B.C. Financial Consumers Investing in RRSPs at an Earlier Age

Vancouver, BC February 13, 2001 - More than half, or 51 per cent, of 18- to 34-year-old financial consumers say that they have made, or plan to make, a contribution to their RRSP for the 2000 tax year, according to a survey conducted in December by Ipsos-Reid for Credit Union Central of British Columbia. That's up from 49 per cent for the 1999 tax year. Sixty-five per cent of those aged 35 to 54 will likely make a contribution. Of those between the ages of 55 and 69, only 43 per cent intend to contribute this year, down from 48 per cent in 1999. (Financial consumers are defined in this survey as those who are primarily or jointly responsible for household financial decisions.)

"These findings indicate that more young British Columbians are aware that starting an RRSP at an early age will help them build their savings for a comfortable retirement," says Wayne Nygren, Central's President and Chief Executive Officer.

Younger RRSP contributors differ from their elders in how they will contribute. Only 49 per cent of those aged 18 to 34 will make one or more lump sum contributions to their RRSP, while 61 per cent of those aged 35-54 and 76 per cent of those between the ages of 55 and 69 favour this method. Those under 35 are much more likely to make regular contributions on a biweekly or monthly basis, with 76 per cent saying that they contribute in this way.

Fewer British Columbians Plan to Contribute

Overall, the survey found that 55 per cent of financial consumers in British Columbia aged 18 to 69 -- the age group eligible to make RRSP contributions -- have already contributed for the 2000 tax year, or plan to do so before the March 1 deadline. This indicates a downward trend from 57 per cent in 1999 and 62 per cent in 1998.

The main reason given by financial consumers in British Columbia who aren't planning to contribute to an RRSP this year is that they simply can't afford it.

"Considering that British Columbians, on average, carry higher short-term debt than residents of other provinces, some will likely decide to pay down debt before making an RRSP contribution," Nygren says.

Not surprisingly, incomes are a factor in RRSP contributions. Seventy-seven per cent of financial consumers with household incomes of $60,000 or more plan to contribute. Fifty per cent of those with household incomes of between $30,000 and $60,000 intend to contribute, compared to only 21 per cent of those with household incomes of $30,000 or less.

Mutual Funds Still Popular

The survey found that mutual funds are still the investments of choice for many RRSP contributors. Two-thirds of all contributors say that they will invest some or all of their RRSP monies in mutual funds for the 2000 tax year, while 24 per cent plan to invest in stocks. Meanwhile, term deposits have declined in popularity, appealing to only 17 per cent of contributors, compared to 28 per cent in 1999. Bonds remain a minority choice, with 13 per cent saying they intend to invest in those products.

"Fluctuations in the markets do not seem to have deterred British Columbians from investing their RRSP contributions in mutual funds and stocks," says Nygren. "They recognize the importance of a long-term strategy when saving for retirement."

Last-Minute Contributions

As in previous years, many financial consumers in British Columbia intend to contribute during the two months before the March 1, 2001 deadline. Over 70 per cent of those intending to make a lump sum contribution for the 2000 tax year said they would do so during January or February 2001.

British Columbia's Savings and Credit Unions offer a wide range of RRSP-eligible financial products and have staff available to provide investment advice and help consumers develop investment plans. Many credit unions will be open for extended hours during the final days of the RRSP season.

The 2000 RRSP Survey was conducted by Ipsos-Reid from December 6 to December 10, 2000, on behalf of Credit Union Central of British Columbia. With a random sample of 456 financial consumers in British Columbia aged 18 to 69 across the province, the survey results are accurate to within plus or minus 4.6 per cent, 19 times out of 20. An identical methodology was used in the 1999 RRSP survey, allowing results to be compared year to year.

B.C.'s credit unions, which have more than $22 billion in assets and 1.4 million members, operate more than 330 branches in 125 communities, including 38 that have no other financial institution. Credit unions employ more than 7,000 British Columbians.

Please contact:
Maria Doyle,
Director, Marketing & Research
Credit Union Central of B.C.
(604) 730-6455