Several years ago, my husband decided to transfer his assets from a Quebec credit union to an Ontario credit union. When we met with the advisor at the Ontario credit union, she told us that RRSPs were guaranteed up to $1 million, while the limit in Quebec is $100,000. I am a widow, and I would like to know if this is still the case. Anecdote: when we spoke about it to our advisor at Desjardins, he was not aware of it and told us that we should not let it get out!
Patricia Bahen
Indeed, the amounts protected are sometimes lower in Quebec than in Ontario, even within Desjardins caisses populaires. And the limit for RRSPs is even higher than 1 million.
Some explanations.
Let’s first exclude federally chartered financial institutions, which include all the major Canadian banks. Their deposits are protected from coast to coast by the Canada Deposit Insurance Corporation (CDIC) with the same amounts: $100,000 per insurable category – there are nine – and per institution. Since its creation in 1967, the CDIC has compensated more than two million depositors in 43 bankruptcies.
Financial institutions that do not have a federal charter, including credit unions, caisses populaires and trust and loan companies, are not covered by the CDIC. They are the responsibility of each province, which sets the rules for deposit insurance and designates an agency to manage it.
In Quebec, it was in 1967 that the Johnson government adopted the Deposit Insurance Act (LAD) and its rules have since essentially followed those of the federal government. The same $100,000 ceiling is now applied in nine insurable categories, in all the caisses populaires of Quebec and their Federation, the Trust Banque Nationale, Beneva and a financial cooperative in Bas-Saint-Laurent, Ma Financière.
Since 1967, the Autorité des marchés financiers reports, the Quebec Deposit Insurance Fund has reimbursed $45.9 million in deposits. The bankruptcies of the economic mutual aid funds in the early 1980s alone cost $31.6 million.
Ontario has chosen a different path, and one that is much more generous in many respects, starting in 2020. Eligible non-registered deposits, including chequing and savings accounts, guaranteed investment certificates and money orders, are protected up to $250,000 per account and per saver, rather than $100,000 as in Quebec.
Registered accounts, such as RRSPs, RESPs and TFSAs, benefit from unlimited coverage.
But wait a moment before rushing to Ontario to open an account at a Desjardins caisse populaire. “An account must be opened in the province of residence,” says Jean-Benoit Turcotti, a spokesperson for Desjardins. “If a Quebec resident wants to open an account in Ontario, we expect that they have an interest in that province, such as work or studies, for example.”
Another caveat: there is an overall limit to Ontario’s generosity. Savers will no longer be reimbursed when the coffers of the Deposit Insurance Reserve Fund, set at $499 million as of December 31, 2023, are exhausted. In Quebec, since 2017, there has been no limit to the loans that the AMF can make to the government to bail out the Deposit Insurance Fund. In other words, the Quebec government is committed to reimbursing all savers who would be affected by the bankruptcy of their financial institution.
“As a result, the protection offered by Ontario could be weaker than that offered in Quebec,” says Mr. Théberge. The other advantage Quebec has, he adds, is that deposits in foreign currencies are protected. In Ontario, only deposits in Canadian dollars are.