Do It Myself Blog – Glenda Watson Hyatt

Living on social assistance is like living in a perpetual catch-22. If you are thrifty enough to save a few dollars a month, you can’t officially save it because then that means the government is paying you too much and your benefits are reduced accordingly. Yet, occasionally you have expenses (say, a $1895 scooter and a $4300 paint levy for your condo) that social assistance doesn’t cover, but that you still must pay. Also, any sizeable financial gift from a parent or friend for said expense gets deducted from your monthly cheque. This leaves you resorting to creative financing (choosing my words carefully) and a few sleepless nights.

Until now.

Thanks to years of tireless effort by the Planned Lifetime Advocacy Network (PLAN), Canada has introduced the world’s first Registered Disability Savings Plan (RDSP):

a savings plan designed specifically for people with disabilities in Canada. The first of its kind in the world, this new tax-deferred savings vehicle will assist families in planning for the long – term financial security of their relatives with disabilities.

According to PLAN, a RDSP is similar to a Registered Retirement Savings Plan (RRSP) and “is designed specifically for people living with a disability. It allows anyone already eligible for a disability tax credit to invest savings tax-free until withdrawal, up to a lifetime limit of $200,000. Friends and family members can also contribute to the RDSP of a loved one.”

To encourage Canadians with disabilities to open RDSPs, the Government of Canada has established the Canada Disability Savings Grant and the Canada Disability Savings Bond, which will match eligible contributions, significantly increasing the savings in a plan. (The Canada Revenue Agency provides further information on RDSP.)

For British Columbians with disabilities living on social assistance, the pot became a little sweeter today with the provincial government announcing the Endowment 150 Fund which “will allow any British Columbian on income assistance to apply for $150 once they have set up an RDSP with $25.  This initial investment has the potential to leverage  a grant of $525 and a $1,000 federal bond. Within one year, clients can earn $1,700 plus interest from their original investment of just $25.”

The deadline for 2008 contributions has been extended to March 2, 2009. Currently, the Bank of Montreal is the only financial institution, outside of Quebec, offering RDSPs. The Vancouver City Savings Credit Union is developing a product, but it may not be available in time to make 2008 contributions. Other financial institutions are also likely in the process of developing similar products. However, only contributions made by March 2nd will be eligible for the 2008 matching funds by the federal government.

A word of caution: as with any financial investment, read all of the fine print and details, and talk with a reputable person to make sure a RDSP is right for you or a loved one with a disability.

Watch the Registered Disability Savings Plan Blog for the latest updates and information.  (Tip: “Subscribe by email” to receive the updates in your inbox. It saves constantly checking the blog.)