The Investment Funds Institute of Canada (IFIC) has called on the Government of Canada to amend the Bankruptcy and Insolvency Act so that beneficiaries of Registered Disability Savings Plans (RDSPs) would be given creditor protection for all contributions made to their plans.

“The RDSP was created to help provide disabled persons with a stable income stream to help pay for their basic needs,” said Paul C. Bourque, president and CEO of IFIC in a Jan. 9 statement. “The current law undermines that goal by permitting individually contributed RDSP assets to be seized as part of a bankruptcy proceeding against a beneficiary.”

Susceptible to being seized

The Canada Disability Savings Regulations provide creditor protection for the government’s contribution to the RDSP, but individually contributed assets are susceptible to being seized in the event of bankruptcy.

“The policy holds potential to impose significant hardships on some of Canada’s most financially vulnerable citizens,” says Bourque. “IFIC members report that it also discourages some parents from establishing RDSPs.”

Deserve equal protection

“The act already provided beneficiaries of registered retirement savings plans and registered retirement income funds with creditor protection – both of which are solely funded by personal contributions,” says Bourque. “We believe that people with disabilities deserve equal protection for the funds contributed on their behalf.”

To learn more, read IFIC’s submission to the government made Jan. 5.