New Tax Free Savings Account unlikely to reduce RRSP contributions, according to RBC poll

TORONTO — According to the 19th Annual RBC RRSP Poll, only eight per cent of Canadians who plan to open a Tax Free Savings Account (TFSA) intend to reduce their RRSP contribution to put money in a TFSA instead. Thirty per cent of those who have heard of the TFSA still plan to contribute as much money to their RRSP as well as to a TFSA, while 23 per cent plan on moving money from existing non-registered savings into a TFSA.

“While Canadians continue to use RRSPs to save for retirement, the TFSA can supplement these savings while sheltering investment returns from tax,” said Lee Anne Davies, head, advanced retirement strategies, RBC. “The TFSA allows Canadians the flexibility to save and invest for a variety of short-term and long-term financial goals.”

Almost half (44 per cent) of Canadians who plan to open a TFSA, intend to use it as a vehicle for long-term retirement savings. Among those aged 35 to 54, this figure rises to 57 per cent and for those between the ages of 18 and 34, 53 per cent plan to use their TFSA to save for retirement. Two in five Canadians who plan to open a TFSA (40 per cent) cite saving for an emergency as their primary intention while 29 per cent will use it for everyday savings and 25 per cent for a large or special purchase.

“When asked to rank their top three financial priorities, Canadians indicated that regular payments to reduce or eliminate debt (52 per cent), retirement savings (44 per cent) and general savings for a rainy day (39 per cent) were top of mind and also reflect their TFSA plans,” added Davies. “We want to help clients determine their financial priorities and then offer advice and solutions, so clients can create the future they want.”

The study also found that just over half (55 per cent) of Canadians have not heard about the TFSA, including 65 per cent of respondents between the ages of 18 and 34. Among Canadians who are aware of the TFSA, almost half (47 per cent) are planning to open and put money in the account.

About the 19th Annual RBC RRSP Poll
The 19th Annual RBC RRSP Poll was conducted by Ipsos Reid from October 16 to 23, 2008. This online survey of 1,272 Canadians was conducted via the Ipsos I-Say Online Panel, Ipsos Reid’s national online panel. The results of this poll are based on a sample where quota sampling and weighting are employed to balance demographics and ensure that the sample’s composition reflects that of the actual Canadian population according to Census data. Quota samples with weighting from the Ipsos online panel provide results that are intended to approximate a probability sample. Statistical margins of error are not applicable to online polls, however, an unweighted probability sample of this size, with a 100 per cent response rate, would have an estimated margin of error of ± 2.7 percentage points, 19 times out of 20, had the entire adult population of Canada been polled.

Your Future by Design® is RBC’s distinctive approach to help clients identify, plan, and realize their goals for retirement. With the guidance of RBC financial planners and investment and retirement planners, Your Future by Design helps clients create a blueprint for a successful lifestyle and financial plan for retirement based on what is truly important to them in key areas in life, including family, health, home, lifestyle, work/business, mind and spirit, and legacy. To find out more about how RBC can help build a blueprint for the future, visit www.rbc.com/yourfuture or call 1-866-335-4055.