Group RESP dealers show 47% growth over past five years
Increase in Assets Under Management highlights continuing consumer confidence in Group RESPs
TORONTO, June 26, 2013 /CNW/ - From 2007 to 2012, the group scholarship plan industry in Canada grew by 47.49 per cent, and now manages an impressive $10.59 billion in assets for Canadian families saving for their children's post-secondary education. This and other industry data was recently compiled by the Registered Education Savings Plan Dealers Association of Canada (RESPDAC), which includes five member companies who represent approximately 90 per cent of the industry, based on accumulated assets under management.
The $10.59 billion invested in RESPDAC-member plans counts for nearly 30 per cent of the $35.6 billion invested in all registered educations savings plans in Canada.
"The growth in assets of our members' plans is keeping pace with the growth in RESPs generally, and that's very gratifying," said Paul Renaud, Chair of RESPDAC. "Even though the economy has proven to be challenging and unpredictable these past five years, and economic recovery has been spotty, there's no question that families continue to see the huge value of post-secondary education for their children.
"Saving for post-secondary studies, and the benefits that a degree or diploma can create, has never been more important."
According to Statistics Canada, average undergraduate tuition fees in Canadian universities were $5,366 in the 2011/12 academic year, not including residence and other living costs. For a child born in 2012, it's estimated that a four-year university course, beginning in 2030, will cost between $85,000 - $136,000 depending on whether the child lives at home or away. Clearly, without savings built up over time, more and more Canadian families will find post-secondary education beyond their financial reach.
Fortunately, Statistics Canada has reported that roughly 70 per cent of Canadian families are saving for post-secondary education, and over 65 per cent of those families do so through an RESP.
There are two types of RESPs available to Canadians. "Group scholarship plans", available only through group plan dealers, place planholders' regularly-scheduled contributions in a pool with other investors' savings. The investments made with these assets are restricted primarily to more conservative fixed-income vehicles such as Treasury Bills, government bonds and GICs, depending on the plan and the dealer. "Individual plans" which can be obtained from group plan dealers, and through banks and other financial institutions, enable investment decisions to be made at the discretion of the planholder.
"While some financial observers have been somewhat critical of the conservative nature of scholarship plan investment policies, they have in fact performed exceptionally well during uncertain economic times such as we've had since 2008," Mr. Renaud said. "As a result, our planholders have generally been very pleased with the investment returns we've been able to provide - and ultimately, with the educational opportunities their children have been able to take advantage of."
In fact, in 2012 alone, over 83,000 Canadian beneficiaries of group RESPs received education assistance payments from their plans, totaling just over $250 million. There are currently nearly 1.5 million group plans in existence, among the members of RESPDAC. The total amount of education assistance payments made by all members of RESPDAC, since their individual companies' establishment as far back as the early1960s, is $4.185 billion.
The RESP Dealers Association of Canada is comprised of five companies which specialize in providing group education savings plans: C.S.T. Consultants Inc., Global RESP Corporation, Universitas Management Inc., Heritage Education Funds Inc., and Knowledge First Financial Inc. Together these companies manage over $10.5 billion of Canadian families' savings for post-secondary education.
SOURCE RESP Dealers Association of Canada
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