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Reintroducing a bill to protect RDSPs and RESPs from creditors

Inspired by the discussion on Monday with Stephanie Cadieux, the MLA for Surrey South, during Private Members statements, I reintroduced a Private Members’ bill to protect Registered Disability Savings Plans (RDSPs) and Registered Education Savings Plans (RESPs) from creditors.

Registered Retirement Savings Plans (RRSPs) were first introduced federally in 1957. Legislation enabling Registered Retirement Income Funds (RRIFs) was subsequently brought forward in the late 1970’s thereby permitting seniors to withdraw their RRSP funds over time instead of all at once or through purchase of an annuity. Since that time, most provinces, including British Columbia, have recognized the importance of protecting RRSPs and RRIFs from creditors in the event of personal bankruptcy. They have passed legislation to protect RRSPs and RRIFs from being seized during bankruptcy. This provides a bankrupt individual a glimmer of hope that they will not be destitute in their old age. Here in British Columbia, such seizures are governed by the 1996 Court Order Enforcement Act.

In 2008 the Federal Government passed legislation to allow for the creation of Registered Disability Savings Plans (RDSPs). The RDSP is a federal, tax-deferred, long-term savings plan for people with disabilities who want to save for the future. Unfortunately, under the Court Order Enforcement ActRDSPs  are not listed as a registered plan in BC’s legislation and are therefore not exempt from creditor protection. Therefore, should an individual with an RDSP go into debt, their savings in the RDSP will not be protected from seizure.

The province of Alberta has already taken such measures and amended their Civil Enforcement Act to include RDSPs under Section 92.1(I): Exemption of registered plans and registered disability savings plans. Legislation has also passed in Alberta protecting RESPs from creditors.

By ensuring the financial security and well-being of those living with disabilities, we are not only providing the individuals and their loved ones with a sense of security, we are also reducing the strain on social services that incurs when individuals are unable to care for themselves. By also including RESPs in section 71.3 of the Court Order Enforcement Act, we are protecting children who, through no fault of their own, might see their education investment seized by creditors.

Below I reproduce the text and video of my introduction, as well as the accompanying media release.


Text of Introduction


A. Weaver: I move that a bill intituled the Court Order Enforcement Amendment Act, 2017, of which notice has been given in my name on the order paper, be introduced and read a first time now.

I’m pleased to be introducing a bill intituled the Court Order Enforcement Amendment Act, 2017. Inspired by a discussion on Monday, I’m reintroducing this for the second time.

Registered retirement savings plans are protected in this province from creditors in the case of personal bankruptcy. Protecting these funds provides a small safeguard that individuals undergoing bankruptcy will not be completely destitute in their old age. It’s good law that most provinces in Canada have adopted.

However, there is no protection for funds that are part of a registered education savings plan or a registered disability savings plan. These are important funds that need equal protection. Recognizing that a child should not have their education investment seized due to misfortune that befalls their parents, the Alberta government passed legislation a number of years ago protecting RESPs. It’s with this in mind that I bring this bill forward today.

This bill amends the Court Order Enforcement Act to ensure that RESPs and RDSPs are protected by law from creditors.

Mr. Speaker: The question is first reading of the bill.

Motion approved.

A. Weaver: I move that the bill be placed on the orders of the day for second reading at the next sitting of the House after today.


Video of Introduction



Media Release


Andrew Weaver introduces bill to protect RDSPs and RESPs from creditors
For immediate release
November 1, 2017

VICTORIA, B.C. – Andrew Weaver, leader of the B.C. Green Party, today introduced a bill to protect Registered Disability Savings Plans (RDSPs) and Registered Education Savings Plans (RESPs) from creditors. The bill, the Court Order Enforcement Amendment Act, 2017, was first introduced by Weaver in March 2016 and would provide RDSPs and RESPs with the same legal protection as Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Fund (RRIFs).

“A child should not have their education investment seized due to misfortune that befalls their parents,” said Weaver

“RDSPs and RESPs are important funds that British Columbians use to save for their futures. It is only fair that they have the same protection as RRSPs and RRIFs. This protection provides a glimmer of hope to those facing bankruptcy that they will not be destitute in their old age. There is no reason why British Columbians who are eligible for the disability tax credit and contribute it into RDSPs shouldn’t have that same glimmer of hope should they ever face a dire financial situation.

