Thousands of foster kids to get RESPs
TheStar.com – parentcentral.com – Thousands of foster kids to get RESPs
Laurie Monsebraaten, April 23, 2008
Queen’s Park is ordering Ontario children’s aid societies to set up registered education savings plans for all kids in foster care younger than age 6 receiving Ottawa’s $100-a-month child-care benefit.
An annual contribution of $1,200 from birth to age 6 would trigger $340 a year in matching federal funds and $1,000 in Canada Learning Bond payments up to age 6. After that, the RESP would grow by $100 per year in Canada Learning Bond payments, until age 16, according to the Royal Bank, which was chosen by the province to manage the RESPs at no chargeto the societies.
Assuming an annual investment return of 5.6 per cent, the RESP could be worth nearly $23,000 by the time the child turns 18.
It adds up to a crucial contribution to the future education of these vulnerable kids, say child welfare advocates who have been pushing the province to ensure children in foster care have access to federal education benefits that grow tax-free.
“Now kids in care will get the same chance to save for their education as other children,” said social policy expert John Stapleton. “And they will have access to federal matching funds.”
RESPs can have a powerful impact on children in care, said Jeanette Lewis, executive director of the Ontario Association of Children’s Aid Societies. “If from a young age a child is given the aspiration and vision that they’ll be able to reach their potential through post-secondary education, it is kind of an emotional goal,” she said yesterday.
While the children’s aid societies are happy to see RESPs set up for those younger than 6, she hopes one day all children who are permanently in the care of the province will have the same opportunity to achieve their goals.
“Wouldn’t it be great if every child in state care knew they could have tuition support? ” she said.
Some advocates have suggested the new Ontario Child Benefit for low-income children younger than 18 should be rolled into RESPs for children in foster care.
In February, Children and Youth Minister Deb Matthews said she would be correcting an oversight that initially denied foster children the new Ontario benefit. Legislation is being drafted to ensure they receive last summer’s lump-sum payment of $250 when monthly cheques of $50 begin to flow in July, she said. The benefit rises to $92 a month in 2011.
But Matthews has not said if this money will be invested in RESPs on behalf of the children.
“The minister said we’re working on a solution â€“ a solution focused on better outcomes for kids in care,” spokesperson Kevin Spafford said in a email yesterday. “She indicated we’re working to have a solution in place for July when the OCB monthly cheques begin, and that timeline continues to stand.”
There are about 19,000 children in the care of Ontario Children’s Aid Societies, and, 9,000 of those are crown wards, meaning the state is their parent. Lewis estimates between 2,000 to 5,000 are younger than 6 and receiving the federal $100-a-month Universal Child Care Benefit. It was introduced by Stephen Harper’s Conservatives in July 2006 to replace the former Liberal government’s $5 billion federal-provincial child care program.
Under the program, cheques are sent monthly to parents on behalf of their children. But in the case of foster children, the money goes to children’s aid societies. The society will remain in charge of the accounts until the children access the funds for post-secondary education or until they turn 25. At that time, if they have not begun post-secondary studies, the money plus all interest accrued will be released to the children minus any federal grants, which will go back to Ottawa. If the children can’t be located the federal government will get its grants and the remaining money and interest will be distributed equally among other CAS-sponsored RESPs.