RRSP contributions hold steady from last year

RRSP contribution levels among Canadians have remained steady from last year, finds a BMO survey.

The bank says 53% of Canadians contributed to their RRSP before the February 29 deadline, down from 57% this time last year and 65% in 2014.

While the number of Canadians who contributed is down slightly from last year, the amount that Canadians have contributed has increased. On average, Canadians contributed $4,117 this year, compared to $3,737 in 2015 and $3,518 in 2014.

Of the people surveyed by BMO, 42% reported that market volatility played no role while 37% stated that it did; 19% indicated that market volatility caused them to contribute more, while 18% said they contributed less.

Survey methodology

The survey was conducted by Pollara with an online sample of 1,000 Canadians 18 years of age and over, between February 22th and 24th, 2016. A probability sample of 1,000 would yield results accurate to ± 3.1%, 19 times out of 20. Results have been weighted using the latest census data to be representative of Canadians as a whole.

The survey didn’t address what role 2015’s $10,000 TFSA contribution allowance had in changing how much people contributed to their registered plans.

Guest columnist and Alberta financial planner Dave Faulkner parsed which situations it’s better to contribute to an RRSP, or to a TFSA, in two articles for Advisor.ca. (This one and this one.)

Faulkner says:

“Conventional wisdom says if your tax rate when you invest the money is higher than when you take it out, you’re better off within an RRSP. … But this advice assumes tax-neutral contributions.”

For more, read:

TFSA or RRSP? The answer isn’t only about tax rates

TFSA or RRSP? The GIS may change the answer.