Smartsaver Community

The CBC’s reporting today that “RESP grants favour higher-income families” is a good reminder, not only of the imbalance that still exists in who benefits from the Canada Education Savings Program (CESP), but also of the lack of attention paid to the growing participation of lower-income savers documented in the most recent evaluation of the program.

The evaluation is the third to have been conducted since the introduction of the Canada Education Savings Grant (CESG) in 1998. The first, completed in 2003, identified the need to increase support to encourage lower-income families’ participation. This led to the introduction of the Canada Learning Bond and additional CESG (A-CESG) in 2004.

A subsequent evaluation completed in 2009 found that “there had not been a significant change in the share of lower income RESP subscribers since the inception of the A-CESG and CLB,” noting that take-up of the new grants was lower than expected and that awareness of them remained low.

Since then, communities across Canada have joined government in efforts to inform families of these benefits, to make sure that lower-income children are not excluded from these opportunities. And the newest evaluation finds that some positive trends are beginning to emerge:

“A significant increase in RESP participation and accumulated RESP savings has occurred at every income level. Participation has increased every year for all income groups –notably, RESP take-up among families with an income under the lowest A-CESG threshold increased four-fold since 1999 and reached 30% in 2012 (with the CLB found to have had a significant impact).”

The evaluation found that:

• The number of lower-income families with RESPs is increasing;
• The proportion of RESP beneficiaries from lower-income families is increasing; and
• The proportion of the CESP’s disbursements directed to lower-income families is increasing while the share of disbursements to higher-income families is decreasing.

A CESP survey further revealed that families with lower incomes, more than those with higher incomes, are encouraged by the RESP grants to start saving earlier than they would otherwise. The CLB in particular, was found to motivate their participation.

These first signs of progress underscore the importance of continued, focused effort to assist lower-income families to access the Canada Learning Bond. To ensure that all families gain proportional benefit from the CESP, more must be done, as the report recommends, to:

“1. Explore ways for funds to more effectively reach families with the greatest need for assistance and encouragement to save for their children’s future PSE; and

2. Complement outreach efforts on promoting awareness with promoting understanding of the CESP savings incentives in order to support increased participation among all Canadian families.”

By May Wong, Executive Director, Omega Foundation