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The inability to improve TFSA usage among low-income Canadians underscores legitimate equity concerns about TFSAs, where most benefits still go to higher-income Canadians. Plus, economists and the Parliamentary Budget Office have shown that the long-run cost of TFSAs in terms of federal and provincial tax revenues, mainly from this high-income group, will be large.

The data also show that inequities in terms of who benefits from TFSAs are growing. Between 2014 and 2016, the assets in TFSAs worth over $500,000 more than doubled from $45 million to $108 million, and the assets in TFSAs worth over $1 million increased from $20 million to $49 million. These inequities will continue to grow as lifetime contribution limits expand: The 2019 TFSA lifetime contribution limit is $63,500 and it will reach $100,000 by 2025.

What to do? At the 10-year mark, the federal government should focus on boosting the benefits for low-income Canadians with options to encourage more effective saving decisions. This could include a “savings credit,” which — similar to RESPs — would provide matching grants for a certain amount of TFSA contributions for lower-income savers. As well, it should investigate ways to ensure that financial advisers, especially those in banks, give better advice to GIS-bound seniors.

Of course, these fixes cost money. But the amount of money required pales in comparison to the long-run government costs from TFSAs. Should they not be addressed soon, the federal government should consider capping lifetime contributions of TFSAs — at around $100,000 to $250,000 — to avoid creating more TFSA millionaires while shortcomings persist among lower-income Canadians.

Richard Shillington is an Ottawa-based statistician. His IRPP report, “Are Low-Income Savers Still in the Lurch? TFSAs at 10 Years,” can be found at irpp.org.