Study on the ability of individuals to establish a registered disability savings plan (RDSP)

We are very pleased to be here today representing the Canadian Bankers Association and our 57 member banks, which includes domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada. With me from the CBA is Randy Hopkins, Advisor, Payments. We are joined by representatives of two of our member banks. Trevor Philp, Manager, Registered Products and Managed Solutions at BMO Financial Group, and Ann Elise Alexander, Senior Counsel at CIBC.

We are pleased to be here to share our views on Registered Disability Savings Plans (RDSPs), specifically the issue of legal representation and the ability of individuals to enter into a contract.

Banks understand and support the government’s clearly articulated policy objective of providing financial security to individuals with severe disabilities and they have invested considerable time and resources into the development and delivery of the RDSP program since its introduction in 2008.

RDSPs are an important financial tool providing significant benefits for Canadians:

  • beneficiaries may receive up to 300 per cent in matched funding from the Canada Disability Savings Grant and up to $1,000 annually (to a maximum of $20,000) in Canada Disability Savings Bonds;
  • since contributions are not tax deductible, they are not included in the beneficiary’s income when withdrawn;
  • additional investment income earned in an RDSP are only included in the beneficiary’s income for tax purposes when paid out of the RDSP;
  • withdrawals from an RDSP do not affect income-tested benefits at the federal level and most provinces ensure payments like social assistance or other means-tested payments are unaffected.

In 2011, the CBA participated in the government’s review of the RDSP and shared our comments on how the RDSP can be made more effective – for Canadians with disabilities, as well as for banks that offer the plan. The ability of individuals to establish plans was one of the key issues that this consultation addressed.

We recognize that some adults and their families face obstacles in establishing RDSPs in situations where the beneficiary lacks capacity to contract, due to the nature of their disability. We were pleased that interim changes were made in 2012 that allowed certain family members to become the plan holder of an RDSP in these situations so that contributions and government assistance amounts could start accumulating.

We also support the objective of simplifying and streamlining the process of opening RDSPs for beneficiaries who lack contractual competence.

The banking industry is committed to the success of the RDSP program and recognizes the importance of ensuring that RDSPs offer convenience and choice so that individuals with disabilities can build their financial future.

Banks are promoting RDSPs to eligible individuals and the CBA has been using many different communications tools including our website and social media to promote RDSPs to the general public and the media. In addition, we have provided information on RDSPs to Members of Parliament so they can share it with their constituents. You have in front of you a copy of the RDSP backgrounder that we included in our basic banking guide that all Members of Parliament and Senators received this fall.

Banks continue to play a vital role in supporting the delivery of RDSPs and are committed to working with the government to help families, parents and others save for the long-term financial security of individuals with severe disabilities.

We look forward to your questions.