In the legislature today during Private Members statements Stephanie Cadieux, the MLA for Surrey South, and I had a productive exchange on the topic of Registered Disability Savings Plans.
Ms. Cadiuex spoke for five minutes discussing the history and emphasizing benefits of the RDSP program. I followed up on the importance of protecting RDSPs from creditors, an issue I first raised in Question Period on March 13, 2014, provided more context to on June 26, 2014 and culminated in my bringing forward private members bills on both March 15, 2016 and again on February 28, 2017.
I plan to reintroduce the bill again shortly and hope that it will be put on the order papers to be debated in the legislature.
Below I reproduce the video and text of the entire exchange.
S. Cadieux: On December 1, 2008, the late Jim Flaherty, the then-Minister of Finance for the federal government, did a remarkable thing — a forward-thinking, first-in-the-world thing. He responded to the advocacy originating from South Surrey from Al Etmansky and the Planned Lifetime Advocacy folks, and he introduced the registered disability savings plan, or RDSP.
The first of its kind in the world, this new tax-deferred savings vehicle was designed specifically to assist people with disabilities and their families for planning for the long term for financial security.
I won’t need to tell members of this House about the reality that people with disabilities have higher rates of poverty and unemployment than their temporarily able-bodied counterparts. I hope I don’t also need to educate this House on the reality that living with a disability can add significant costs and expenses not faced by those who don’t have a disability.
While there are many social programs designed and provided by governments to assist, some of those programs are only available to individuals whose sole source of income is government benefits. Another less-known reality is that there are far more people with disabilities that are not dependent on — or even eligible for — government benefits than those who are.
That’s why the RDSP vehicle is so important. An RDSP allows you to save money for the future without paying tax on the earnings. The federal government will contribute as much as $90,000 to an individual’s account. It’s estimated that 500,000 people across Canada are eligible for the benefit.
The future impacts of the RDSP go well beyond a simple planning tool. They provide a path for security, for choice — for individual choice.
So far, since first becoming available in 2008, over 100,000 RDSPs have been opened. I’d like to read for you the Plan Institute’s top ten list — the top ten reasons why people with disabilities or their carers should open an RDSP:
(1) You choose where to invest your money. All of the major Canadian banks are offering RDSPs.
(2) The government contributes generously. For every dollar saved, they will match up to $3.
(3) If you have a low income and can’t invest yourself, the government will still save for you.
(4) An RDSP will not affect your disability benefits.
(5) It’s an easy way to save for big items like mortgage down payments, home renovations or cars.
(6) There are no restrictions. You can spend the money on anything you choose.
(7) When you close an RDSP, your contributions and investments gained are yours.
(8) With savings tucked away, the future becomes yours to imagine.
(9) You become more powerful economically. Decision-makers need to take you more seriously.
(10) The whole world is watching. What happens here in Canada may determine the future of people with disabilities in other countries.
As of December 2015, the total value of RDSPs in B.C. is over $460 million. British Columbians have personally contributed $163 million to their RSDPs, leveraging an additional $297 million in federal grants and bonds. I know, with talking with financial advisers and having financial planning education myself, there’s no better deal out there. People have nothing to lose and so very, very much to gain.
In 2015, British Columbians held 18 percent of all RSPDs in Canada, yet made up only 14 percent of eligible Canadians. Currently, 12 percent of all people with disabilities under 50, or 22,500 people, in B.C. have an RDSP, higher than any other province, which is great. But another 60,000 people in this age group could benefit, and they should.
Like most financial products, the rules are complicated, but there are plenty of experts available to help. It doesn’t need to be overwhelming. People should not be afraid to ask for help. There is too much to gain, especially if you have a low or modest income.
As an example, also from the Plan RDSP website…. An individual with an annual net income of $26,000. If they contribute $900 per year, they will earn $2,300 in federal RDSP grants and another $1,000 in a bond every year. So over your lifetime, you could receive $250,966 from your RDSP by contributing $18,000 in contributions, garnering $20,000 in federal bonds, $46,000 in federal grants and $166,000 in earned interest at 3 percent a year.
Understanding that even coming up with an initial contribution could be a challenge for some people, there are grants available through the endowment 150, which offers eligible people with disabilities a one-time savings grant of $150 to help get their RDSP, or registered disability savings plan, started and growing.
There’s no better time than now. October is RDSP Awareness Month, and the government of British Columbia has been a leader across the country in supporting the efforts of the advocates and the federal government in ensuring that British Columbians were first and most apt to take up this challenge. B.C. was first to exempt the income and earnings from an RDSP from affecting disability benefits, and on so many fronts, B.C. has been leading the country when it comes to providing supports to people with disabilities and looking to find ways to ensure that people with disabilities can claim their economic position, as well, in our society.
