September 2001
September Questions & Answers and September Graph
by Joel Emes
Q: How many people contribute to RRSPs and RPPs? How has this changed over time?
A: In 1982, 2.1 million people, which represents 13.8 percent of tax filers, sheltered income in a Registered Retirement Savings Plan (RRSP) and 3.4 million (22.6 percent of tax filers) contributed to a Registered Pension Plan (RPP). The number of RRSP contributors grew steadily until it leveled off in 1998, while the number of RPP contributors has remained stable (see table 1). As of 1998, the proportion of tax filers taking advantage of the RRSP tax deferral had more than doubled to 29.1 percent and the number of Canadians who made an RRSP contribution had almost tripled to 6.1 million. By 1998, the proportion of tax filers making an RPP contribution had decreased by 26.0 percent and the number of Canadians who made an RPP contribution had only increased by 2.9 percent.
Q: Who uses the RRSP and RPP tax deductions?
A: Table 2 shows RRSP and RPP participation by income group. Over half (56.3 percent) of the total dollar value of RRSP and RPP contributions came from those with incomes under $60,000. Thirty-nine percent of those earning between $20,000 and $40,000 made RRSP contributions and 23.3 percent made RPP contributions. The majority (79.3 percent) of RRSP and RPP contributions come from people earning less than $60,000.
Q: How do RRSP and RPP contributions vary with age?
A: In 1998, the proportion of tax filers who made RRSP contributions varied between 3.1 percent for those under 20 years of age, and 42.2 percent for those aged 40 through 49. Similarly, the proportion of tax filers who made RPP contributions varied between 0.9 percent for those under 20 years of age, and 28.5 percent for those aged 40 through 49. Table 3 shows the proportion of each age group that made RRSP and RPP contributions in 1998. This month's graph shows these breakdowns for 1998, 1990, and 1982. These figures reflect a relative decline in the popularity of RPPs and an increase in the use of RRSPs.
Table 1: RRSP and RPP Contributors
|
Year |
RRSP Contributers (millions) |
Proportion of tax filers |
RPP contributers |
Proportion of tax filers (percent) |
|
1982 |
2.1 |
13.8 |
3.4 |
22.6 |
|
1984 |
2.6 |
17.0 |
3.5 |
22.3 |
|
1986 |
3.2 |
19.4 |
3.5 |
21.2 |
|
1988 |
3.8 |
21.6 |
3.5 |
19.9 |
|
1990 |
4.1 |
22.1 |
3.7 |
19.7 |
|
1992 |
4.8 |
24.9 |
3.7 |
19.1 |
|
1994 |
5.4 |
26.6 |
3.7 |
18.2 |
|
1995 |
5.7 |
27.9 |
3.7 |
17.8 |
|
1996 |
6.0 |
28.8 |
3.6 |
17.3 |
|
1997 |
6.2 |
29.3 |
3.5 |
16.7 |
|
1998 |
6.1 |
29.1 |
3.5 |
16.7 |
|
Sources: Revenue Canada, Taxation Statistics, various years; Revenue Canada, Tax Statistics on Individuals, various years; Revenue Canada, Income Statistics, 1999 Edition; Canada Customs and Revenue Agency, Income Statistics, 2000 edition; calculations by author. |
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Table 2: Distribution and value of RRSP and RPP contributions, 1998 tax year
|
Income group |
Proportion of tax filers who made RRSP contributions (percent) |
Proportion of tax filers who made RPP |
Distribution of RRSP and RPP contributers (percent) |
Value of RRSP and RPP |
Average RRSP and RPP contribution |
Average RRSP and RPP |
|
Loss and Nil |
0.6 |
0.2 |
0.0 |
7,805 |
1,766 |
n/a |
|
$1-$10,000 |
3.8 |
1.5 |
2.7 |
193,348 |
751 |
15.0 |
|
$10,000-$20,000 |
13.4 |
4.5 |
9.5 |
1,251,139 |
1,368 |
9.1 |
|
$20,000-$30,000 |
32.2 |
17.3 |
17.1 |
2,923,095 |
1,779 |
7.1 |
|
$30,000-$40,000 |
47.8 |
31.2 |
20.8 |
4,730,120 |
2,372 |
6.8 |
|
$40,000-$50,000 |
57.7 |
40.2 |
16.9 |
4,971,579 |
3,073 |
6.8 |
|
$50,000-$60,000 |
64.6 |
45.3 |
12.4 |
4,521,083 |
3,800 |
6.9 |
|
$60,000-$70,000 |
70.1 |
47.0 |
8.1 |
3,591,099 |
4,611 |
7.1 |
|
$70,000-$80,000 |
74.4 |
40.9 |
4.4 |
2,465,089 |
5,866 |
7.8 |
|
$80,000-$90,000 |
76.2 |
37.2 |
2.5 |
1,716,120 |
7,060 |
8.3 |
|
$90,000-$100,000 |
76.1 |
33.8 |
1.5 |
1,239,802 |
8,447 |
8.9 |
|
$100,000-$150,000 |
72.8 |
26.8 |
2.6 |
2,816,070 |
11,142 |
8.9 |
|
$150,000-$250,000 |
70.5 |
17.2 |
1.0 |
1,485,558 |
14,817 |
7.4 |
|
$250,000 and over |
71.5 |
9.5 |
0.6 |
1,126,213 |
19,140 |
7.7 |
|
Total |
29.1 |
16.7 |
100.0 |
33,038,119 |
3,442 |
n/a |
|
Sources: Canada Customs and Revenue Agency, Income Statistics, 2000 edition—1998 Tax Year (Interim Statistics—Universe Data); calculations by the author. |
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Table 3: Age distribution of RRSP and RPP contributers and contributions, 1998
|
Age group |
Proportion of tax filers who contribute to RRSPs (percent) |
Proportion of tax filers who contribute to RPPs (percent) |
Distribution of RRSP contributions (percent) |
Distribution of RPP contributions (percent) |
Distribution of RRSP contributors (percent) |
Distribution of RPP contributors (percent) |
|
<20 |
3.1 |
0.9 |
0.1 |
0.0 |
0.5 |
0.2 |
|
20-29 |
24.8 |
10.5 |
8.2 |
6.1 |
14.5 |
10.7 |
|
30-39 |
38.0 |
22.3 |
24.9 |
25.5 |
27.8 |
28.4 |
|
40-49 |
42.2 |
28.5 |
30.5 |
38.6 |
29.5 |
34.8 |
|
50-59 |
41.9 |
25.6 |
26.1 |
26.1 |
20.5 |
21.8 |
|
60-64 |
26.5 |
9.8 |
6.5 |
2.8 |
4.8 |
3.1 |
|
65+ |
4.0 |
1.0 |
3.7 |
0.8 |
2.4 |
1.0 |
|
Total |
29.1 |
16.7 |
100.0 |
100.0 |
100.0 |
100.0 |
|
Sources: Canada Customs and Revenue Agency, Income Statistics, 2000 Edition—1998 Tax Year (Interim Statistics—Universe Data); calculations by the author. |
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September Graph
Joel Emes (joele@fraserinstitute.ca) is Senior Research Economist at The Fraser Institute. He has an M.A. in Economics from Simon Fraser University.
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