REPORT: INCREASED CONTRIBUTIONS ONLY PARTLY OFFSET BY LOWER RRSP SAVINGS

Dec 21, 2015

By Bob Komsic

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While the question of whether Canadians are putting aside enough for retirement has been up for debate in recent years, a new report says automatic increases in registered pension plans are most helpful to those who don’t save much in RRSPs.

Mature couple talking to financial planner at home

The report, by Statistics Canada, found there’s some reduction in investments when pension plan contributions are increased, but the automatic increases are a net benefit.

For example, for an average worker, a $1 automatic increase in pension plan contributions resulted in an average reduction in RRSP contributions of 55-cents.

But for workers who did not save much, the $1 automatic increase in pension contributions increased net savings by about 95-cents.

Meanwhile, for those who save regularly for retirement, the $1 automatic increase was largely offset by a similar reduction in RRSP contributions.
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