Young people, individuals with high incomes and those in legal marriages (as opposed to common-law relationships) are more likely to contribute to RRSPs, according to a new study from Statistics Canada.

The study, “Profiling RRSP contributors” published today examines factors that make one person more likely than another to contribute to an RRSP. Using 1998 tax data, the article looks at personal and family characteristics associated with RRSP participation.

The study showed that the likelihood of contributing decreases with age, particularly among single people. As age increases from 30 to 50, the likelihood of contributing declines by almost 10 percentage points.

It also showed that the higher the income, the more likely it is that an individual will contribute to an RRSP. High income provides not only the means to contribute, but also the incentive, since those with high income bear the heaviest tax burdens. In addition, having a higher-income spouse means higher household income, and therefore greater ability to spend on RRSPs.

However, having a spouse in a higher tax bracket decreases one’s likelihood of contributing if the spouse has RRSP room. This may be because the priority is to use up the higher-income spouse’s room, thus reducing the heavier tax burden first.

On the other hand, higher-income spouses with no room cannot make a contribution to reduce their own tax burden, but they can help the lower-income spouse make a contribution, increasing that individual’s likelihood of making an RRSP contribution.

People who invest outside registered plans are also likely to contribute to RRSPs. In some cases, investors with relatively low income are more likely to contribute than non-investors with higher income.

Women are more likely contributors than men, except when both spouses have RRSP room. However, when children are present, women’s likelihood of contributing is reduced to a greater extent than men’s.

Self-employed people are more likely to contribute to RRSPs than their employed counterparts. Besides not having a pension plan, the self-employed tend to have more year-to-year income variability than employees, so some may use RRSPs as an income-averaging device. Having an employer-sponsored pension makes one less likely to contribute, except at low income.

Having a contributing spouse doubles a person’s probability of participating. However, decisions to contribute may depend on the income discrepancy between the two spouses. Married people are generally more likely to contribute than people in common-law relationships, except for women whose husbands have RRSP room.