Imagine a savings program where the federal government gives a man or woman up to $3 for every $1 contributed by that man or woman – to a lifetime maximum of $70,000. Wouldn’t people flock to that program? Wouldn’t the Treasury be all but emptied?
Actually, there is such a program – the Registered Disability Savings Plan. It is a wonderful program. Jim Flaherty, the federal Finance Minister, is to receive an award this week from the Council of Canadians with Disabilities for having created it. The CCD lists the program (which Mr. Flaherty hopes to improve through a public consultation announced this month) among the highlights of the past 30 years for disabled Canadians.
But disabled people are not emptying the Treasury. One poll found that nearly half of disabled Canadians hadn’t even heard of it. The program was launched on Dec. 3, 2008, and today 48,000 people are enrolled – far fewer than the 500,000 that the government expects, at a cost of $200-million a year.
That is no slight to the program. The worst thing that can be said about the RDSP is that so few people know about it.
How does it work? The government will give $1,000 a year (for a maximum of 20 years) to those who may be too poor to make a contribution – anyone with an income under $24,183 (indexed to inflation). Those earning up to $83,088 receive up to $3 to match each dollar that they, their friends or families invest for them in the savings plan (300 per cent on the first $500, 200 per cent on the next $1,000 in a year). There is a 10-year waiting period after the money is invested before one can withdraw money without penalty. To his credit, Mr. Flaherty persuaded most provincial governments not to claw back any federal contributions to the savings plan from their disability payments. Three provinces, however – Quebec, New Brunswick and Prince Edward Island – insist that RDSP payments will be clawed back, after certain limits are reached. This is small-minded and miserly. The savings plan can help people with disabilities take some control over their lives. In New Brunswick, the annual disability benefit is $8,670. How much control is possible on that?
The federal government, banks, non-profit groups and health-care workers should ensure that each and every disabled person who would benefit knows about this superb program.