Abstract

Registered Development Savings Plan (RDSP) as a Vehicle for Asset Accumulation for Low Income Canadians

John Stapleton, Rick Eagan and Maureen Fair

The multi-service neighbourhood centre, St. Christopher House, has worked with a social policy expert and diverse low-income community members to develop and test the idea of a Registered Development Savings Plan (RDSP): a designated savings accounts for social assistance recipients to accumulate assets and save for important life goals including obtaining work, education, training, and home ownership.

St. Christopher House’s concern about income security issues led to the Community Undertaking Social Policy (CUSP) project with an income policy expert working in the frontline agency over the winter and spring of 2002/03. This approach provided St. Christopher House and the diverse community it serves with an opportunity to respond to longstanding poverty problems.

For example, the lack of a financial cushion causes people receiving welfare to remain on assistance much longer than they otherwise would. Insufficient personal resources often put them back on welfare when a relatively small household financial crisis occurs. It also contributes to some families coming on to social assistance in the first place.

Interestingly, new research evidence from the US shows that people who leave welfare are far less likely to come back on to welfare if they have a cushion of personal resources that allows them to weather minor crises in their lives. Although this new research is responding to state level concern over termination of federal funding once recipients use up their lifetime limit of welfare funding, the encouraging research results showcase the need for a similar model in Canada.

Accordingly, the paper proposes a “made in Canada” Registered Development Savings Account or RDSP and sets out design parameters for how these accounts would best work in the Canadian context. Input and feedback from diverse low-income individuals and families is incorporated into a detailed design and implementation proposal. Pros and cons are discussed, including an examination of how a RDSP interacts with other income assistance programs and taxation policies. There will also be brief reflections on the process of developing social policy with community members who are most affected.

Bio

John Stapleton is the Community Undertaking Social Policy (CUSP) Fellow sponsored by the Atkinson Foundation with St. Christopher House and Massey College in Toronto. He recently left the Ontario Public Service after a 27-year career in income security policy and operational development.

St. Christopher House is a multi-service neighbourhood center in downtown west Toronto. Rick Eagan has been the Community Development Coordinator there for 9 years. Maureen Fair is Director of Community Response and Advocacy and has worked in St. Chris for 11 years.

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