TORONTO, Feb. 6 /CNW/ - CIBC (CM: TSX; NYSE) - Canadians are expected to
contribute a record of nearly $33 billion towards their RRSPs this year but
this number is miniscule compared to the $491 billion they still have in
unused RRSP contribution room, according to a CIBC World Markets report
released today, entitled Retirement: Ready or Not?
    "On average, each of the 20.7 million Canadians with unused RRSP
contributions can contribute $23,700 to their RRSPs for the 2006 tax year, up
from $15,000 in 1999," says Benjamin Tal, Senior Economist, CIBC World
Markets. "Almost 90 per cent of Canadian tax filers currently have RRSP room."
    Despite the strong growth in overall RRSP contributions in 2005, fewer
than 40 per cent of Canadians between the ages of 25 and 64 actually
contributed during the year. The dollar value of contributions has hardly
changed in the past few years, with a median contribution of $2,030 per
household in 2005 - roughly the same amount seen in 2003 and 2004. This means
that when accounting for inflation, the median amount of RRSP contributions
made by Canadians is, in fact, falling. Low and falling median RRSP
contributions translate into insufficient overall RRSP savings. As a share of
income, RRSP contributions have fallen below 6 per cent in 2005, more than a
full percentage point lower than the level seen in 1999.
    "As of 2005, the median amount of RRSP investment held by Canadians age
55 to 65 was only $60,000," adds Tal. "In today's low interest rate
environment, the interest payments on such savings would amount to an income
inflow of only a few thousands dollars a year."
    The increase in total RRSP contributions also masks a growing income
disparity, given that most of the growth is attributable to Canadians who earn
more than $80,000 per year. In 2005, only 20 per cent of Canadians between the
ages of 35 and 64 with a yearly income of less than $30,000 contributed to
their RRSPs. At the same time, the declining relative importance of
employer-sponsored pension plans is doing little to remedy this gap.

    The complete CIBC World Markets report is available at:
    http://research.cibcwm.com/economic_public/download/srpt_rrsp_022007.pdf.

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