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Commentary: Quebec Ink

How the Caisse is riding out Quebec’s grey wave

MONTREAL — At some point in 2025, a Quebecer will retire and become one of the roughly 95,000 to claim pension benefits each year. This humdrum event will trigger an unprecedented change for the Caisse de dépôt et placement du Québec, the body charged with investing the collective bounty of more than six million people. In 2025, for the first time in what will be its 60-year history, the number of retirees drawing from the Caisse’s coffers will outnumber the number of workers contributing to them.

Commentary: Quebec Ink

How the Caisse is riding out Quebec’s grey wave

‘We’re in this for a long time’

By Martin Patriquin
Passers-by read a posted menu at a Quebec City restaurant in March 2013. Photo: Jeff Greenberg/Universal Images Group via Getty Images
Sep 11, 2023
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MONTREAL — At some point in 2025, a Quebecer will retire and become one of the roughly 95,000 to claim pension benefits each year. This humdrum event will trigger an unprecedented change for the Caisse de dépôt et placement du Québec, the body charged with investing the collective bounty of more than six million people. In 2025, for the first time in what will be its 60-year history, the number of retirees drawing from the Caisse’s coffers will outnumber the number of workers contributing to them.

This fact, mentioned in passing by Caisse president Charles Emond last December, underscores the extent to which Quebec’s looming demographic problem is no longer looming. It is upon us, to a greater extent than in most of the rest of the country. 

Thanks to decades of low birthrates and stubborn governmental resistance to immigration, the province has the oldest population in the country outside the Atlantic provinces. This hard truth manifests itself, regularly and viscerally, in Quebec’s overcrowded hospitals and overburdened system of public retirement homes. For the Caisse, it is an economic question born of an existential quandary: as of 2025, there will be more takers outside the workforce than givers within it. I dropped by the Caisse’s Montreal mothership to gauge the level of panic within its art-laden halls.

The answer? Not panicked in the least. Sanguine, even.

“It’s the same elsewhere,” shrugged Jacques Demers, who as the Caisse’s senior vice-president for deposits oversees the torrent of cash flowing into the fund. “In developed countries in North America, there’s an aging population, so with that comes more retirees in proportion to employees and contributors. We’re in that situation now.”

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When I ask him how the Caisse compensates for this, Demers likens Caisse’s lot to that of many other 58-year-old Quebecers: decently capitalized, edging closer to 65, and therefore allergic to risk: “As you get closer to 65, you’ll start withdrawing from your savings. And you won’t tell yourself, ‘Shit, I’m withdrawing from my savings now, I need more risk and more returns.’ No, you’ve planned your things so that there’ll be enough. And there’ll be enough because you’ll continue generating returns.”

Fruits of the Caisse’s planning are now reaching season in a big way. In 1993, when Passe Partout was still freaking out children and the Quebec Nordiques remained a going concern, the Quebec government launched “Retirement Plans Sinking Fund,” which it envisioned as a way to pay public and parapublic employee benefits without having to draw on general government revenues or borrow money on the open markets. Clunky name aside (it’s no less clunky in French) this fund is now worth $107.5 billion, and constitutes the biggest of the Caisse’s 48 institutional depositors who entrust their lucre to the $424-billion monolith. According to La Presse, the government plans on availing itself of the fund for the first time … in 2025. 

It probably helps that the Caisse was born smack in the midst of Quebec’s Quiet Revolution, the decade-long societal upheaval that saw the province extract itself from the Catholic Church’s long shadow. The birth rate was already declining by 1965 and, with a few exceptions, has declined in the years since. 

Today, the province’s birth rate is less than half what it was 58 years ago. Translation: the Caisse has been forced to plan for the province’s greying years practically since its inception, and must continue to do so. “Maybe generations down the road, our retirees die and our younger population make families of eight. Or maybe immigration changes the reality of our demography,” Demers told me. “But we’re in this for a long time.” 

His comment is telling. Within the Caisse’s walls, the subject of immigration is academic to the point of bloodlessness—an economic force, not an eternally divisive buzzword. It is a different story in the political realm, where it tends to turn leaders into hypocrites. 

About a year ago, during the last provincial election campaign, Quebec Premier François Legault said an increase to current immigration levels in the province would be “suicidal” to the “Quebec nation.” Legault has also suggested immigrants are violent and deserve expulsion should they insufficiently master la langue de Céline. 

Yet immigration levels have actually increased under Legault, surpassing those of the previous Liberal government. And there is a plan to increase them further, to more than 60,000 a year by 2027. 

In this contradiction lies the essence of the current premier of Quebec: a rhetoric-spewing populist who must appeal to a base, and a successful businessman and former industry minister who must—like the Caisse itself—hew to demographic reality.

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“Nationwide, Quebec very much included, immigration is key to sustainability as far as pension plans are concerned,” Keith Ambachtsheer, a pension expert who is currently executive-in-residence at the University of Toronto’s Rotman School of Management, recently told me. It’s a simple question of having enough warm, working bodies to replace those Quebecers themselves aren’t producing.

Martin Patriquin is The Logic’s Quebec correspondent. He joined in 2019 after 10 years as Quebec bureau chief for Maclean’s. A National Magazine Award and SABEW winner, he has written for The New York Times, The Guardian, The Walrus, Vice, BuzzFeed and The Globe and Mail, among others. He is also a panelist on CBC’s “Power & Politics.”

#Caisse de dépôt et placement du Québec #pensions #population aging #Quebec Ink

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