OSFI data shows what Canadians prefer when it comes to retirement saving plans
When it comes to retirement saving plans, Canadians are seen to prefer subscribing to Tax-Free Savings Accounts (TFSA) rather than contributing to Registered Retirement Savings Plans (RRSP).
The latest data from the Office of the Superintendent of Financial Institutions (OSFI) showed that at the end of 2015, there were already 12.7 million TFSA holders, representing 49% of tax filers. This is compared to the 6 million RRSP account holders.
Overall, the proportion of tax filers who contributed to RRSPs decreased from 26% in 2005 to 23% in 2015. The decrease in proportion of those contributing to RRSPs is apparent in the lower age brackets of below 25, 25-34, 35-44, and 45-54. For instance, the share of RRSPs holders in the 25-34 age group slumped from 32% to 26%. For those people in the 55-64 and above 65 brackets, the proportion of those contributing to RRSPs held steady. The average age of those saving through RRSPs also shifted from 44 to 46 years old.
Meanwhile, the number of TSFA holders increased from 4.5 million to 7.9 million between 2009 and 2015, representing 19% and 30% of tax filers, respectively.
Additionally, there is a huge jump in the share of TSFA holders in the younger age brackets: from 9% to 20% in Under 25, from 15% to 33% in 25-34, and from 15% to 27% in 35-34 age bracket.
In terms of income groups, the proportion of tax filers who contribute to an RRSP varies. The OSFI data showed that the proportion increases with the filer's total income but overall RRSP usage declined. This is compared to the increase across the board in TFSA users.
The OSFI data also showed that the number of active registered pension plan (RPP) members increased over the last ten years, with the number of women expanding at a faster pace than that of men. However, the number of members as a percentage of the labour force has slightly decreased.
There has also been a shift from Defined Benefit plans to Defined Contribution plans and other plans. This is particularly obvious in the private sector, from 70% to 42%.
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