Voluntary retirement savings plans are a smart move

To understand the importance of voluntary retirement savings plans, we have to recognize that there is still a long way to go for large numbers of Quebecers to be able to look forward to a comfortable retirement.

Currently, 50 per cent of workers in this province do not have access to a workplace pension plan. They must save for their retirement themselves, by contributing to an RRSP, for example. But, unfortunately, RRSP contributions are often insufficient, if they are made at all. The last budget estimated that 30 per cent of workers in Quebec have no retirement savings. There is a real danger that many Quebecers will be forced to drastically lower their standard of living once they reach retirement.

Our experience in group pension plan management has clearly shown us that sav- ing for retirement has to be accessible and easy. And that is precisely what VRSPS are intended to achieve.

Regular contributions by payroll deduction are often easier for people to manage; they can fit more comfortably into their budgeting habits. It will therefore be vital to have businesses on board – with VRSPS, smalland medium-sized businesses will be asked to be a “gateway” to saving. They will be free to decide whether to contribute to their employees’ plans. So simply by making it possible for a mil- lion workers to contribute to a pension plan in the workplace, they will be playing a key role – one that will be even more decisive given the automatic enrolment feature of VRSPS, which will make it easier than ever for workers to save.

As we have seen elsewhere, plans with active “opt-in” enrolment usually achieve participation rates of around 50 to 60 per cent. Plans with “automatic” enrolment, where contributions start up without any action on the member’s part, can boost that rate to 85 or even 90 per cent. VRSPS will give workers in Quebec that same simplicity, while allowing individuals the freedom to withdraw from the plan or reduce their contribution level.

For businesses and workers alike, the introduction of VRSPS will mean journeying into territory that is for the most part uncharted. Financial institutions that will be offering VRSPS will therefore have to demonstrate that their solutions are simple for employers and affordable for workers.

Raising retirement savings levels among Quebecers is a sizable challenge that calls for effort on everyone’s part.

Businesses have a role to play by offering VRSPS to employees who do not have access to a pension plan. Workers also have a responsibility to come to grips with saving.

Financial institutions have an obligation, too: they must offer solutions that are simple, easy and affordable. This is a role we are eager to play, and starting next year we look forward just as eagerly to seeing close to a million Quebecers set off on the path to a brighter retirement with VRSPS.