Have Your Say on Protecting RDSPs from Bankruptcy

Back in March 2014,  I raised a concern about the lack of protection for Registered Disability Savings Plans (RDSPs) and Registered Education Savings Plan (RESPs). Industry Canada is now conducting a public consultation that includes these same concerns.

As a quick reminder, RDSPs are a federal, tax-deferred, long-term savings plan for people with disabilities who want to save for the future. Unfortunately, under the Court Order Enforcement Act,  RDSPs  are not listed as a registered plan in BC’s legislation and are therefore not exempt from creditor protection. Therefore, should an individual with an RDSP go into debt, their savings in the RDSP will not be protected from seizure.

To put this in context, Registered Retirement Savings Plans (RRSPs) and Registered Retirement Savings Plans (RRIFs) are protected. Most provinces, including British Columbia, have recognized the importance of protecting RRSPs and RRIFs from creditors in the event of personal bankruptcy.  Legislation was passed to protect these registered plans from being seized in the event of personal bankruptcy. Here in British Columbia, such seizures are governed by the 1996 Court Order Enforcement Act.

Industry Canada is currently conducting a public consultation on the Bankruptcy and Insolvency Act – and in the discussion paper, a proposal has been made to exempt RDSP assets from seizure in insolvency proceedings.

Industry Canada has called for public input on the issue of creditor protection for the Registered Disability Savings Plan. Submissions will be accepted until July 15, 2014. Information about making a submission can be found here.

To read more about the concerns I raised, including my questions to the Minister of Justice, please click here.

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