20% Foreign Property Rule
Increasing Risk and Decreasing Returns
on RRSPs and RPPs

by Jason Clemens and Fazil Mihlar with Johanna L. Francis

Contents

• Acknowledgments
• Executive Summary
• Introduction

1. Canada's social security system: the public system
2. Private savings: Registered Retirement Savings Plans (RRSPs)
3. Portfolio management and diversification
4. The Foreign Property Rule
5. Effects of the Foreign Property Rule
6. The cost of the Foreign Property Rule
7. Original rationale for the Foreign Property Rule
8. Conclusion

• Appendix A: The impact of high taxes on the growth of productivity
• Appendix B: Changes to the Canada Pension Plan
• Appendix C: Derivatives and index funds
• Appendix D: Estimates of forgone capital accumulation
• Appendix E: Forgone capital accumulation relative to savings
• Notes
• References

Critical Issues Bulletins

Critical Issues Bulletins are published from time to time by The Fraser Institute (Vancouver, British Columbia, Canada) as supplements to Fraser Forum, the Institute's monthly periodical. Critical Issues Bulletins are comprehensive studies of single issues of critical importance for public policy.

The authors have worked independently and opinions expressed by them are, therefore, their own, and do not necessarily reflect the opinions of the members or the trustees of The Fraser Institute.

For additional copies of Critical Issues Bulletins, any of our other publications, or a catalogue of the Institute's publications, call our toll-free order line: 1-800-665-3558 or visit our web site at http://www.fraserinstitute.ca.

For information about publications of The Fraser Institute and about ordering, please contact Chris Howey

via telephone: (604) 688-0221, ext. 580
via fax: (604) 688-8539
via e-mail: chrish@fraserinstitute.ca.

Copyright© 1999 by The Fraser Institute
Date of Issue: April 1999

Printed in Canada

Canadian Publications Mail
Sales Product Agreement #0087246

ISSN 1480-3666

Editing and design:
Kristin McCahon and
Lindsey Thomas Martin

Image for front cover:
copyright© Felix Clouzot, The Image Bank

The Fraser Institute

The Fraser Institute is an independent Canadian economic and social research and educational organization. It has as its objective the redirection of public attention to the role of competitive markets in providing for the well-being of Canadians. Where markets work, the Institute's interest lies in trying to discover prospects for improvement. Where markets do not work, its interest lies in finding the reasons. Where competitive markets have been replaced by government control, the interest of the Institute lies in documenting objectively the nature of the improvement or deterioration resulting from government intervention. The work of the Institute is assisted by an Editorial Advisory Board of internationally renowned economists. The Fraser Institute is a national, federally chartered, non-profit organization financed by the sale of its publications and the tax-deductible contributions of its members, foundations, and other supporters; it receives no government funding.

To learn more about the Institute, please visit our web site at http://www.fraserinstitute.ca.

For information about membership in The Fraser Institute, please contact via mail to
Sherry Stein, Director of Development
The Fraser Institute, 4th Floor
1770 Burrard Street
Vancouver, BC, V6J 3M1
via telephone: (604) 688-0221, ext. 590
or via fax: (604) 688-8539.

In Toronto, you may contact us toll-free
via telephone: (416) 363-6575
or via fax: (416) 601-7322.

The work of The Fraser Institute is assisted by an Editorial Advisory Board that includes Prof. Armen Alchian, Prof. Jean-Pierre Centi, Prof. Friedrich Schneider, Sir Alan Walters, Prof. J.M. Buchanan, Prof. Michael Parkin, Prof. L.B. Smith, and Prof. Edwin G. West.

info@fraserinstitute.ca You can contact us at the above email address for any comments or information requests. Please report any dead links or technical problems.

If you know someone who would be interested in this web page, please enter their email address below, and we will forward this URL to them: Email Address:

Last Modified: Wednesday, October 20, 1999.