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.
These bodies run the RESP program on behalf of all the parents who are a member of it. 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 issue is the sharp reduction that is imposed in the amount you receive in the end.
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While parents can transfer their savings to other platforms, the program will charge a lot to do the operation. You will also be required to pay an enrollment fee and all transfer charges will be on your side. Many people have complained about the high rate of interest, lack of transparency in salespeople and the charges involved.
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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 dealers are the one who makes the decisions for all members of the program. The dealers also determine your contribution schedule.
In case you fail to contribute on time, your account can be suspended or attract extra fees for every contribution you failed to pay. The fees you are supposed to pay include trustee, enrollment and administration fees.
With the program, you will be limited in many ways. You will be limited in the amount you can withdraw, and when you can do the withdrawal.
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 main benefit of a self-directed plan is that you can withdraw your money when you need it. Your child will get a government grant, but the fund will not be used to pay school fees.
Many mutual fund dealers have a certain fee but the fee keeps on reducing and after seven years, you are not charged anything. This another benefit as you will be paying no fee after this period.
The RESP program was formed by the Canadian government to help parents save for their children’s education. There are many members of this program who have received benefits from it. Due to the many issues that parents are raising, there is a high probability of many parents to stop being members of the program.