Nearly Two-thirds of Canadians Use Tax-assisted Savings

More than 65 per cent of Canada’s 14 million households contributed to at least one registered savings account (RPP, RRSP or TFSA) in 2015, according to recently released Statistics Canada data from the 2016 Census.

On average, 30 per cent of households contributed to an employer-sponsored Registered Pension Plan, 35 per cent contributed to a Registered Retirement Savings Plan and 40 per cent contributed to a Tax-Free Savings Account. About three in 10 households contributed to more than one registered savings account, while less than one in 10 (9.3 per cent) contributed to all three.

Not surprisingly, household income was a significant factor for both the likelihood and type of contribution made. For example, more than 85 per cent of households with after-tax income above $60,000 contributed to at least one account; and among households with after-tax income below $80,000, a larger proportion contributed to TFSAs (33.8 per cent) than to RRSPs (20.1 per cent) or RPPs (17.6 per cent).

Similarly, contributions to registered savings accounts varied with life cycle demographics. Households where the major income earner was in his or her prime working years — aged 35 to 54 — were the likeliest to contribute to RRSPs (46.4 per cent) and RPPs (42.2 per cent). Conversely, households with a major income earner younger than 35 or older than 54 were the most likely to contribute to TFSAs (40.4 per cent and 43.1 percent, respectively).

Interestingly, there may also be a correlation between the household members’ sector of employment and likelihood of using tax-assisted savings. According to the StatsCan report, there are only four metropolitan areas where more than three-quarters of households contributed to a registered savings account in 2015 — and three of them had among the highest rates of public sector employment in Canada. These metropolitan areas are Cold Lake, Alberta; Petawawa, Ontario; and Yellowknife, Northwest Territories; each has at least 25 per cent of workers employed in the public sector according to the 2011 National Household Survey (NHS).

(For more on retirement statistics by sector, see “Canadian Retirement Stats: Do Employed or Self-Employed Retire First?”)

This is the first time Statistics Canada has linked income data from the Canada Revenue Agency to all census respondents. As such, this is also the first time information for TFSAs is included with the data.

Additional Educational Resources:

Tax-Efficient Retirement Income Planning course

Knowledge Bureau Registered vs Non-Registered Savings Calculator (free trial available)

MFA-Retirement and Estate Services Specialist designation

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