“I have been raising this issue in the house for three years now. Government has had plenty of time to consider it. It is time that government acts to finally give British Columbians’ RDSPs and RESPs the equal protection they deserve.”

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Media contact
Jillian Oliver, Press Secretary
+1 778-650-0597 | jillian.oliver@leg.bc.ca

On the importance of protecting RDSPs from creditors

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.


Video of Exchange



Text of 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.

A Private Members Bill to Protect RDSPs and RESPs from Creditors

Today in the legislature I introduced a private members Bill M208 – Court Order Enforcement Amendment Act, 2016. The bill adds Registered Disability Savings Plans (RDSPs) and Registered Education Savings Plans (RESPs) to the list of plans protected under the act.

If a person files for bankruptcy in B.C., their RRSPs are protected from being seized by creditors. However, the same protection does not exist for RESPs or for RDSPs. A child should not have their education investment seized due to misfortune that befalls their parents. Alberta has protected RESPs; we should follow suit.

I asked the Minister of Justice about this problem in question period two years ago. At the time, the Minister said that it was an important issue and that she’d be glad to work with me to move it forward. Yet two years have now passed and still nothing has changed. Seeing as I haven’t seen any meaningful progress from the government on this simple legislative change, I decided to offer them a possible solution.


Text of Bill Introduction


A. Weaver: I move a bill, intituled Court Order Enforcement Amendment Act, 2016, of which notice has been given in my name on the order paper, be introduced and read a first time now.

Motion approved.

A.Weaver: Registered Retirement Savings Plans (known as RRSPs) were first introduced federally in 1957. Legislation enabling Registered Retirement Income Funds (known as RRIFs) was subsequently brought forward in the late 1970’s.

RRSPs and RRIFs are protected in this, and most other provinces, from creditors in the case of personal bankruptcy. Protecting these funds provides a glimmer of hope that individuals undergoing bankruptcy will not be destitute in their old age.

In 2008 Federal legislation was passed to allow for the creation of Registered Disability Savings Plans (RDSPs). The RDSP is a federal, tax-deferred, long-term savings plan for people with disabilities who want to save for the future.

Unfortunately, under our outdated Court Order Enforcement Act, 1996, RDSPs are not listed as a registered plan in BC’s legislation and are therefore not exempt from creditor protection. Should an individual with an RDSP go into debt, their savings in the RDSP will not be protected from seizure. The same is true for Registered Education Savings Plans (known as RESPs).

Recognizing that a child should not have their education investment seized due to a misfortune that befalls their parents, the Alberta government also passed legislation two years ago protecting from creditors.

This Bill amends the Court Order Enforcement Amendment Act to ensure that RESPs and RDSPs are protected by law from creditors.

I move that the bill be placed on the orders of the day for second reading at the next sitting of the House after today.

Motion approved.

BILL M208, Court Order Enforcement Amendment Act, 2016, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.


Video of Bill Introduction


Have Your Say on Protecting RDSPs from Bankruptcy

Back in March 2014,  I raised a concern about the lack of protection for Registered Disability Savings Plans (RDSPs) and Registered Education Savings Plan (RESPs). Industry Canada is now conducting a public consultation that includes these same concerns.

As a quick reminder, RDSPs are a federal, tax-deferred, long-term savings plan for people with disabilities who want to save for the future. Unfortunately, under the Court Order Enforcement Act,  RDSPs  are not listed as a registered plan in BC’s legislation and are therefore not exempt from creditor protection. Therefore, should an individual with an RDSP go into debt, their savings in the RDSP will not be protected from seizure.

To put this in context, Registered Retirement Savings Plans (RRSPs) and Registered Retirement Savings Plans (RRIFs) are protected. Most provinces, including British Columbia, have recognized the importance of protecting RRSPs and RRIFs from creditors in the event of personal bankruptcy.  Legislation was passed to protect these registered plans from being seized in the event of personal bankruptcy. Here in British Columbia, such seizures are governed by the 1996 Court Order Enforcement Act.

Industry Canada is currently conducting a public consultation on the Bankruptcy and Insolvency Act – and in the discussion paper, a proposal has been made to exempt RDSP assets from seizure in insolvency proceedings.

Industry Canada has called for public input on the issue of creditor protection for the Registered Disability Savings Plan. Submissions will be accepted until July 15, 2014. Information about making a submission can be found here.

To read more about the concerns I raised, including my questions to the Minister of Justice, please click here.

