Sherbrooke, February 4, 2010 – Passing through Sherbrooke, Yvon Bolduc, President and Chief Executive Officer of the Fonds de solidarité FTQ (the “Fonds”), expressed growing concern about Québec’s low savings rate. The fact is that Quebecers are not preparing themselves adequately for retirement and risk finding themselves in a precarious financial situation during their golden years. This will have serious repercussions on the Québec economy since experts predict that in less than 15 years, there will be just 2.5 workers for every retiree, compared to four today.
Québec has one of the lowest personal savings rates in the country: 2.1% in 2008, versus 3.7% for Canada as a whole.1 In fact, the rate is now just one tenth of what it was in 1982 (20.2%).2
The Fonds sounds the alarm
“We have to educate Quebecers more about the importance of saving for retirement. The answer is financial products that allow them to begin saving regularly as soon as they start working so that they don’t have to rely on the small pensions provided by the government,” explained Mr. Bolduc.
Many Quebecers do not have any long-term savings. The Régie des rentes du Québec reports that one out of three has no money put away for retirement, not even a personal RRSP.3 As a result, many of them will have to work much longer than they would have liked to ensure a decent standard of living when they leave the workplace.
Another study, conducted by Léger Marketing, shows that six out of ten Québec SMEs4 do not have an employee pension plan. What’s more, 84% do not expect to be able to offer one in the next three years due to their financial situation. Most affected are retail and distribution businesses, which employ many thousands of workers.
Driving the regional economy
“Saving for retirement through the Fonds’ RRSP not only helps foster a decent standard of living in retirement, it also allows us to make investments in the regional economy that create and preserve jobs,” added Mr. Bolduc, citing as examples the money invested by the Fonds régional de solidarité FTQ and the Fonds regional de Sherbrooke in Viandes Laroche, in Asbestos, and in Sherbrooke-based Tekna Systèmes Plasma, which helped preserve nearly 120 jobs. “We commend the 22,400 Fonds de Solidarité FTQ shareholders in the Estrie region for taking concrete steps to save for a better retirement and at the same time thank them for placing their trust in the Fonds.”
The Fonds RRSP: an accessible saving solution
As Québec households find themselves with less and less disposable income, the Fonds’ RRSP offers an easy way to save. The 30% in tax credits combined with payroll deduction and the immediate tax reduction make it easier to set some money aside each week. For instance, a worker with an annual taxable income of $40,000 who signs up for payroll deduction and an immediate tax refund would pay just $7.21 per week and end up with net savings of $1,000 per year.
Saving with the Fonds RRSP pays off
A shareholder who invested the same amount every year for the last five years through payroll deduction would have earned a compounded annual return of 14.9%.
According to GlobeFund, for the same period, Canadian neutral balanced funds returned 4.0%. A comparison can also be made with a 5-year non-redeemable GIC, which currently yields about 2%.
Annual compounded return calculated based on the same amount invested each year |
5-Year Return |
7-Year Return |
10-Year Return |
Factoring in the 30% tax credits, a shareholder who invests the same amount every year through payroll deduction would earn a compounded annual return of: |
14.9%* |
11.5%* |
7.6%* |
*Does not take into account RRSP tax deductions.
Savings and the regional economy
A contribution to the Fonds RRSP is a direct capital injection into the economy. Although 2009 was a tough year from an economic and financial perspective, the Fonds continued to forge ahead, investing a hefty $848 million. Including the network of regional and local funds, these investments allowed 2,000 businesses to continue growing. And since 1990, the initiatives of the Fonds and its network have helped create, maintain and protect nearly 390,000 jobs in Québec. “The Fonds and its network are proud to have invested over $145 million in Estrie over the years to help further the development of local businesses,” concluded Mr. Bolduc.
About the Fonds de solidarité FTQ
The Fonds de solidarité FTQ helps drive our economy. With net assets of $7.0 billion as at November 30, 2009, the Fonds is a development capital fund that channels the savings of Quebecers into investments in all sectors of the economy to help further Québec's economic growth. The Fonds is a partner, either directly or through its network members, in 2,000 companies. With its 577,000 owner-shareholders, it has helped, on its own or with other financial partners, to create, maintain and protect nearly 143,000 jobs. For more information, visit www.fondsftq.com.
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For further information:
The telephone number below is for journalists and other media representatives only.
Source:
|
Josée Lagacé
Senior Advisor, Press Relations and Communications
Fonds de solidarité FTQ
Telephone: 514 850-4835
E-mail: jlagace@fondsftq.com |
References:
1. Statistics Canada, Perspectives on Labour and Income: Personal Debt, 2007-2008.
2. OECD Economic Outlook, No. 86, Household Saving Rates, Table 23.
3. Régie des rentes du Québec, Portrait du marché de la retraite au Québec, December 2008, p. 47.
4. Léger Marketing Survey, November 2009.