Ottawa gave notice in Tuesday’s budget that it is looking at the possibility of unveiling tax-prepaid savings plans as a possible alternative to RRSPs.

Like RRSPs, TPSPs provide a shelter for invested funds. But TPSP funds would not be taxed when withdrawn. The downside is that investors would not receive a contribution deduction against their income.

If TPSPs are introduced, they could motivate Canadians to save more, resulting in a potential boon for the investment industry.

TPSPs were first touted for Canada in 2001 by the Toronto-based C.D. Howe Institute as potential tax system-assisted savings vehicles. Since then, several individuals, researchers and businesses have made submissions to Ottawa advocating the plans. Several other countries have a system that utilizes a combination of RRSP-type and TPSP-type vehicles.