Despite all the criticism of the Caisse de dépôt, many Québecians want to keep their proceeds for their RRSP. Why isn’t that possible?
After all, the Caisse has produced an average annual return of 6.1% over the past five years, compared to 5.1% for growth-focused exchange-traded fund iShares.
Richard Guay
Professor of Finance at UQAM
Over 10 years, the benefit of our collective wool sock is even greater: its average annual return reached 8.3% versus 7.0% for the iShares fund (XGRO).
The idea of entrusting the Caisse with your personal pension plan keeps coming up, but implementing it would be more difficult than it seems. Richard Guay, professor of finance at UQAM and former CEO of the Caisse, easily understands the interest in the concept. “There are so many different financial products out there these days […] that it could be reassuring for savers to opt for the Caisse,” he stresses.
The person skilled in the art sees two ways of realizing the idea.
Option 1: Voluntary QPP Contributions
In this scenario, employees could make additional contributions to the Quebec Pension Plan (QPP), which would increase their retirement benefits.
“For example, if the employer said ‘rather than having a group RRSP, we will contribute more to the QPP with your paycheck’, that would mean that more money would accumulate in the QPP for those individuals,” explains Mr Guy.
“On the other hand, those who would make that choice wouldn’t actually get the return of the Caisse de dépôt because what the QPP would probably do is say, ‘If you deposit 20% more, we’ll pay you 20%. higher,” he says.
The reason is simple: the contributions we pay to the QPP and the income generated by the Caisse are used not only to pay our future pensions but also to save the plan.
“If you look at the contributions an employee makes to the QPP and what they receive in retirement, then the implied return on those contributions [et de celles de l’employeur] much lower than that of the Caisse,” says Richard Guay.
Option 2: direct deposits with the Caisse
In this scenario, Quebecers could effectively open an account with the Caisse and deposit the amounts they wish to grow. They would thus receive the (positive or negative) performance of the institution.
The problem is that neither the Caisse nor the QPP were designed for this purpose. Their investment horizon is long-term, while that of some individuals is shorter. The account management component could be entrusted to an organization like Épargne Placements Québec, but it’s far from certain that the government would want to get involved.
“Of course there would be reactions from the private financial sector saying, ‘Well, that’s almost unfair competition,'” notes Mr. Guay.