Registered retirement savings plan contributions, 2020
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Released: 2022-04-01
In 2020, over 6.2 million Canadians put aside a total of $50.1 billion for their retirement by making contributions to their registered retirement savings plan (RRSP). Compared with a year earlier, contributions increased 13.1% in 2020, while the number of contributors increased 4.9%.
In 2020, the aggregate total income of Canadians grew by 6.0% in constant dollars, because of federal and provincial government transfers and benefits to assist Canadians financially during the COVID-19 pandemic. Canadians reported a similar amount of savings in 2020 as in the previous seven years combined due to higher disposable income and lower consumer spending. According to a report by the Bank of Canada, Canadians had accumulated on average $5,800 in extra savings by the end of 2020. RRSPs are one of the saving vehicles available to Canadians for investing their savings. Other mechanisms such as tax-free savings accounts or non-registered accounts are also available and may appear more flexible in times of uncertainty.
The proportion of tax filers making RRSP contributions reached 22.3% (+0.5 percentage points) in 2020. The increase in the proportion of tax filers making RRSP contributions in 2020 broke a 12-year downward trend, which started in 2008 and coincided with the implementation of the tax-free savings account. It is too early to assess whether this uptick in the contribution rate in 2020 will persist into 2021 or later years.
Meanwhile, the median RRSP contribution in current dollars has trended up since 2008 as contribution limits are raised. The median RRSP contribution reached $3,600 in 2020, the highest level on record and up from $3,260 in 2019.
Infographic 1
Proportion of contributors among tax filers and median Registered Retirement Savings Plan contributions, 2000 to 2020
The median Registered Retirement Savings Plan contribution increased in all provinces and territories in 2020, except in Newfoundland and Labrador
In 7 of the 10 provinces and in the three territories, the proportion of tax filers contributing to an RRSP and the total RRSP contributions increased in 2020.
Increases in the median RRSP contribution were largest in Nunavut (+26.7%), Québec (+14.0%) and Nova Scotia (+10.0%).
In 2019 and 2020, Quebec has shown the highest contribution rates (26.3% in 2020). Since 2015, Quebec's contribution rate has been increasing, and the gap has been widening between Quebec and the national rate. Yukon was next highest for the proportion of tax filers making contributions, at 24.5% in 2020.
Newfoundland and Labrador was the only province where both the median contribution (-8.3%) to an RRSP and the proportion of tax filers making contributions (-0.5 percentage points) declined in 2020. In 2020, there was a much faster decrease in the actual average of hours worked in Newfoundland and Labrador than in other provinces and territories. This loss of hours worked, despite new pandemic benefits, led tax filers in Newfoundland and Labrador to the smallest increase in median total income across the country. In addition, saving rates increased across the country but more slowly in Newfoundland and Labrador in 2020. This particular situation might have left tax filers in Newfoundland and Labrador with less money for contributing to an RRSP than in previous years.
In Alberta (+1.7%) and Saskatchewan (+6.6%), the median contribution increased in 2020, but the proportion of tax filers making contributions decreased (by -0.2 percentage points in each province). The median total income of these two provinces grew less than in the rest of the country, which may have limited possibilities of making RRSP contributions.
Median Registered Retirement Savings Plan contributions in Vancouver, Toronto and Calgary are still the highest among the census metropolitan areas
Similar to 2019, Vancouver ($4,700), Toronto ($4,600) and Calgary ($4,200) were the three census metropolitan areas (CMA) with the highest median RRSP contributions in 2020.
St. John's was the only CMA in which the median RRSP contribution decreased from 2019 to 2020 (-7.5%). It was also the only CMA where the percentage of tax filers to make RRSP contributions declined in the same period (-0.2 percentage points). Nevertheless, St. John's median RRSP contribution ($3,700) remained marginally higher than the national median ($3,600) in 2020.
On the other hand, Belleville and Winnipeg had the lowest RRSP median contribution amount ($2,600 in each case) followed by Lethbridge ($2,610).
Similar to 2019, Québec (31.5%), Montréal (27.5%) and Calgary (26.5%) remained the CMAs where contributions to RRSP were more frequent among tax filers in 2020. In contrast, tax filers in Abbotsford–Mission (17.4%), Belleville (17.6%) and St. Catharines–Niagara (18.1%) remained least likely to contribute in 2020.
