Final answer:
The RRSP was introduced to promote retirement savings and provide financial security for Canadians. This move was influenced by experiences during and after World War I, as well as the need to improve national savings rates and tackle challenges individuals faced in financial planning for their later years.
Step-by-step explanation:
Introduction of the RRSP in Canada The Registered Retirement Savings Plan (RRSP) was introduced to the Canadian public as a way to promote savings for retirement and to provide financial security. This was especially necessary given the financial strains and the lack of a proper support system for aging individuals and those out of work, as evidenced in the period of World War I and post-war recovery. Canadian soldiers and their families experienced financial difficulties, even with some government support and the Canadian Patriotic Fund, leading to calls for better financial solutions for retirement and later life.
Historical Context
In Canada, there was a need for better financial preparation for individuals' later years. During the Great Depression, similar to the United States' introduction of Social Security, Canada saw the importance of establishing solid financial security measures for its citizens. In the wake of industrialization and economic policies like the National Policy, the government recognized its role in helping citizens save effectively for retirement due to the observed challenges individuals had with saving.
Why Introduce the RRSP?
The RRSP was created to help citizens prepare for retirement, recognizing that many people struggled with long-term financial planning due to a variety of reasons, including a lack of information, self-control, and proper financial instruments to aid in retirement savings. By providing a tax-advantaged savings vehicle, the government aimed to mitigate these issues and increase the national savings rate, supporting the financial well-being of its aging population.