OTTAWA — The Senate’s banking committee says the federal government has to do more to remove hurdles for Canadians to start aRegistered Disability Savings Plan (RDSP), and do a better job of advertising the under-utilized program.
Issues with the six-year-old program have dampened uptake to the point that only 15 per cent of 500,000 eligible Canadians have applied for an RDSP to save for their future needs.
The government created the RDSP program in 2007 on the advice of an expert panel. When it came into effect in 2008, it was designed, for instance, to help parents put away money for a disabled child’s future needs.
Over the last seven years, the government has committed more than $800 million in grants and bonds to the RDSP program.
However, many Canadians haven’t applied to the program because they either don’t know it exists, or because of legal and administrative issues, the committee wrote in a report released Wednesday.
Others don’t apply because the withdrawal rules require a 10-year wait, which the committee said was too long and should be halved to help those whose disability could decrease their life expectancy.
The chief legal issue appears to be varying rules across the country to help disabled Canadians who don’t have a family member or lawyer to help them start an RDSP for their future. Those legal issues fall under provincial and territorial jurisdiction.
Different rules across the country mean eligible Canadians found to be legally incompetent and with no one to legally help them, have been unable in some cases to start an RDSP.
The committee didn’t think federal intervention would help the situation, because this could spark a constitutional challenge in the courts.
Rather than focusing on legal issues, the committee recommended the federal government “reduce the administrative burden” for applicants, and ensure they are “provided with any assistance they need” to start an RDSP. The committee also recommended the government consider automatically starting an RDSP once someone qualifies for a disability tax credit.
An interview request to the committee, under chairman Sen. Irving Gerstein, was not granted Wednesday.
RDSP by the numbers:
12,000: Average number of RDSPs created each year since program became active
78,000: Total number of RDSPs created since 2008
3,800,000: Approximate number of Canadians aged 15 and older who have a disability, according to Statistics Canada
500,000: estimated number of disabled individuals in Canada eligible for RDSP
15 per cent: uptake rate for RDSP
$564.5 million: federal grants to the RDSP program
$235.8 million: federal bonds to the RDSP program
$200,000: Lifetime contribution limit for private contributions
A quick look at the RDSP:
– Much like a registered retirement savings plan (RRSP), an RDSP allows a disabled individual, parents, spouses or any other guardian to save for a beneficiary’s mid- and long-term future.
– The people eligible are those who qualify for a disability tax credit.
– Contributions can be made annually until the beneficiary of the RDSP turns 60
– Contributions are not tax-deductible