Only 17% Canadians have made contributions, or plan to make contributions, to their RRSPs before this year’s deadline, according to a new study from Toronto-based H&R Block Canada Inc. released on Monday.

That finding may not be surprising considering new data from Statistics Canada (StatsCan), also released on Monday, that indicate the popularity of RRSPs has dwindled in recent years and has not been helped by the emergence of TFSAs.

The number of Canadian tax filers between the ages of 25 and 54 who contributed to RRSPs fell to 4.2 million in 2013 from 5 million in 2000, with two of the largest annual declines occurring in 2008 and 2009, according to StatsCan. Those specific years coincided with the global economic recession and the launch of TFSAs.

Instead, TFSAs have seen a steady rise in usage. Three million Canadians made a contribution to their TFSAs in 2013 compared with the two million who did so in 2009, the first year that the TFSA was available.

StatsCan’s research finds that the popularity of TFSAs correlates with Canadians’ level of income: “Among tax filers who contributed to an RRSP at least once from 2005 to 2008, the shift from RRSP to TFSA use appears to have been most prevalent among those in the bottom half of the income distribution.”

One of the reasons for this is that RRSPs offer a “weak incentive to save given that contributors’ marginal tax rates are already low,” the StatsCan study states.

In making the choice between the two registered accounts, H&R Block’s study finds that 40% of Canadians are looking to their savings goals to help them make the choice while 38% are considering the penalties connected to making withdrawals and 37% are thinking of the potential to reduce their tax bill.

As the TFSA gets older, H&R Block’s study indicates that a growing percentage of Canadians understand the differences between TFSAs and RRSPs, with 65% saying this is the case compared with the 50% of Canadians who said so in the company’s survey in 2016.

Canadians who are 55 years old or older report being the most knowledgeable, with 71% stating they understand the differences between the two vehicles while 66% of those between the ages of 35 and 54 indicate the same.

Millennials between the ages of 18 and 34 are the least-informed demographic with 56% stating that they understand how RRSPs and TFSAs can affect their 2016 tax returns.

H&R Block’s study is based on data collected between Jan. 27 and Jan. 28 from 1,521 randomly selected Canadian adults who are Angus Reid Forum panelists.

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