Many parents have been using the RESP Group plans since the Canadian government introduced it. The program is under the regulation of dealers such as the Higher Education Funds.
The bodies represent the parents who are members of the RESP Group plans. Although the plan has been doing well in the past, many parents are now raising a lot of concerns about it.
Many parents complain that there are a lot of barriers when you want to terminate your 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. Some of the charges that you will incur include an enrollment fee and transfer charges. Some of the other areas that parents have complained about include dishonesty of the salespeople, hidden charges, and high rate of interest.
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Although there have been some changes, there are still complaints coming from parents. There have been increased complaints from parents as reported by a government agency based in Ottawa.
These dealers are the one who makes the decisions for all members of the program. They also give you the contribution schedule that you should follow.
In case you fail to contribute on time, your account can be suspended or attract extra fees for every contribution you failed to pay. Some of the fees you will be required to pay, include administration fees, trustee charges, enrollment fees, among other fees.
The program doesn’t offer a lot of flexibility. The dealers determine the amount that you can withdraw and when you can withdraw.
Parents now have a better plan that has been formed by mutual fund dealers in collaboration with banks. With this plan, you can control the amount you wish to contribute and the kind of investment you want.
The major advantage of the self-directed plan is that you get your contribution whenever you want it. 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 a benefit as you will save for your child’s education with no charges involved.
The RESP program was formed by the Canadian government to help parents save for their children’s education. Many parents joined the program and the program has helped many of them. However, with the recent issue with the dealers regulating the program, many parents will be forced to look for alternative ways of managing their savings.