Half of Canadians yet to open a Tax-Free Savings Account

Jan 09, 2014, 12:07 ET from ING DIRECT

ING DIRECT survey found 42% have no intention of opening one this year  

TORONTO, Jan. 9, 2014 /PRNewswire/ - ING DIRECT revealed in a new survey that 53% of Canadians still haven't opened a Tax-Free Savings Account (TFSA) and that 42% of those without a TFSA don't intend to open one this year. For half (52%) of those who still don't have a TFSA, not having money to contribute was cited as the main reason they haven't opened one.

The survey also found:

  • Close to a third of Canadians (31%) admit they still don't understand how TFSAs work.
  • Thirty-eight per cent are unsure about the current annual contribution limit.
  • Retirement savings (46%) continue to be the main reason Canadians use TFSAs.
  • Within the younger (18-34 years) Canadian demographic, almost a third (31%) plan to use their TFSA for purchasing a home.  
  • Of the 47% of survey respondents who have opened a TFSA, nearly one in five (19%) are approaching the contribution limit.
  • When looking at how Canadians are contributing, a lump sum deposit one to two times a year is most popular (52%), while 26% contribute to their TFSA on a monthly basis.

"In addition to not paying tax on earnings on TFSA investments, another benefit is the flexibility of a Tax-Free Savings Account – no penalties for withdrawing money and the ability to carry over unused contributions - which makes it a great way to save for both short-term and long-term goals," said Silvio Stroescu, Head of Investments and Savings at ING DIRECT. "For Canadians finding it difficult to start saving, a TFSA is a great option since there is no minimum contribution required and you can begin saving in small, regular increments."

For more information about TFSAs, visit ingdirect.ca/maxout.

ING Bank of Canada, operating under the trade name of ING DIRECT, is a wholly owned subsidiary of The Bank of Nova Scotia. ING DIRECT is Canada's leading direct bank with over 1.9 million Clients and close to $40 billion in total assets. ING DIRECT is a bright way forward in everyday banking for Canadians, offering value added, simple products such as high interest savings accounts, including TFSAs, GICs and RSPs with no fees or service charges, mutual funds, low rates on mortgages and a no-fee, daily chequing account that actually pays interest. ING DIRECT has been operating in Canada since 1997, and has paid over $6 billion in interest to Clients. ING DIRECT is open for banking 24 hours a day, 7 days a week, at ingdirect.ca, on mobile devices at m.ingdirect.ca or by calling 1-800 ING DIRECT (1-800-464-3473).

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About the Survey
From October 2 to October 3, 2013, an online survey was conducted among 1,511 randomly selected Canadian adults who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 3.1%, 19 times out of 20. The results have been statistically weighted according to the most current education, age, gender and region Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.