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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. 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. There are those parents who are complaining about barriers when you want to stop contributing 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. All charges involved will be deducted from your savings and you are also expected to pay an enrollment fee. Many people have complained about the high rate of interest, lack of transparency in salespeople and the charges involved.
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Although there have been some reforms made in an effort to solve these issues, parents are still complaining. A government agency in Ottawa reported that they are receiving many complaints from parents about RESP dealers. These problems are seen because the dealers make the decisions on behalf of the parents. The dealers also determine your contribution schedule. The program requires parents to pay extra fee if they miss to contribute on time and there are instances when your account can be terminated. The fees you are supposed to pay include trustee, enrollment and administration fees. There are a lot of restrictions with RESP Group plans as compared to other saving plans. You will be limited in the amount you can withdraw, and when you can do the withdrawal. A relief to most Canadian parents is that mutual fund dealers and banks have come into a collaboration to provide parents with self-directed plans. You can make the decision on the amount of money you can contribute and also the type of investment you want. The main advantage of the self-directed plan is that you can get your contribution at any given time. While the government can still give a grant to your child, this money won’t go to their school fees. Although mutual fund dealers have certain charges, but the amount of fee reduces with time and get lifted after seven years. This another benefit as you will be paying no fee after this period. The government of Canada introduced RESP group plans to help parents to make savings for their children’s education. Many parents joined the program and the program has helped many of them. Due to the many issues that parents are raising, there is a high probability of many parents to stop being members of the program.