Lack of awareness hampers RESP

By Staff | July 13, 2010 | Last updated on July 13, 2010
2 min read

Poor awareness and understanding of Canada’s registered education savings plan (RESP) program are keeping participation low, according to a Certified General Accountants Association of Canada (CGA-Canada) report.

“Canada’s RESP program provides families with a relatively secure savings option dedicated specifically to education,” says Rock Lefebvre, CGA-Canada’s vice-president, research and standards. “In fact, due to refinements in the program over the years, it is a particularly effective savings vehicle for lower-income families. As a result, it is doing a good job of meeting its objective of making post-secondary education more affordable and accessible to Canadians.”

However, despite the program being ranked as one of the most generous savings plans across all countries of the Organisation for Economic Co-operation and Development, the program is poorly understood and underutilized.

Since the RESP program comprises several components, most people lack a clear understanding of how it works and what the benefits to them would be, says Lefebvre. “This is particularly true with the very people who stand to benefit the most from the RESP program, lower-income Canadians.”

Due to savings bonuses offered by the federal government through the Canadian education savings grant, families can grow their investment, in part, through government contributions, an attractive feature that is not available through any other plan. For lower-income Canadians, these government contributions can form a significant amount of their investment gains.

The report also notes that rising tuition fees are countering the benefits of the RESP program and should be addressed directly. Recent action taken in the U.K. may serve as a good example for addressing this challenge.

Registered Education Savings Plans – Valuable Opportunities for the Students of Tomorrow can be viewed on the CGA-Canada website.

(07/13/10) staff


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