A. A Long-Term Savings Vehicle for Persons with Disabilities
The RDSP became available in December 2008 after several years of advocacy activities led by families of persons with disabilities and affiliated organizations.[21] The Planned Lifetime Advocacy Network (PLAN), an organization founded by parents of children with disabilities, was instrumental in mobilizing broad-based discussions on how to secure the future well-being of children with severe disabilities, who would require funds as adults when their families would no longer be able to support them. With funding from the Law Foundation of British Columbia, PLAN commissioned two research studies to examine the viability of a savings plan for that purpose.[22] Following the submission of those studies to the federal government, the Minister of Finance appointed an Expert Panel that reviewed them and made further recommendations in its report, A New Beginning.[23] These recommendations were largely adopted in the design of the RDSP, including that all persons entitled to the Disability Tax Credit (DTC) would be eligible to become an RDSP beneficiary, both children and adults, age 59 and under.[24]
Figure 1: RDSP Quick Facts
- To become a beneficiary, a person must be eligible for the Disability Tax Credit, be a resident of Canada and be age 59 or under.
- The Canada Disability Savings Grant matches private contributions at rates of up to 300 per cent, depending on the amount of the contribution and family income (up to $3,500 annually and $70,000 over the beneficiary’s lifetime).
- The Canada Disability Savings Bond provides government support to those with a low income, depending on family income, even if they make no private contributions to the plan (up to $1,000 annually and $20,000 over the beneficiary’s lifetime).
- Funds in or withdrawn from an RDSP do not make beneficiaries ineligible for most provincial disability and income support programs, such as the ODSP, and they benefit from special treatment for tax purposes.
- When a beneficiary turns 60, mandatory periodic payments from the RDSP begin (called Lifetime Disability Assistance Payments or LDAPs).
- Beneficiaries can make one-time withdrawals, depending on rules set by the federal government (called Disability Assistance Payments or DAPs). However, withdrawals made within 10 years of receiving government contributions will reduce grants and bonds at a rate of three times (3x) the withdrawal amount.
We describe basic terms of the RDSP in the following sections. However, for more detailed information, please see the Employment and Social Development Canada (ESDC) website here: http://www.esdc.gc.ca/eng/disability/savings/index.shtml.
B. RDSP Policy Objectives: Poverty Alleviation, Contribution and Autonomy
The RDSP has distinctive policy objectives that are material to understanding its design and administration as well as adults’ expectations when they seek to access it. Although the LCO will not evaluate the RDSP policy objectives, or their implementation, we took them into account in defining the benchmarks for reform.
The RDSP is unique to Canada. The Minister of Finance’s Expert Panel surveyed a number of jurisdictions but “failed to turn up a form of tax assisted Disability Savings Plan that was in use in other countries”.[25] Without the benefit of an analogous example, the RDSP was modelled on other registered savings plans offered in Canada, such as the Registered Retirement Savings Plan (RRSP) and Registered Education Savings Plan (RESP).[26] This approach was consistent with PLAN’s earlier proposals, which had concluded that a tax-assisted savings plan would be the appropriate mechanism to achieve several policy objectives for the RDSP.[27] Long-term financial security for those who bear the high costs of disability was one such policy objective.[28] Other policy objectives included encouraging self-sufficiency through a contributory benefit structure,[29] promoting active citizenship as consumers of mainstream financial services, and developing a partnership among families, the government and the private sector “to share the responsibility for securing a good life for people with disabilities”.[30] These are discussed briefly below.
Families and governments often share responsibility to provide assistance to persons with disabilities. Family contributions may include caregiving in the tasks of daily living as well as financial assistance. These exist as informal supports within the naturally dynamic relationships that characterize family units and they complement government benefits.[31] Governments administer special programming for persons with disabilities, which is typically comprised of income supports and social services.[32] Social services include care and other assistance delivered by government and by voluntary and professional providers in areas such as homecare, equipment, therapy and employment training.[33]
In Canada, as elsewhere, income supports and social services have changed significantly over the last fifty years alongside a shift in the way that “disability” is conceptualized.[34] Services provided under earlier, wholly medical models of disability frequently entailed placing persons with disabilities in institutions that were removed from society in order to treat perceived impairments or for protection.[35] Beginning in the 1960s, social movements to deinstitutionalize persons with disabilities have emphasized participation and inclusion in community life. “Rather than seeing disability as inherent in an individual, these new approaches see disability resulting from attitudes and conditions within society”.[36] Public funds have been progressively reallocated away from institutions to income supports and community-based services.[37]
Many Canadians with disabilities now rely on income supports as their primary, if not only, source of income.[38] However, income support is intended only to cover the basic costs of living and supplemental benefits for disability-related services are often pre-determined.[39] Moreover, income supports in Canada have been found to hinder the contributions that adults can make to achieve varying levels of self-sufficiency.[40] The income support that Canada’s provinces administer to persons with disabilities is generally allocated as a monthly flat-rate and is “means-tested”: eligibility for income support requires that an adult has little independent income and, for each payment, there is a ceiling beyond which income that an adult generates, or the value of gifts, may be deducted.[41] In 2012, the Commission for the Review of Social Assistance in Ontario found that