RESP Government review
Written by Jim Yih •
Registered Education Savings Plans (RESPs) have been around for a long time but back in 1998, the government introduced the Canada Education Savings Grant (CESG) which really catapulted the popularity and use of the RESP.
The Canada Education Savings Grant is a grant from the government given to those that contribute to a RESP. For every dollar contributed to a RESP up to a $2500 maximum, the government will contribute 20 cents into the RESP plan through the CESG.
In 2007, the government enhanced the CESG program which provides a greater grant for lower income families.
Most recently, the government has conducted a statistical review of the RESP and CESG programs. I’ll provide some highlights of the report but you can also download the full report here.
RESP Contributions and CESG payments
Families contributed $3.54 billion to their children’s RESPs in 2011. This represents an increase of $110 million over 2010, when they had contributed $3.43 billion.
Overall the introduction of the CESG has increased the use of RESPs as a savings vehicle for education. As you can see, annual contributions into the RESP have steadily increased year after year and so has the annual CESG payments accordingly
YearAnnual RESP contributions ($Billions)Annual CESG ($Billions)19980.870.15119991.570.29120001.710.31820011.870.34820021.990.37020032.060.38920042.270.42620052.460.47020062.670.51420072.990.57920083.100.60320093.180.62720103.430.67820113.540.703
Although any person can be named by a subscriber of an RESP to receive money for education after high school, the Annual Statistical Review only reports on those who have received any of the Government of Canada incentives to save in RESPs which are available to children 0 to 17 years of age.
Contributions per beneficiary
Not all families contribute to their RESPs each year. As of 2011, there were 3.02 million kids aged 0 to 17 years eligible for the CESG. Of this total, 2.31 million (77%) received contributions to their RESP and hence received the CESG.
Of the children who had contributions deposited into their RESPs:
· Only about 12.6% of RESP beneficiaries received contributions greater than $2500
· 38.8% received between $1,001 and $2,500 in contributions
· 48.7% received less than $1,000 in contributions
· 24.5% received $500 or less.
The average contribution per beneficiary ranged from a low of $1284 in 2002 to high of $1463 in 2010.
RESP assets represent the total market value of all RESPs in Canada as of December 31 of each year.
As you can see from the chart, the total amount of RESPs at the end of 1998 was $4.0 billion. In 2011, the value of the RESP assets reached $31.6 billion, continuing the trend of steady growth. There was only one year (2008), when the total value of RESPs decreased slightly due to the world financial crisis.
Stats summary for 2011
· Total RESP assets = $31.6 Billion
· Annual RESP contribution – $3.54 Billion
· CESG Payments = $703 million
· Total number of beneficiaries that have ever received a CESG = 4.26 million
· Amount withdrawn from RESP for post secondary education = $2.07 billion
· Number of people using RESPs to pay for Post Secondary education = 299,799
· Average withdrawal per student $6,907
Overall, the RESP and CESG program has been incredibly successful by all measures.