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RESP in Canada–The Challenges that Parents Are Facing

A good number of Canadian parents have joined RESP Group plans since it was formed by the government. RESP Group plans are controlled by organizations such as the Heritage Education Funds and USC.

The dealers acts on behalf of the parents. Although the program has done a lot in helping parents save for their children’s’ education, there are some few complaints from parents who have been using it.

Many parents complain that there are a lot of barriers when you want to terminate your contribution to the program. Another issue is the sharp reduction that is imposed in the amount you receive in the end.
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While parents can transfer their savings to other platforms, the program will charge a lot to do the operation. 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 in Ottawa reported that they are receiving many complaints from parents about RESP dealers.

The dealers are responsible for making decisions for parents. They also give you the contribution schedule that you should follow.

In case you fail to contribute on time, your account can be suspended or attract extra fees for every contribution you failed to pay. Some of the fees you will be required to pay, include administration fees, trustee charges, enrollment fees, among other fees.

The program doesn’t offer a lot of flexibility. You will be limited in the amount you can withdraw, and when you can do the withdrawal.

Some mutual fund brokers and banks have joined together to start offering parents with self-directed saving plans. With a self-directed plan, you can decide which amount 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. Your child will get a government grant, but the fund will not be used to pay school fees.

Many mutual fund dealers have a certain fee but the fee keeps on reducing and after seven years, you are not charged anything. This another benefit as you will be paying no fee after this period.

The RESP program was formed by the Canadian government to help parents save for their children’s education. There are many members of this program who have received benefits from it. However, with the recent issue with the dealers regulating the program, many parents will be forced to look for alternative ways of managing their savings.