 

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Protecting RDSPs and RESPs from Bankruptcy Seizure

How many of us plan for bankruptcy? Very few. Unfortunately, it happens far too often. When it occurs, individuals inevitably struggle to rebuild their lives in the hope that one day they will become financially stable once more.

Registered Retirement Savings Plans (RRSPs) were first introduced federally in 1957. Legislation enabling Registered Retirement Income Funds (RRIFs) was subsequently brought forward in the late 1970’s thereby permitting seniors to withdraw their RRSP funds over time instead of all at once or through purchase of an annuity. Since that time, most provinces, including British Columbia, have recognized the importance of protecting RRSPs and RRIFs from creditors in the event of personal bankruptcy. They have passed legislation to protect RRSPs and RRIFs from being seized during bankruptcy. This provides a bankrupt individual a glimmer of hope that they will not be destitute in their old age. Here in British Columbia, such seizures are governed by the 1996 Court Order Enforcement Act.

In 2008 the Federal Government passed legislation to allow for the creation of Registered Disability Savings Plans (RDSPs). The RDSP is a federal, tax-deferred, long-term savings plan for people with disabilities who want to save for the future. Unfortunately, under the Court Order Enforcement ActRDSPs  are not listed as a registered plan in BC’s legislation and are therefore not exempt from creditor protection. Therefore, should an individual with an RDSP go into debt, their savings in the RDSP will not be protected from seizure.

Today in the Legislature I posed the the following question to the Minister of Justice:

A. Weaver: Most provinces, including British Columbia, have recognized the importance of protecting RRSPs and RIFs from creditors in the event of personal bankruptcy. They’ve passed legislation to protect these registered plans from being seized during bankruptcy. This provides a bankrupt individual a glimmer of hope that they will not be destitute in their old age. Here in B.C. such seizures are governed by the 1996 Court Order Enforcement Act. In 2008 the federal government passed legislation to allow for the creation of registered disability savings plans. These are called RDSPs. The RDSP is a tax-deferred, long-term savings plan for people with disabilities who want to save for the future. Unfortunately, under the same act, RDSPS are not listed as a registered plan and are therefore not exempt from creditor protection. My question is to the Justice Minister. It’s this. Does the government have a plan to provide creditor protection for disabled individuals as in, for example, the province of Alberta?

The Minister of Justice responded:

Hon. S. Anton: I thank the member opposite for bringing this matter to the attention of the House, because it is an important one. Our government is committed to modernizing our laws and keeping them up with protecting our vulnerable citizens. When new things come along, like this particular plan, it has to keep up as well. It is an important issue for people with disabilities and their families. We are looking at it as part of the general review of the Court Order Enforcement Act. We’re looking at our legislation. We’re comparing it with other provinces to ensure harmonization. There are complex questions attached to the issue, I’m told, but we will be looking at those. I’d be glad to keep the member abreast of where we’re going and keep him involved in the discussion, because it is a matter that needs to be addressed

The Federal Government has also created the Registered Education Savings Plan (RESP) designed to allow parents to save for their children’s education after they graduate from high school.

Today in the House, I also posed the supplemental question to the Minister of Justice:

A. Weaver: The province of Alberta actually, just this past December, also passed legislation to provide creditor protection for RESPs, the registered educational savings plans. My question again is: does the government have a similar plan to protect a child who, through no fault of their own, might see their education investment seized by creditors?

The Minister of Justice responded:

Hon. S. Anton: Again, I would be very glad to have a look at that one as well. I think that the thoughts behind it are the same. I appreciate the member bringing it to our attention. I would be glad to work with him moving forward on it.

Both these answers are very reassuring and I look forward to working with government and the official opposition to bring in legislation that modernizes the Court Order Enforcement Act.

The province of Alberta has already taken such measures and amended their Civil Enforcement Act to include RDSPs under Section 92.1(I): Exemption of registered plans and registered disability savings plans. On December 13, 2013, legislation in Alberta received Royal Assent thereby also protecting RESPs from creditors.

By ensuring the financial security and well-being of those living with disabilities, we are not only providing the individuals and their loved ones with a sense of security, we are also reducing the strain on social services that incurs when individuals are unable to care for themselves. By also including RESPs in section 71.3 of the Court Order Enforcement Act, we are protecting children who, through no fault of their own, might see their education investment seized by creditors.