WINNIPEG, March 28, 2012 – The Great-West Life Assurance Company commends the Quebec government for its proposed voluntary retirement savings plan (VRSP), the province’s version of the federal pooled registered pension plan (PRPP) initiative, now in its third reading in Parliament.
“The VRSP offers a strategic framework for other Canadian provinces as they develop their own PRPP legislation,” says Bill Kyle, Executive Vice-President, Wealth Management at Great-West Life. “We encourage all provincial governments in their efforts to help Canadians achieve retirement income adequacy by incorporating universal access, auto enrolment, auto escalation and locking in of contributions.”
“The Quebec government’s commitment to provide universal pension access to Quebec workers is critically important to the VRSP’s success in Quebec,” Kyle says. “This same commitment to universal access will be key to making the PRPP a success in other provinces across Canada.”
VRSPs are expected to benefit Quebec workers by providing a plan structure to pool smaller employers’ assets to allow these plans to benefit from economies of scale.
According to the proposal, which must still be passed into law, VRSPs will offer mechanisms to address issues identified as central to the retirement reform debate in Canada without disturbing existing employer-sponsored retirement plans. These mechanisms include:
- Universal access – The VRSP must be made available to all employees of businesses with five or more eligible employees.
- Early enrolment – Automatic enrolment engages members early to be actively involved with their retirement planning and helps them take advantage of tax-free compounding.
- Age-adjusted investment options – By including a lifecycle (e.g., target date) fund as the default, the member’s asset mix will adjust to their stages of life automatically, providing an easy way to diversify and rebalance as they get older.
- Locked-in employer contributions for retirement – Although the current proposed VRSP structure allows plan members to reserve savings for retirement and access the contributions they make at any time, the VRSP structure locks in employer contributions until the age of 55 to help ensure employees’ savings are earmarked for retirement.
- Portability – Employees who change jobs can continue contributing to the same VRSP.
As a leading provider of group retirement services for Canadians, Great West Life currently provides services to nearly 6,000 companies with five to 99 members. Great-West Life’s experience will provide employers with a program that is easy to implement and administer – freeing them to focus on their day-to-day businesses.
About Great-West Life
Great-West Life administers over 17,000 group retirement plans and over 1.2 million member accounts, representing nearly 30 per cent of capital accumulation plans (CAPs) in Canada. In the United States, Great-West is the fourth-largest group retirement plan recordkeeper based on total participants and Putnam Investments adds to the organization’s North American presence in this market. www.greatwestlife.com