSP? No. Employers will ot be required to cotribute to their employees VRSP. As with a traditioal pesio pla, if employers decide to cotribute, their cotributios will ot be subject to payroll taxes ad will be tax deductible at both the provicial ad federal level. What are the advatages for my cliets to offer a VRSP to their employees? Quick ad easy to set up Su Life hadles all VRSP admiistratio As the admiistrator, Su Life will provide all member commuicatios If a employer decides to cotribute to the pla, cotributios are tax deductible ad ot subject to payroll taxes VRSPs level the playig field with larger busiesses whe it comes to attractig ad retaiig talet 5
4. EMPLOYEE-SPECIFIC INFORMATION What are the advatages for employees to participate i a VRSP offered through their employer? Easy, affordable access to a workplace pla that facilitates systematic savig Access to olie educatio ad retiremet plaig resources via Su Life Fiacial s pla member services website at mysulife.ca Pla flexibility, icludig the ability for employees to choose their cotributio rate, choose their ivestmets, opt out (withi 60 days of the date their otice of membership is set to them) ad make withdrawals from their employee cotributios. For icome tax purposes, employee cotributios will be deducted from eared icome ad will grow tax-free If they leave their employer they may choose to either take their savigs with them or cotiue to cotribute to their Su Life Fiacial VRSP through our Automatic Cheque Pla (ACP) If my cliet offers a VRSP, are all employees required to participate? No. All eligible employees must be erolled, but if a employee does ot wish to participate, they must otify their employer i writig, withi 60 days of the date their otice of membership is set to them by Su Life, that they wish to termiate membership i the VRSP. Your cliet must advise Su Life if they receive such writte otificatio from a erolled employee ad retai the opt-out otice for the duratio of the employee s employmet. After 60 days, employees are ot allowed to termiate membership, but they ca reduce their cotributios to zero after cotributig to the VRSP for at least 12 moths, or earlier, if : Uder tax rules they are o loger permitted to make cotributios to the pla; They make a additioal cotributio to the pla equal to or greater tha the cotributio determied for that period; Their employer cotributes to the pla o their behalf. How much ca employees cotribute to their VRSP? Member ad employer cotributios are subject to the same aual limit as RRSPs (i.e., maximum total 18% of previous year s eared aual icome). Parter with Su Life Fiacial to lear how you ca take advatage of this uique opportuity to build the best solutio for your cliets. To fid out more, cotact our Small Busiess Cetre at 1-855-362-3086 ay busiess day from 8 a.m. to 6 p.m., ad visit our VRSP microsite sulife.ca/vrsp. Group Retiremet Services www.sulife.ca Group Retiremet Services are provided by Su Life Assurace Compay of Caada, a member of the Su Life Fiacial group of compaies. Su Life Assurace Compay of Caada, 2014. 03-15-RB GRP1835-E Life s brighter uder the su 6