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A majority of taxfilers in Canada have been saving for retirement during the 1990s, either by contributing to a registered retirement savings plan (RRSP) or an employer-sponsored registered pension plan (RPP). Seven out of every 10 taxfilers aged 25 to 64 saved through at least one of these programs between 1991 and 1997.
About 30% of taxfilers in this age group did not use these programs. Almost all had incomes of less than $20,000. Over half of the non-savers were women (60%). Continued non-participation in RRSPs and RPPs will mean that public pension programs, such as the Old-Age Security/Guaranteed Income Supplement, or the Canada and Quebec Pension Plans, may provide their major source of income in retirement.
A little more than half of taxfilers saved regularly. The proportion was much lower in the Atlantic provinces because of below average income and low employment levels.
As income rises, so does the likelihood of saving through RRSPs or RPPs. Eight out of 10 individuals with incomes between $30,000 and $40,000 saved regularly (in four or more years). Virtually all taxfilers with incomes over $40,000 did as well.
Chart: Percentage of taxfilers who saved through an RRSP or RPP increased with income
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People with incomes of $50,000 or more (about 15% of taxfilers) were the most likely to be consistent savers; three-quarters of the taxfilers in this income group either contributed to an RRSP or belonged to an RPP in all seven years. Only about 10% of those with incomes of less then $30,000 saved each year.
The age of taxfilers has an impact on saving behaviour, but to a lesser extent than income. About 62% of taxfilers aged 45 to 54 were regular savers between 1991 and 1997, the highest proportion of any age group. The youngest age group (25 to 34 years) was least likely to have saved; 35% of this group did not participate at all in these programs over the seven year period. However, it's worth noting that a taxfiler in this group could have been as young as 18 in 1991.
Men, on the whole, were more likely to have belonged to an RPP or contributed to an RRSP than women. Just over 58% of men saved regularly (four or more years) between 1991 and 1997; only 46% of women did. This is partly attributable to the large proportion (53%) of women with incomes of less than $20,000, the income group least likely to participate in these programs.
When comparing the savings behaviour of men and women by income group, a very different picture emerges. At each income level up to $60,000, women were more likely than men to have saved regularly in at least one of these retirement income programs.
Chart: At most income levels, women were more likely to save regularly
Slightly more than 40% of all taxfilers aged 25 to 64 made no RRSP contributions between 1991 and 1997. Most (84%) of these individuals had incomes of less than $30,000. Another 25% of taxfilers contributed only occasionally (in one, two or three years). Only 35% of taxfilers contributed to an RRSP regularly over this period (in four to seven years).
While contributing to an RRSP is voluntary, membership in a registered pension plan - if one is offered - is usually mandatory. Individuals who continue to work for an employer providing an RPP are likely to participate in that plan every year. In fact, of those taxfilers who had participated in an RPP from 1991 to 1997, half were members for all seven years.
The number of taxfilers who contributed to an RRSP increased from 4.3 million in 1991 to 5.6 million in 1997 (+30%), while participation in an RPP declined slightly during this same period, from 4.7 million to 4.5 million (-4%).
Because of the growth in the number of RRSP contributors, by 1997 the $22.8 billion contributed to RRSPs by those aged 25 to 64 represented over half (55%) of the savings made through both RRSPs and RPPs. This was up from 42% in 1991. RRSP contributions accelerated rapidly from 1991 to 1996, but increased only moderately in 1997.
Chart: RRSP savings increased while RPP savings remained constant
In 1997, taxfilers aged 25 to 64 cashed in just over one dollar for every five dollars they contributed to an RRSP. About 918,000 individuals (6% of taxfilers in this age group), received $4.9 billion in income originating from RRSPs. This income was largely in the form of cash withdrawals.
While taxfilers aged 25 to 64 could have contributed up to $185 billion in 1997, they used just 12% of their total RRSP room ($22.8 billion). About six out of 10 individuals did not use any of their room in 1997, not surprising given that almost two-thirds of them had incomes of less than $20,000.
Only 11% of those with RRSP room used it all in 1997. Those with higher incomes were most likely to maximize the use of their room. Even so, only half of those with an income of $80,000 or more used all their available contribution room.
Data on retirement savings through RRSPs and RPPs are available free on Statistics Canada's Web site at www.statcan.ca, under Canadian statistics, then Labour, employment, and unemployment followed by Employment, insurance and pensions. The publication, Retirement savings through RPPs and RRSPs, 1991 to 1997 (74F0002XIB) is also available. See How to order publications.
For more information about the current survey results and related products and services, or to enquire about the concepts, methods or data quality of this release, contact Client Services (613-951-7355; 1-888-297-7355; fax 613-951-3012; income@statcan.gc.ca), Income Statistics Division.