Economic crisis: 64% of workers plan on making RRSP contributions in 2009: wishful thinking or reality?

    Léger Marketing Survey for the Solidarity Fund QFL

    MONTREAL, Feb. 12 /CNW Telbec/ - According to the Institut de la
statistique du Québec, the average savings rate of Quebecers for the first
three months of 2008 hit a 10-year low of 1.4% of disposable personal income.
With the recession now firmly entrenched, the situation is all the more
alarming. This probably explains why most Quebecers are planning to contribute
to their RRSP in 2009. Such were the findings of a survey conducted by Léger
Marketing from January 9 to 14 on behalf of the Fund, which sought to gain
insight into Quebecers' savings intentions in the current economic climate.
    The results were unveiled today at a press conference. Also present was
Delta Actuarial Services, which showed that the Fund RRSP outperformed a
balanced RRSP portfolio over the long term thanks to the 30% tax credits
granted by the provincial and federal governments.
    "Quebecers should be commended for their intentions to save despite the
economic downturn, but the truth is that reality is totally different. We know
that Canadians' household income has stagnated for the last few years and that
Quebecers' debt levels continue to grow, as does their spending, particularly
among young people. We figure that middle class people will not be able to
maintain their current standard of living once they retire because they simply
won't have the means. The fact is that 36% of middle-class Québec households
put no money aside in 2007, and those who did, saved just $1,800. The
situation is even worse for those under 40, because the "cash flow generation"
doesn't believe in budgets, doesn't prioritize saving, squanders its money,
and doesn't think long term," said Christian Bourque, vice-president of
marketing at Léger Marketing.
    "The Fund has every reason to worry about the dwindling savings rate. Our
survey in this economic slump shows the paradox between desire and reality.
The Fund's mission to encourage workers to save is important for Québec, and
its RRSP is a good solution because it makes saving more accessible thanks to
the tax credits," added Mr. Bourque.
    "With its 30% tax credits, systematic savings, and tax deductions at
source, the Fund's RRSP has been an attractive solution for over 25 years.
Because it's a vehicle designed for retirement savings, it tends to prevent
young people from pulling the money out to spend on things like a trip, for
example. However, even though our RRSP is a long-term investment, it's also
flexible. For instance, you can use the money through the HBP to buy a first
home, or withdraw funds to go back to school or even to start a business.
Aside from the unmatched impact of the labour fund tax credits, our
shareholders are contributing to a socially responsible RRSP, which helps
create, maintain and preserve jobs throughout Québec. These tough times call
for solidarity, which is not only the right thing to do, it also happens to be
especially rewarding," said Denis Leclerc, Executive Vice-President of the
Fund's Shareholder Services.
    For Dany Provost, CFA and president of Delta Actuarial Services, the tax
credits make the Fund RRSP a clear winner for the long term. Based on a
hypothetical annual return of 4% for the Fund and a marginal tax rate of 38%,
a balanced RRSP portfolio would have to yield 32% over 5 years, 10% over 20
years and 9% over 25 years to be equivalent to the Fund's RRSP.
    To show just how significant the tax credits are, Mr. Provost used the
example of an after-tax annual investment of $1,000 in the Fund's RRSP with a
4% return, compared to a balanced RRSP portfolio with a 6% yield. After five
years, the $1,000 would have grown to $17,436 at the Fund, compared to $9,396
in a balanced RRSP portfolio, over a 10-year period, the investment would have
reached $38,649 at the Fund, versus $21,969; the value after 20 years would
have been $95,859 at the Fund, against $61,312; and after 25 years, the Fund
RRSP would have grown to $134,063 while the RRSP balanced portfolio would have
been $91,445. The study also shows that the Fund RRSP is a less risky
investment than a traditional RRSP because it is less volatile.

    A contribution of $18.23 per week to the Fund RRSP adds up to $3,000 in
    savings per year

    Payroll deduction, with an immediate tax reduction on each pay, is an
excellent way to save without seeing too much of a decrease on one's net pay.
For example, for an income of $38,832 to $76,799, an automatic deduction of
$18.23 from each pay allows you to save $57.70 per pay or $3,000 per year, and
costs just $950.

                       2009 Taxation Year - 52 Pay Periods
                        Contri-                         Net Pay
                        bution    Tax Savings (appx.)   Reduced     RRSP
    Taxable Income(1)   Per Pay   Credits(2) + RRSP(3)  by (appx.)  Amount
    $38,400 to $38,831  $19.24     $5.77        $6.25    $7.22      $1,000
                        $57.70    $17.31       $18.75   $21.64      $3,000
                        $96.16    $28.85       $31.25   $36.06      $5,000
    $38,832 to $76,799  $57.70    $17.31       $22.16   $18.25      $3,000
                        $76.93    $23.08       $29.54   $24.31      $4,000
                        $96.16    $28.85       $36.93   $30.38      $5,000
    $76,800 to $77,662  $57.70    $17.31       $24.46   $15.93      $3,000
                        $76.93    $23.08       $32.62   $21.23      $4,000
                        $96.16    $28.85       $40.77   $26.54      $5,000

    (1) Gross income less deduction provided by law.

    (2) Reduction in Québec and federal income taxes (15% tax credit at each

    (3) The reduction in Québec and federal taxes is due to the decrease in
        taxable income, calculated according to the marginal tax rate.

    About the Solidarity Fund QFL

    With net assets of $6.2 billion as at November 30, 2008, the Solidarity
Fund QFL is a development capital company that through its RRSP channels the
savings of Quebecers into investments in all sectors of the economy to help
create and maintain jobs and to further Québec's economic growth. The Fund is
a partner, either directly or through its network members, in 1,881 companies.
It currently has nearly 575,000 shareholders and has helped, on its own or
with other financial partners, to create, maintain and protect over 126,000
jobs. For more information, visit

For further information:

For further information: Note: The telephone number provided below is
for the exclusive use of journalists and other media representatives: Josée
Lagacé, Senior Advisor, Press Relations and Communications, Fonds de
solidarité FTQ, (514) 850-4835, Cell.: (514) 707-5180,

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