I think it’s tremendous. There’s a tremendous amount of work that has gone on. The RDSP action group, made up of advocates and groups that support people with disabilities, is doing a tremendous job making sure that British Columbians with disabilities stay at the forefront of this program so that B.C. continues to have the biggest uptake of RDSPs in the country. But there are so many people that still haven’t taken advantage of this vehicle and should, because they only have everything to gain.
A. Weaver: Thank you to the member opposite for her compelling narrative about the importance of the registered disability savings plan.
Unlike some other provinces, the province of British Columbia does not actually protect RDSPs from creditors. It’s something that…. I think we could expand upon the leadership that British Columbia has shown. Twice over the last couple of years, I brought in a bill to ensure that RDSPs, like RESPs and RRSPs and RIFs are protected from creditors. In the case where, through no fault of their own, somebody who is relying upon an RDSP — once perhaps their parents pass away —can have that taken from them because it can be accessed by creditors.
Now, the reason why that occurs is nothing more than for historical reasons. The RDSP a relatively new tool and was predated before that by the RESP and the RRSP. While we have no problem in British Columbia and Canada, that’s why protecting RRSPs and RESPs in some provinces — certainly RRSPs and RIFs…. The RSDP is not protected. There’s a national organization, whose name slips me at this moment, who have been pushing for this provincewide. Some jurisdictions, like Alberta, are taking a proactive response here.
I completely agree with the member opposite about the importance of RDSPs, allowing people to put aside some resources in case they need to be accessed sometime in the future. Fundamentally, those resources should be used for the purposes that they’re used, and they should not be used in terms of creditors potentially having access to them.
The analogy with our RESPs is direct. A child may have an RESP. Through no fault of their own, they might get into financial difficulty. In B.C., RESPs are not protected either. What can happen, then, is creditors can go after those — go after those designed specifically for the education of a child down the road. In the case of a disability plan, it’s analogous.
As we move forward, in light of the presence of the new government here, I hope that we can actually work across party lines to build the support for RDSPs that we’ve just heard, in terms of why they’re so important, to build support from all parties to bring credit protection for those in British Columbia blessed to have an RDSP so that they are protected, not only for today but also for tomorrow. They’re there for a specific reason.
With that, I thank the member opposite for her comments. I agree wholeheartedly with her comments, and I hope that we can take that to the next level and protect RDSPs for present and future and generations.
S. Cadieux: Thank you to the member for Oak Bay–Gordon Head for his comments. There are probably, I would say, few things that we have been in agreement on in the recent days, and yet, like the member’s desire to see us work towards basic income pilots, which I agree with him on, and I certainly agree with him on the need to look to expand creditor protection for RDSPs. These are, in my mind, no-brainers, as we look to modernize and ensure that all of our citizens engage fully in their economic citizenship as well as their social citizenship.
The reality is that the RDSP is such a significant tool for long-term financial security. Someone saving $1,500 a year over 30 years could find their RDSP worth nearly half a million dollars. An RDSP allows you to save money for the future without paying tax on the earnings, and I can think of no other program where the federal government will contribute as much as $90,000 to an individual’s account.
It’s true for many people with disabilities, who rely on government benefits, saving even a small amount can be too challenging, but it doesn’t mean that you can’t have an RDSP and benefit from the tax-free savings vehicle and the government’s contributions and the compounding interest. And compounding interest is just a beautiful thing.
In fact, the reality is that this vehicle is extra beneficial, in that anyone can contribute to an individual’s RDSP. Family, friends, neighbours, charities, foundations and organizations can all contribute dollars to an individual’s RDSP. The federal government encourages these contributions by matching each dollar contributed with up to $3 depending on the RDSP owner’s annual income.
This is an opportunity for us, as elected members, to use our platforms — the platforms provided to us — to amplify the message, to use our voices and our collective non-partisan voices to do our best to ensure that people with disabilities in our communities are aware of the RDSP; and for those who need it, that they’re aware of the grants available through endowment 150.
In case there’s any doubt from members in this House who is eligible for an RDSP, it’s people who are eligible for the disability tax credit federally, who are under the age of 60 and who are Canadian residents with a social insurance number. So it’s relatively easy for a person with a disability to qualify.
If people have any questions at all, in October, 2014, the provincial government created the RDSP action group. Their goal is to maintain B.C.’s position as the province with the highest per-capita uptake of RDSPs. They have a toll-free hotline, step-by-step guides to help people plan and even a dedicated website.
This will truly be a step forward in the journey to full inclusion for financial security for people with disabilities. It’s now up to people with disabilities and their allies to take the fullest advantage.
November 23, 2017
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