The Registered Disability Savings Plan fails to meet the needs of average families
By Stephen Pate – The Bank of Montreal has announced a 3-year partnership with Planned Lifetime Advocacy Network (PLAN), a not-for-profit organization, to promote one of Jim Flaherty’s pet projects the Registered Disability Savings Plan or RDSP.
Much like the maligned family income tax splitting, the benefits in the RDSP are for high income Canadian families with a disabled dependent. I am opposed to social benefit programs that only help rich Canadians. All that does is help the wealthy accumulate more wealth while ignoring real social problems.
PLAN are solidly behind the RDSP but that’s in their self-interest since the BMP partnership creates revenues for their non-profit. Thanks to Jim Flaherty, disabled Canadians can fulfill their dreams wrote their founder Al Etmanski in the Globe and Mail.
“I’m sure that Mr. Flaherty had many good qualities, but the benefits of the program described in the article will positively impact only a small subset of Canada’s disabled population, particularly those unfortunate individuals who are born with disabilities,” wrote one Globe reader who spoke for the majority.
A similar Globe article praising Flaherty and the RDSP Disability community ‘has lost a true champion’ in Jim Flaherty received 30 negative reader comments who astutely panned the RDSP.
“A champion for people with disabilities? Surely you jest. I have a daughter with Cerebral Palsy but where am I supposed to find the money to put in her RDSP? This programme benefits those who need financial help the least and does nothing, absolutely nothing, for those who need it the most.” Globe and Mail
If the Harper government wants to help families with disabled dependents there more effective ways to do it. Caledon Institute has a well-developed, cost-effective and universal proposal the benefits all Canadians with disabilities.
Undoubtedly, the RDSP reflects the help-yourself bias of the present government, an inappropriate prescription for Canadians living with severe disabilities.
Lack of discretionary savings
The RDSP creates a lifetime savings plan for dependent children or adults living with a disability in which the government provides triple matching funding for the family’s contribution plus a $1,000 savings bond for low-income families.
The RDSP sounds like a great plan, if I can be excused the pun, but it only reflects the upper-income bias of Mr. Flaherty, whose family had a child living with a disability.
Average Canadians find it hard to save for their retirement. Middle income families with a severely disabled child face an unbelievable cost burden in providing supports and care, often full-time, for their children and adult dependents. The ability to save any money under those circumstances is extremely limited.
In the PEI Human Rights case Murphy v Province of PEI , 4 families of children and adult dependents with autism described annual attendant care costs between $55,000 and $75,000. The parents won their case which gave them about 50% funding from the PEI Disability Support Program.
The average Canadian middle-income family earns less than $50,000 after taxes. How much of that can they afford to save if they are also facing $10, 000 or $20,000 in other disability related costs.
The amount of the grant is based on the beneficiary’s family income as follows:
*The beneficiary family income thresholds are indexed each year to inflation. The income thresholds shown are for 2013. Chart from CRA RDSP
From the BMO Press Release
BMO Investments Inc. has announced that it is partnering with Planned Lifetime Advocacy Network (PLAN), a not-for-profit organization committed to ensuring the safety, security and well-being of those living with disabilities.
The three-year sponsorship and partnership will focus on educating individuals and their families about the Registered Disability Savings Plan (RDSP). The partnership will also help those with disabilities set up RDSPs in order to help with their financial future.
“With this partnership, we hope to continue to bring awareness to the RDSP, and help support the needs of individuals with disabilities in communities across Canada,” said Robert Armstrong, Vice President and Head of Managed Solutions, BMO Global Asset Management.
In December 2008, BMO became the first Canadian bank to offer RDSPs to the public. Today, BMO is Canada’s RDSP market leader with more than 32,000 customer accounts, over $620 million in assets under management and approximately 46 per cent share of the market.
Mr. Armstrong continued, “When Jim Flaherty introduced the RDSP in 2008, Canada showed the world how a smart, innovative policy can help provide financial security and independence for people with disabilities.”
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