First fully digital employer-sponsored RESP helps employees advance long-term savings goals during COVID-19
Winnipeg, MB (Sept. 2, 2020) – The back-to-school season may look a little different this year thanks to COVID-19, but some things never change, like the need to save for children’s post-secondary education. Employers can show their support for working parents during this difficult time with Canada Life’s new self-directed registered education savings plan (RESP) employee benefit.
Not only do employees gain access to traditional RESP advantages like applicable government education grants and tax-sheltered earnings on contributions, they also enjoy Canada Life’s low investment fees, convenient payroll deduction and ease of a fully digital experience.
According to Statistics Canada, tuition for undergraduate programs for Canadian full-time students was, on average, $6,838 in 2018/2019, up 3.3% from the previous academic year. More than half (57%) of students graduating from post-secondary studies in 2018 said they relied on financial support from parents, family or their spouse. And about half reported having education-related debt, owing on average $28,000.
“Tuition and student debt are only going to go up,” says Ryan Weiss, Vice-President Product and Experience, Group Customer, Canada Life. “RESPs are without a doubt the best way to save for education, but many families who need it most are missing out on free education grant money, in part because they believe opening an RESP is a complex and daunting task. We’ve addressed this concern by making Canada Life’s RESP conveniently available through the employee’s workplace benefits and simplified the enrolment process with an online application.”
The RESP complements Canada Life’s student debt flexible savings program, which enables employers to support graduates in saving for retirement, even as they pay down student debt.
“Helping young Canadians afford post-secondary education and minimize student debt is exactly in line with our commitment to the financial, physical and mental well-being of all Canadians, not just at retirement, but across all life stages,” Weiss adds. “That includes our 11,000 employees across Canada, who were the very first to have access to this new employee benefit.”
How Canada Life’s RESP works:
- Employers can add the RESP to their employee benefits plan at no cost to them.
- Employees choose either the family or individual plan, where they can contribute as much or as little as they want through payroll deduction, pre-authorized debit or online banking bill payment.
- Employees’ contributions are placed into a fund designed to automatically lower the risk of potentially decreasing in value as students get closer to starting post-secondary education.
- Friends and family can also directly make contributions, or even open a secondary RESP.
- Employees are prompted to access any applicable grants, which could include:
- Canada Education Savings Grant (CESG) – kicks in $1 for every $5 an employee contributes. That’s a guaranteed return of 20%, up to $500 a year, to a max. of $7,200.
- Canada Learning Bond (CLB), which is aimed at low-income Canadians, provides a $500 initial grant to a maximum of $2,000, just for opening an RESP account – no contributions needed.
- Contributions, potential investment growth and compound interest then grow tax-free until the beneficiary withdraws funds to register at a qualifying educational program.
- When the time comes, there is a streamlined withdrawal process and simple forms to release the funds to the beneficiary.
1. Statistics Canada. Chart 1: Average undergraduate tuition fees for Canadian full-time students, by field of study, 2018/2019. 5 Sept 2018.
2. 2018 Graduating Student Survey, Master Report 2018. Canadian University Survey Consortium, June 2018.
About The Canada Life Assurance Company
Canada Life is a leading insurance, wealth management and benefits provider focused on improving the financial, physical and mental well-being of Canadians. For more than 170 years, individuals, families and business owners across Canada have trusted us to provide sound guidance and deliver on the promises we’ve made.
As of January 1, 2020, Great-West Life, London Life and Canada Life became one company – Canada Life. Today, we proudly serve more than 13 million customer relationships from coast to coast to coast. For more information, visit www.canadalife.com.
Source: Canada LifeTags: benefits, Canada Life, coronavirus, epidemic, industry first, savings, savings goals