Overall increase in proportion of tax filers making Registered Retirement Savings Plan contributions led by those with higher income levels
In 2020, the proportion of tax filers who contributed to an RRSP increased in Canada (+0.5 percentage points) due to the increased participation of those in income brackets of $120,000 or more (+0.2 to 1.4 percentage points) and a shift of many tax filers towards higher income brackets in 2020. The increase in contributions may reflect a greater opportunity for higher earners to save more in 2020, as consumption of travel and some services were restricted. However the differential across income groups stems in part from the tax incentives built into the RRSP. These incentives are mainly to reduce high income tax rates by contributing in high-income years and withdrawing at a lower tax rate in the future.
Women's Registered Retirement Savings Plan contributions overall remain lower than men's
Female tax filers (20.1%) were less likely overall to make contributions to an RRSP in 2020 than male tax filers (24.6%).
Women's median RRSP contribution has historically been lower overall than that of men. In 2020, the median RRSP contribution was $2,960 for women, while the median RRSP contribution was $4,280 for men.
However, when considering RRSP behaviour at different levels of income, the picture is more nuanced, as women were more likely to contribute to an RRSP than their male counterparts for each level of income except at the highest of $160,000 or more, and the median contributions of women and men were similar in most income groups. Women were more likely to be in the lower income groups (less than $80,000) where the RRSP contribution rates and amounts are lower. This leads to a lower overall contribution rate and median contribution for women.
Note to readers
All dollar amounts in this release are expressed in current dollars and have not been adjusted for inflation except where stated otherwise.
Data in this release are based on a preliminary version of the T1 Family File (tax filer data).
The extension by the Canada Revenue Agency of the deadlines for filing 2019 tax returns and for the payment of taxes without penalty impacted the completeness of the 2019 tax data used in this release. The number of tax filers appearing in the preliminary income tax data, generally speaking individuals who filed taxes before September, edged down by 0.8% in 2019 and increased by 2.5% in 2020 while the number of tax filers in the preliminary tax file increased on average by 1.3% yearly since 2009. The larger increase in 2020 was likely due to a number of later filings in 2019. Therefore, caution should be used with this data when interpreting moderate changes in counts of contributors and total contributions between 2019 and 2020. The decline in the number of contributors could be understated by approximately 1.2 percentage point.
Registered retirement savings plans (RRSPs) allow individuals or their spouses to make tax-deductible contributions to individual savings and investment accounts. To be eligible to contribute to an RRSP, a tax filer must have unused room from earlier years, or new room as a result of qualifying income from the previous year (generally employment income).
The RRSP limit is based on 18% of the earned income of the previous tax year up to a fixed maximum, less any pension adjustments, plus any unused room carried forward. The fixed maximum RRSP contribution in 2020 was $27,230 up from $26,500 in 2019. Income earned in the account accumulates tax-free, but withdrawals, which can take place at any time, are taxed.
Contributions can be made, and unused contribution room can be carried forward, until age 71. At that point, the RRSP is closed and an individual chooses either to pay taxes on the full value of the RRSP holdings or to convert the holdings into a registered retirement income fund. This type of savings account allows individuals to defer part of their income over time, subject to minimum withdrawal limits.
The median is the value in the middle of a group of values (i.e., half of people make contributions above this value and half of people make contributions below this value).
All data in this release have been tabulated according to the 2016 Standard Geographical Classification used for the 2016 Census.
A census metropolitan area is formed by one or more adjacent municipalities centred on a population centre (also known as the core). It must have a total population of at least 100,000, of which 50,000 or more live in the core.
Products
The document "Technical Reference Guide for the Preliminary Estimates from the T1 Family File (T1FF) (11260001) presents information about the methodology, concepts and quality for the data available in this release.
The Income, pensions, spending and wealth portal, which is accessible from the Subjects module of the Statistics Canada website, provides users with a single point of access to a wide variety of information related to income, pensions, spending and wealth.
The data on RRSP contributors (17C0006, various prices) are now available for Canada, the provinces and territories, economic regions, census divisions, census metropolitan areas, census agglomerations, census tracts, and postal-based geographies. These custom services are available upon request. A table associated with this release is available for free on the Statistics Canada website for Canada, provinces and territories, census metropolitan areas, and census agglomerations.
Contact information
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