The Registered Disability Savings Plan (RDSP) enables Canadians with disabilities to do something most of us take for granted, save money. Already the accumulated amount in registered plans across Canada exceeds $2 billion. By itself, this is not enough to reduce one of the biggest handicaps experienced by people with disabilities, poverty.
However, the RDSP sets three precedents, which might help.
- Funds in an RDSP are not subject to the asset limit test of provincial/territorial disability benefit programs
- Funds withdrawn from the RDSP are not clawed back
- People do not have to report on what their RDSP funds are used for.
Anti-poverty advocates around the world make a compelling argument that one of the most significant policy shifts in combatting poverty is to allow people to accumulate assets.
Recently the BC government took that to heart. It changed its welfare benefits program for people with disabilities. Undermined it might be a better characterization. The asset limit for people receiving disability benefits has been increased from $5,000 to $100,000. Furthermore, people can now receive cash gifts and inheritances without impacting monthly benefits and without reporting. (More information on these and other changes here.)
This is the beginning of the end of disability welfare. Hooray. Other jurisdictions are bound to follow suit and treat income support as a floor, not a ceiling. It is now practical to imagine a guaranteed annual income or pension replacing the patchwork of disability benefits systems across Canada.
We have closed most of our institutions and segregated schools in Canada. It is now time to break the welfare mentality that chains people with disabilities to a life in poverty.
The post-RDSP agenda involves:
- Increasing the take-up of the generous Registered Disability Savings grants and bonds. Right now only 15-20% of Canadians have signed up. The federal government should automatically enroll eligible Canadians and waive the cumbersome application process.
- Unbundling government program dollars and making them directly available to people with disabilities so that they can choose and direct the supports and services they want.
- Subsidizing adaptive equipment and mobility devices. This is simply basic infrastructure that people with disabilities need to work, participate and contribute.
- Removing employment barriers and disincentives such as income clawback. If a person with a disability has taxable income as the result of a good job let the income tax system deal with it, not the welfare system.
Economic citizenship enables people with disabilities to gain more control of their destiny. Ask anyone with an RDSP. Economic citizenship is liberating and exhilarating.
…a Disability Savings Plan is but a small piece in a much larger puzzle. Communities and Governments have to come together so that Canadians with disabilities can participate equally in our society. We look forward to the day when all Canadians have the supports they require to live full and productive lives
– Expert Panel on Financial Security for Children with Severe Disabilities
Transformer man, transformer man
Unlock the secrets
Let us throw off the chains that
Hold you down.
– from Transformer Man by Neil Young written to acknowledge and simulate the communication challenges of his son Ben. Listen here. Purchase here.
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I found out about the RDSP plan just this past December. My brother who has Down’s Syndrome turned 50 in January. I was able to apply for an RDSP, but we are still awaiting word if he’s accepted. I did contribute $3500, and they say he may be accepted for bonds/grants. He has a disability tax certificate. The problem is that I did not know about this. My brother lives in a group home, and no one knew about it. They contacted the umbrella organization in our city, and again no one had heard about it. There’s a reason there is low participation. Somehow, the word needs to get out. We’ve lost all those contributing years since he is now 50. The other issue is my brother has health issues which are often associated with Down’s. Even if we had known about it and made the contributions, it is unlikely that he will make it to age 60. Right now, I’m paying for him to go on trips, etc. so he can enjoy his life, but at age 60, if he’s even alive, it is unlikely we will need the money.
Hello Annette – the good people at PLAN and PLAN Institute can help you out. They can give advice about appealing decisions of CRA and RDSP bonds and grants plus how to “sprinkle” your contributions to maximize benefits to your brother. Also if your brother is eligible for the Disability Tax Credit that means contributions can be made on his behalf for the previous 10 years. I’ll contact you by e-mail to make an introduction to the folks at PLAN. – Al