The use of RRSP declines as TFSA takes over

According to new data analysis by Statistics Canada, only fewer Canadians in their prime-aged working years have made contributions, or plan to in their registered retirement savings plans (RRSPs) this year.
New data also released on Monday by Statistic Canada, the number of Canadian tax filers between the ages 25 and 54 who contributed to RRSPs fell to 4.2 million in 2013 over the relevant period, despite the result of changing demographics.
The total value of RRSP contribution declined steadily among 25 to 54 age group from approximately $30.6 billion to $22.5 billion. The total number of RRSP withdrawers increased over the period, from the year 2000 to 1.3 million in 2013. The data agency also found a correlation between the declining relative popularity of RRSPs compared to tax-free savings accounts, which the federal government introduced in the 2009 budget.
RRSPs are tax deferment vehicles, a contributor gets a tax credit up front, but must pay tax later on withdrawals, or a witholding tax for doing so before age 65. Canadians can contribute up to 18 per cent of their income in any given year to an RRSP, to a limit of $26,010 this year.
Three million Canadians made a $15.9 billion contribution to their TFSAs in 2013 compared with the two million who did so in 2009.
The value of TFSA withdrawals also increased to $7.4 billion in 2013.
“Both the frequency and magnitude of TFSA withdrawals are significantly larger than for RRSPs,” Statistics Canada said.