The Fund will soon be 40 years old. Its unique model, proudly Quebecois, has proven itself. Nevertheless, observers sometimes question some of its foundations.
Recently, the relevance of tax credits relating to labour-sponsored funds was questioned. This is a good opportunity to recall what makes our model so successful and to correct certain inaccuracies conveyed.
A savings incentive for the middle class of Quebec
First, note that the Fund does not receive direct financial assistance from governments. The tax credits go back into the pockets of our savers, who total the equivalent of one out of six Quebec workers, mostly from the middle class. Today, the Fund allows 359,166 employees working in 14,191 companies to access the RRSP+ through payroll deduction.
The profile of our savers is diversified with as many union members as non-union members. Many of them – nearly 40% – do not have access to a pension plan. For many, the tax credits and the presence of the fund are the incentive that motivates the decision to save for their future. Although the annual qualifying limit is $5,000, our savers set aside an average of $2,900. A sign that saving is a challenge for many of them.
The Fund helps to increase the chances of a dignified retirement for hundreds of thousands of Quebecers who would otherwise be at risk of aging in poverty. Let’s never forget that.
A lever for the economic development of all our regions
The mission of the Fund is then to invest the money entrusted to it in companies contributing to the economic development of Quebec – annually more than $1.2 billion on average for five years.
It has been wrongly mentioned that the Fund reinvests “only $401 million” in Quebec companies. During our last fiscal year, we instead injected $1.4 billion into the economy, while respecting all of our buyback obligations, which totaled more than $660 million. How is it possible? By reinvesting the returns of the last years during which we had an average of 7%.
Much has also been made recently of some investments made by the Fund in companies outside Quebec. Let’s be clear: for every dollar invested there, at least one dollar comes back to Quebec.
In the end, each dollar of tax credit granted to Fund savers currently translates into $9.22 in capital invested in the economic development of our regions.
From a strictly financial point of view, this is a highly profitable fiscal measure for Québec.
A fund designed to meet the challenges of our time
We are an actor of change that our governments can count on to meet challenges that traditional financial institutions are less interested in.
We are one of the largest investors in social housing where we have contributed to nearly 6,500 housing units. Within five years, we want to reach $12 billion in sustainable development, in particular for decarbonization or just environmental transition projects.
So, should we maintain the tax credits relating to labour-sponsored funds? The debate has been done 100 times rather than once, for 40 years. Each time, the reflections led to the same conclusion: the positive impacts of the Fund for Quebec society are too great for us to deprive ourselves of collectively. Moreover, several companies would be happy to have their counterpart of the Fund as a lever for social and economic development.
Janie C. Beique, President and Chief Executive Officer, Fonds de solidarité FTQ