Increased pension contributions only partly offset by lower RRSP savings

OTTAWA -- A new report by Statistics Canada says automatic increases in registered pension plans are most helpful to people who don't save much in registered retirement savings plans.

See Full Article

The report noted that there is some reduction in RRSP investments when pension plan contributions are increased, but the automatic increases are a net benefit.

"Moreover, the response tends to be smaller for workers with weaker histories of saving in retirement accounts," author Derek Messacar wrote in his report released Monday.

"Employer sponsorship and other forms of automatic saving may, therefore, matter a great deal in helping more vulnerable groups save for their retirement."

The report found that for workers earning near the Canadian average, a $1 automatic increase in registered pension plan contributions resulted in an average reduction in registered retirement savings plan contributions of 55 cents.

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

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

The Statistics Canada report looked at personal income tax data from 1991 to 2010 to see if increases in registered pension plans increased retirement savings or redirected savings that would have been made elsewhere.

However researchers were unable to assess how an automatic increase in registered pension contributions affected other forms of savings due to data limitations.

Saving for retirement and whether Canadians are putting aside enough has been a key policy discussion in recent years.

During the recent federal election campaign, the Liberals promised they would work to enhance the Canada Pension Plan, however just what that would look like is unclear.

Several provinces have raised concerns about the cost and what that could mean for the economy.

Ontario is moving ahead with its own pension plan that will be phased in starting in 2017 for companies that don't offer a pension plan. Critics of the plan have said it will increase the cost of hiring workers and hurt job creation.



Advertisements

Latest Economic News

  • Notley: Keystone XL doesn't lessen need for Energy East, Trans Mountain

    Economic CTV News
    CALGARY -- Alberta Premier Rachel Notley says U.S. approval of the Keystone XL pipeline does not lessen the need for two other controversial proposals within Canada's borders. U.S. President Donald Trump announced the green light for the line more than eight years after Calgary-based TransCanada first applied for a cross-border permit. Source
  • Trump's Keystone XL decision sets up new fight in Nebraska

    Economic CTV News
    LINCOLN, Neb. -- U.S. President Donald Trump may have approved a federal permit for the Keystone XL pipeline, but the fight is far from over in Nebraska, the one state in its path that has yet to approve the project. Source
  • Toronto stock index extends rally, Wall Street mixed after 'Trumpcare' pulled

    Economic CBC News
    Specialist Stephen Naughton, left, and trader Michael Milano work on the floor of the New York Stock Exchange on Wednesday. North American equity markets finished mixed on Friday after U.S. Republicans withdrew their bill to overhaul Obamacare. Source
  • PepsiCo, Wal-Mart, Starbucks join YouTube ad boycott in U.S.

    Economic CTV News
    SAN FRANCISCO -- An advertising boycott of YouTube is broadening in a sign that big companies doubt Google's ability to prevent marketing campaigns from appearing alongside repugnant videos. PepsiCo, Wal-Mart Stores and Starbucks on Friday confirmed that they have also suspended their advertising on YouTube after the Wall Street Journal found Google's automated programs placed their brands on five videos containing racist content. Source
  • Debate renewed over economic benefits of Keystone XL pipeline

    Economic CTV News
    U.S. President Donald Trump is calling his administration's approval of the Keystone XL pipeline a new era for American energy policy. As expected, the State Department reversed a decision by the Obama administration and favoured energy development over environmentalists' objections to the pipeline, which will carry thick Canadian crude oil to Nebraska, where it can flow on to refineries along the Gulf Coast. Source
  • BRP could move Mexican production if NAFTA changes too onerous, says CEO

    Economic CTV News
    MONTREAL -- The company that makes Ski-Doos, Sea-Doos and Spyder vehicles says it could move production from Mexico if NAFTA changes result in hefty border taxes, but BRP chief executive Jose Boisjoli is hoping "common sense" will prevail during upcoming negotiations. Source
  • FCA to wind down transport operations in Windsor

    Economic CBC News
    Nearly 300 jobs could be eliminated at Fiat Chrysler Automobiles as the automaker winds down its FCA Transport operations in Windsor. "Retirement packages will be offered to eligible employees at the Windsor Assembly Plant, which includes FCA Transport," said a company spokesperson in a statement. Source
  • Dakota Access pipeline builder, U.S. government want lake crossing upheld

    Economic CBC News
    The company building the $3.8 billion US Dakota Access oil pipeline and the Army Corps of Engineers want a judge to reject a request by American Indian tribes to revoke permission for the project to cross a Missouri River reservoir in North Dakota. Source
  • Ontario premier discusses trade issues with auto industry leaders

    Economic CTV News
    TORONTO -- U.S. political leaders are showing a better-than-expected understanding of how important trade with Canada is to the health of the American auto sector, Ontario Premier Kathleen Wynne said Friday. Wynne, who met with several auto industry leaders in Toronto, said her government has been lobbying U.S. Source
  • Wynne: Ontario auto sector concerned about U.S. trade

    Economic CBC News
    Ontario Premier Kathleen Wynne says leaders of the province's auto sector have told her trade with the U.S. is their top concern. Wynne, who met with several industry leaders in Toronto on Friday, says her government has been lobbying U.S. Source