Anyone visiting a doctor’s office, maternity ward or prenatal screening clinic in Canada will likely see pamphlets for Canadian Scholarship Trust fund RESPs, encouraging parents-to-be to start saving for their child’s post-secondary education.
I rarely take notice of such advertisements, and have picked one up and filled it out only once in my life. As a result of that weak, nervous, distracted moment in the waiting room, we found ourselves relentlessly hounded by the salespeople of CST. And, a few months later, we found ourselves signed up for 18 years of payments into the fund.
It was only when we began to prepare for our relocation overseas that we revisited this decision – with regret.
It seems that RESP group plans (such as CST) work well when all goes according to schedule i.e., your kids grow up and complete four years of post-secondary education, AND you continue to pay into the plan until that point. Any deviation from this arrangement, however, presents a problem.
We learned that Canadian law does not permit paying into RESPs if you live outside Canada. Moving to South Africa therefore means stopping our payments. However, stopping payments before university is completed also means losing hefty “enrollment fees” charged by CST. We stand to lose about $4000.
The only way around this is to continue paying into the plan at the same rate to which we originally agreed. Our helpful salesperson recommended that we resume payments when we return to Canada, or (his preferred scenario) by providing a fake Canadian residential address while we are overseas. Hear that Revenue Canada?
I’m not saying CST is a scam. I’m sure it works well if you follow the standard course. But the fine print is extensive and extraordinarily cryptic. Even our financial advisor had trouble deciphering the details. So, I am saying beware. Be aware – before you sign up.
Check out this Georgia Straight article for more information.
