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RESP in Canada–The Challenges that Parents Are Facing

Many parents have been using the RESP Group plans since the Canadian government introduced it. Heritage Education Funds, USC, and other dealers are given the responsibility of regulating the registered education saving group plans.

These bodies run the RESP program on behalf of all the parents who are a member of it. The program has been doing well, until recently when many parents started complaining about the program.

Some parents have complained that they are facing a lot of barriers when they want to stop making a contribution to the program. Another problem is that parent is getting a small amount out of their contribution as a result of the reductions that are being made.
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While it is possible to transfer your savings to a bank or any other, you will have a certain amount of deduction for your contribution. Some of the charges that you will incur include an enrollment fee and transfer charges. Some of the other areas that parents have complained about include dishonesty of the salespeople, hidden charges, and high rate of interest.
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Parents are still having problems despite the changes that have been made. A government agency said that they are still getting a lot of complaints from parents.

These problems are seen because the dealers make the decisions on behalf of the parents. The dealers also determine your contribution schedule.

When you miss any contribution, you will have to pay extra charges and your account can also be terminated. The fees you are supposed to pay include trustee, enrollment and administration fees.

The program doesn’t offer a lot of flexibility. You can’t decide the amount of money you can withdraw and when to do so.

Some mutual fund brokers and banks have joined together to start offering parents with self-directed saving plans. With this plan, you can control the amount you wish to contribute and the kind of investment you want.

The major advantage of the self-directed plan is that you get your contribution whenever you want it. While the government can still give a grant to your child, this money won’t go to their school fees.

After seven years, the fee charged by mutual fund dealers is reduced to zero after decreasing from the initial fee to zero within this period. This another benefit as you will be paying no fee after this period.

RESP in Canada was formed to help parents save for the education of their children. There are many members of this program who have received benefits from it. But with the high number of parents complaining about the dealers controlling the program, there are high chances that many parents will opt out of the program.