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CDIC protection extended to RESPs and moribund RDSPs with little take-up
May 15, 2022
8:31 am
Doug
British Columbia, Canada
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In perhaps the most uninteresting and useless CDIC deposit protection change, or "enhancement," CDIC protection has, or will be, extended to eligible deposit products with RESPs and RDSPs. Protection will be similar to the protection with RRSPs and RRIFs.

However, unlike RRSPs and RRIFs, RESPs and RDSPs provide no refund of income taxes or tax deferral. In this way, they're more akin to TFSAs except that withdrawals from RESPs and RDSPs are not re-added to your next year's contribution room. and, of course, there's limitations (especially with RESPs) in how the funds may be spent. Also, with RESPs, if the beneficiary does not end up going to college, trade school, or university and the funds returned to the principal contributor/plan holder, there are income tax implications.

These are interesting points, to be sure, but none of which are why this is the most uninteresting and useless news...in saving for education, with a long-term time horizon and very young age of the beneficiary, you want maximum capital growth, in order to benefit from the tax-free growth and provide for having a chance of financing the beneficiary's education. Ultra secure CDIC protected deposits will not do that and, worse, will be used by financial institutions (particularly credit unions) that strive to maintain deposits they can't upsell to investment products by (mis)selling a CDIC RESP product that would be woefully inappropriate.

Cheers,
Doug

May 15, 2022
9:34 am
Bill
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Lots of folks use RESPs not to completely fund the later education (that's what summer jobs, etc are for) but to maximize getting the available gov't grants and to set aside securely a bit of money that can be used for education. In my case the goal was not to maximize capital growth but to have a bit of a pile available to help out when the time came. Kids were happy when they found out there was some money there, it was a bonus, much of it paid for by my fellow citizens. So for many folks GICs, etc do the trick just fine.

May 15, 2022
12:34 pm
Dean
Valhalla Mountains, British Columbia
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.
Unlike many of us here, some people (regardless of age) don't/won't invest in stocks & bonds, no matter the time frame involved, or the type of registered SP(s) they have. They are often referred to as; 'The Risk-Averse'.

These are the people who Only invest in SA's & GIC's, and it's these people
who will benefit the most from the CDIC coverages mentioned above,
and here

My two Centavos sf-wink

    Dean

sf-cool " Live Long And Prosper " sf-cool

May 15, 2022
3:32 pm
dougjp
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My reaction to this uninteresting and useless protection change was CDIC was under pressure to do something, either
(a) the obvious, which is increase the 100k maximums either by a monetary increase, or introduce annual indexing, but why do something people want and have been saying for years...
(b) or simply, do something meaningless to justify continuing their existence/salary.

Why is 'abbreviation' such a long word?

May 15, 2022
3:37 pm
HermanH
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Along with all those useless TV commercials during the darkest times of the pandemic saying, "CDIC is here to protect your deposits."

Translation: "We're still here and trying to be relevant."

May 16, 2022
7:55 am
turquoise
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dougjp said
(b) or simply, do something meaningless to justify continuing their existence/salary.  

Hey, it could have been worse -- they could have made a big thing about changing their branding and logo.

Oh wait, they did that already a few years ago...

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