Backing into the future - RRSP contribution rates on downward trajectory: RBC Economics

Aging boomers driving RRSP decline; rising house prices also a factor

TORONTO, Feb. 23, 2012 /CNW/ - RRSP contributions as a share of personal disposable income (PDI) continue to decline, confirming a downward trend first identified by RBC Economics in 2010. According to the RBC Economics 2012 RRSP Report - Backing into the Future: Canada's Declining RRSP Contribution Rates - RRSP contributions appear to be heading back to levels last seen in the 1970s.

The latest study reaffirms the 2010 report's findings that demographics are the key reason behind declining RRSP contributions, and also identifies a new factor influencing this trend - house prices.

"As house prices have increased, Canadians have been reducing their RRSP contributions, which suggests that real estate investments are acting as an alternative to RRSP investments," explained Paul Ferley, assistant chief economist, RBC. "Still, our research continues to demonstrate that Canada's aging population is the dominant force behind the decline in RRSP contributions."

RRSPs were first introduced in Canada 55 years ago - in 1957 - to permit individuals to shelter financial assets from income taxes. Contributions grew steadily from 1968 to 1997, relative to PDI, but have been on a downward trajectory ever since, according to the RBC Economics 2010 RRSP Report.

The 2012 RBC Economics report projects that the decline in RRSP contributions will continue to trend lower through 2020. This rate is expected to fall back to under 2.0 per cent of PDI - a level not seen since the 1970s - from a high of 5.0 per cent of PDI in 1997 and 3.3 per cent in 2010.

"Our research indicates that the downward trend from 1997 to 2010 coincided with the aging boomer generation - as boomers moved past their higher saving years in their mid-30s through to their mid-50s," added Ferley. "By comparison, Canadians under the age of 34 tend to be the least likely to make RRSP contributions."

The complete RBC Economics 2012 RRSP report is available online at:

Image with caption: "RBC Economics 2012 RRSP Report - Model Simulations: RRSP contributions as share of PDI (CNW Group/RBC)". Image available at:

Image with caption: "RBC Economics 2012 RRSP Report - Asset prices (CNW Group/RBC)". Image available at:

Image with caption: "RBC Economics 2012 RRSP Report - Age composition of the Canadian population (CNW Group/RBC)". Image available at:


For further information:

Paul Ferley, RBC Economics, 416-974-7231
Elyse Lalonde, RBC Media Relations, 416-974-8810
Kathy Bevan, RBC Media Relations, 416-436-9099

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