A good number of Canadian parents have joined RESP Group plans since it was formed by the government. The program is under the regulation of dealers such as the Higher Education Funds.
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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The program can allow you transfer funds to other places, but you will incur a lot of charges for doing that. You will also be required to pay an enrollment fee and all transfer charges will be on your side. Other issues that have been raised concern include the lack of transparency on the charges involved, dishonest salespeople, and high rates of interest.
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Although there have been some changes, there are still complaints coming from parents. 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.
When you miss any contribution, you will have to pay extra charges and your account can also be terminated. You will be required to pay enrollment fee, trustee fee, and other charges.
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.
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.
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 is another advantage as you won’t incur any charges after this period.
RESP in Canada was formed to help parents save for the education of their children. 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.