The tax-free savings account (TFSA) is still not being used by the majority of Canadians, and general knowledge about the savings product continues to lack, according to a survey by ING Direct.
More than one-half (52 per cent) of Canadians do not have a TFSA, found the survey of 1,000 people.
Not having money to contribute is the reason cited by 53 per cent of those who don't have a TFSA.
Close to one-third (31 per cent) of those surveyed who don't have a TFSA said they have no intention of opening one this year or next, while 52 per cent remain undecided.
Forty-four per cent of Canadians have a vague idea of how the TFSA works, while 19 per cent say they don't understand it at all.
"The TFSA has been around for nearly four years, and it's unfortunate that so many Canadians aren't taking full advantage of this savings opportunity," said Peter Aceto, president and CEO of ING Direct. "Since its launch, TFSAs have been a great way to reach short-term and long-term savings goals and provide flexibility that other investment options, like RSPs, don't."
Of those Canadians who have a TFSA, 35 per cent have made withdrawals from the account. One-half said they needed emergency funds, 21 per cent did so because they achieved their savings goal and 16 per cent admitted to treating their TFSA as a regular savings account.
Saving for retirement is the primary reason 38 per cent of those surveyed have opened a TFSA, followed by emergency funding (30 per cent). Nearly one-quarter (24 per cent) of younger Canadians, ages 18-34, choose to use their TFSA as an emergency fund, while 19 per cent are using it to save for a down payment on a house.
Retirement savings plans (RSPs) top the list as preferred investments, with 52 per cent of those surveyed ranking RSPs ahead of TFSAs, which came in second (29 per cent).
© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.