RRSP contributions in Canada: trends revealed

2022 saw a shift in RRSP trends, with total contributions falling to $54.2bn and Yukon bucking the national downturn

RRSP contributions in Canada: trends revealed

In 2022, the landscape of registered retirement savings plan (RRSP) contributions in Canada mirrored the patterns observed before the COVID-19 pandemic, according to a Statistics Canada report released yesterday.

Tax filers contributed a total of $54.2 bn to RRSPs, experiencing a 3.4 percent decline from 2021.

This downturn follows a period of growth during the pandemic, with contributions increasing by 13.1 percent in 2020 and 12.2 percent in 2021. The decline in 2022 marks a shift in household savings trends over the recent years.

Furthermore, the proportion of tax filers making RRSP contributions fell by 0.7 percentage points to 21.7 percent, resuming the downward trend from 2008 to 2019.

This trend had momentarily paused during the peak savings periods of the COVID-19 pandemic. Meanwhile, the median RRSP contribution, which has been on an upward trajectory since 2010, reached $3,910 in 2022, showing a 0.5 percent increase.

Geographically, the trend of declining total RRSP contributions was widespread across Canada, except for Yukon, where contributions increased by 3.6 percent. This increase in Yukon continues an upward trend starting in 2019.

In contrast, the Northwest Territories and Nunavut witnessed the most significant decreases in contributions with declines of 17.2 percent and 11.6 percent, respectively. Notably, Nunavut had the highest median RRSP contribution at $4,560 nationally in 2022.

The proportion of tax filers contributing to RRSPs declined across all age groups in 2022. The age groups of 25 to 34 years and 35 to 44 years saw the largest declines in contribution rates, both dropping by 1.0 percentage points.

The age group of 45 to 54 years remained the most likely to contribute, with 36.4 percent doing so. However, the age groups of 55 to 64 years and 45 to 54 years experienced the most substantial decreases in total RRSP contributions, leading the overall downturn.

Interestingly, the only age groups to see an increase in total RRSP contributions were the youngest, 0 to 24 years and 25 to 34 years.

Income also influenced RRSP contributions, with the proportion of contributors varying significantly across income brackets. In 2022, this ranged from 1.7 percent among tax filers with incomes below $20,000 to 66.2 percent for those earning between $200,000 and $499,999.

Median RRSP contributions decreased or remained static for all but the two highest income groups. For tax filers earning between $500,000 to $999,999 and those with incomes of $1,000,000 and over, median contributions rose to $29,210, the maximum amount claimable for the tax year.