Between October 21 and December 16, 2011, the Government of Canada launched a Review of the Registered Disability Savings Plan (RDSP). The review, held roughly three years after the plan’s inception, was meant to ensure that RDSPs continue to meet the needs of Canadians with severe disabilities and their families.
The Government launched the review by releasing a consultation paper called Ensuring the Effectiveness of the Registered Disability Savings Plan, which discussed and requested input on various issues crucial to the success of the RDSP, such as establishing plans, accessing savings, plan termination, the administration of the RDSP program and issues of legal representation. Additionally, a series of workshops was held with key stakeholders that focused on policy options to address these issues. The consultation paper and overall review process provided an open opportunity for individuals, families and organizations to comment on these concerns and suggest ideas for improvement.
PLAN has been heavily involved in the practical functioning of the RDSP from its early days of development and the plan’s implementation to its ongoing feedback and review. From 2009 on, PLAN began compiling and reviewing RDSP questions and comments from thousands of families across the country. To draft our formal response to the Federal Review, we looked at responses from the over-2,100 that attended a PLAN Financial Literacy and RDSP information session, comments on blog entries, callers into the organization, and the responses of two recent surveys posted on rdsp.com: “3-Year RDSP Review” and “Why Not”. By listening closely to families, PLAN was able to provide the federal government with thoughtful and innovative possible solutions on how many people across the country envision an improved RDSP.
After their review was closed, Finance Canada spent a few months making their decisions, which were announced in the March 2012 Federal Budget.
- Replace the 10-year repayment rule applying to withdrawals with a proportional repayment rule
- Allowing investment income earned in a Registered Education Savings Plan (RESP) to be transferred on a tax-free basis to the RESP beneficiary’s RDSP
- Extending the period that RDSPs of beneficiaries who cease to qualify for the Disability Tax Credit may remain open in certain circumstances
- Amending the rules relating to maximum and minimum withdrawals
- Amending certain RDSP administrative rules
- Allow a temporary expansion—until the end of 2016—on who may be an adult beneficiary’s plan holder to include the beneficiary’s spouse, common-law partner, or parent
The last one, number six, was enacted early on June 29, 2012. The others reached royal assent on December 14, 2012 and the changes will take place on January 1, 2014.
The next major RDSP review should be in 2014, however we are also aware that five out of the six last federal budgets included significant mention and adjustments to the RDSP. All of these came following recommendations from PLAN and others—and so we expect to regularly have the opportunity to lend our voices.
We would like to hear from you. What are your feelings on the recent changes? What about previous changes? What has not been addressed but needs to be?
Some of the feedback and suggestions on further changes we have already received include:
- Allow the rollover of an RDSP from one beneficiary to another
- Add physical disabilities to the list of who can be eligible for retirement rollovers
- Guarantee that the Guaranteed Income Supplement will not be affected by RDSP withdrawals
- Increase the RDSP age limit to be in line with RRSPs (71) or at minimum be raised by 2 years to match with the recently increase in OAS eligibility
- Ensure that losing the Disability Tax Credit will never cause an RDSP to collapse or trigger any grant and bond claw-back but instead only disallow new contributions during ineligibility
- Make RDSPs creditor proof
“We learned an important organizational lesson in PLAN’s early years. Our innovative programs would not have much impact unless they were recognized by society’s systems and institutions. We needed our governments to recognize and adjust their regulations, policies and statutes to accommodate the solutions that we were developing. Since then we learned that all social innovations require corresponding structural changes in order to be sustainable, long lasting, and to have widespread impact”. – Al Etmanski, Safe and Secure
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