The percentage of workers who have a registered pension plan has declined, but only about a quarter of Canadians are contributing to their RRSPs, and less than half have a TFSA.
The Office of the Superintendent of Financial Institutions (OSFI) has compiled a fact sheet on Registered Pension Plans (RPPs) and other types of savings plans in Canada between 2004 and 2014. While the number of active RPP members has increased from 5.7 million to 6.3 million over the period, the proportion of employees who are covered by a RPP has declined from 39% to 38%. This is because the size of the workforce increased faster than the growth in RPP membership.
DB membership declines
OSFI’s research shows that the number of Canadians with defined benefit (DB) plans has declined significantly over the period, dropping from 81% to 70%. This is due entirely to cutbacks in the private sector, where DB membership has fallen from 71% to 45%. In the public sector, there was actually a slight increase in DB membership from 93% to 94%.
One might think that more Canadians would turn to private plans to save for retirement, but this has not been the case. The number of tax filers who contributed to an RRSP (both group and individual) remained stagnant over the decade, and only 23% made a contribution in 2014. Even those in the higher tax brackets are not taking full advantage of RRSPs; in 2014, OSFI says that only 58% of tax filers with total income of $80,000 or more made a contribution.
TFSAs not being used
TFSAs have been available since 2009 but at the end of 2014 there were just 11.7 million Canadians with accounts, which represents 45% of tax filers. TFSA were supposed to be of particular help to those in the low-income bracket, since withdrawals do not affect eligibility for federal income-tested benefits and credits. The OSFI data reveals, however, that this most people in this target group are not using the accounts: only 19% of those who earn less than $20,000 contributed to a TFSA last year, while 40% of people with incomes of more than $80,000 did so.
These are just some highlights from the report. The full document is available on the OSFI web site.