One-third of Canadians contribute to RRSP for 2020 despite pandemic disruption
One-third of Canadians contributed to their registered retirement savings plans (RRSPs) for the 2020 tax year, despite the disruption of the COVID-19 pandemic.
On average, Canadians planned to contribute $4,000, finds a survey of more than 1,500 Canadians by IG Wealth Management.
"It's encouraging to see that Canadians are continuing to prioritize retirement planning during this challenging period," says Damon Murchison, president and CEO of IG Wealth Management. "RRSP contributions can play a key role when saving for retirement. But, to truly achieve your ideal retirement lifestyle, you need to also consider all potential sources of retirement income, including both registered and non-registered investments and public and private pension plans and take into consideration other financial dimensions, such as insurance, tax strategies, estate planning and budgeting."
This is good news considering that 27 per cent of Canadians report that the pandemic has worsened their personal financial situation.
Thirteen per cent of Canadians planned to contribute more to their plans this year while just nine per cent planned to contribute less. One in five (20 per cent) said they would be contributing the same amount as last year, finds the IG survey.
Improving retirement programs
While employers want to deliver greater value and a better employee outcome for retirement, they struggle to engage employees, according to a report from Aon.
Much can be done to improve retirement savings programs, according to Olivia Mitchell, author of the paper “Building Better Retirement Systems in the Wake of the Global Pandemic Pandemic.”
“Pension models for the future will also require new methods to share risk, beginning with enhancing financial literacy in the population, helping people to save more and invest smarter, and to better manage longevity. Plan sponsors can also do more to make pensions more flexible, for instance by linking retirement ages and contributions to funding levels,” says Mitchell, executive director of the Pension Research Council at the Wharton School at the University of Pennsylvania.
“Policymakers could enhance the decision-making environment by providing better data to price insurance products, and by formulating better forecasts and establishing plans to respond to the aging population’s needs. Raising retirement ages, incentivizing continued work, and helping people save more are also likely to be part of the solution, though answers will vary across countries.”