It was when he was a fresh-faced Conservative MP nearly two decades ago — and father to 10-year-old Jaden — that Mike Lake realized he could be in a position to bolster the financial futures of those with disabilities and the families who cared for them.
And he happened to be in a governing party thinking the same way, at the same time.
“Our finance minister, [the late] Jim Flaherty, had three kids, triplets, and one of his sons had an intellectual disability,” Lake told CBC Radio. “So, in the 2007 budget, the RDSP showed up in that — and in subsequent budgets.”
The Registered Disability Savings Plan, a tax-free savings vehicle that includes grants of up to $70,000 and bonds of up to $20,000 from Ottawa, was born.
“In my son’s case, he likes to work,” Lake said in a recent interview about his now-adult son, who was diagnosed with autism as a child. “Jaden’s not in paid employment right now, but the potential of those things — in combination with the RDSP, really does create an environment where Jaden will be able to thrive and live the life he wants.”
But the plan has had poor uptake.
Only about 34 per cent of those who qualify for it have opened one, according to a 2024 investigation by Statistics Canada. Meanwhile, other registered savings plans — like the Tax-Free Savings Account or RRSPs — are being used by roughly 68 per cent of eligible Canadians.
Those who qualify for the Disability Tax Credit (DTC) also qualify for the RDSP, but a report from April by The Canadian Tax Observatory found the take-up rate for the various programs available to that cohort less than 50 per cent — and declining.
Jill Teeple, investment advisor and financial planner, says that one of the barriers is that only the Big Five banks and a handful of local credit unions or wealth management firms offer the RDSP. (Submitted by Jill Teeple)
After spending close to two decades working as an investment adviser and financial planner for people with disabilities and their families, Jill Teeple has identified two consistent barriers to the program.
The biggest: people don’t know it exists, she said, though the federal government has started sending leaflets to those already approved for the Disability Tax Credit, the gateway to eligibility.
“Your financial institutions and, you know, maybe your provincial and territorial income support program for people with disabilities, they’re not telling you,” said Teeple, the vice-president of non-profit Inclusion Canada.
“So we have this knowledge gap.”
Until recently, only the Big Five banks and a handful of local credit unions or wealth management firms offered RDSP accounts, largely because there are a lot of checks and balances required for them — and, for smaller ventures, it may not have made financial sense.
For example, they have to monitor whether someone still qualifies for a Disability Tax Credit, whereas as Teeple says, other investment vehicles are a lot more straightforward, both for the bank and the customer.
And there’s the secondary hurdle: navigating the medical and bureaucratic obstacles of applying for the tax credit.
As part of the medical process, you’ll have to meet with a clinician willing to go through a 16-page questionnaire to determine eligibility, which encompasses 10 categories of physical and cognitive disabilities.
“Lots of families or people with disabilities don’t qualify right away, so you have to try again,” Teeple said.
In cases where there is a significant disability that is not expected to improve, people are given lifetime eligibility. But on average, people are given between four to six years before having to reapply.
That can be a challenge for applicants, Teeple said, noting that when the Disability Tax Credit was created in 1988, Canadians were not facing the doctor shortage of today.
“We had an entirely different relationship to our family doctor,” she said.
An opportunity for startups
Until recently, applicants had to rely on disability rights organizations, financial planners and doctors for assistance, but startups are starting to enter the picture.
In fact, there are two fintech companies that provide no other services aside from RDSP support. One is Montreal’s Terry.
Co-founder Michel-Alexandre Riendeau said the idea emerged during the pandemic, when people were forced to rely on online support.
“This is when the RDSP project really came into mind, because it’s physically impossible to be able to go door-to-door and help all the people with disabilities around the province, around Canada.” he said. “So I think this online shift really enabled us to be able to help more people.”
Co-founder of financial technology company Terry, Michel-Alexandre Riendeau, says his business focuses exclusively on RDSPs. (Submitted by Michel-Alexandre Riendeau)
Understanding how the RDSP works, and who qualifies for grants, can be confusing — especially for first-time investors, he notes.
The RDSP provides the matching grants to those under the age of 49 with a disability — be it visible or invisible, though people can continue to invest in the plan until the end of the calendar year they turn 59 or have made $200,000 in contributions, whichever comes first.
Riendeau advises eligible clients to open an RDSP, even if they are not in a position to contribute right now.
“Over 90 per cent of our clientele, it’s their first investment,” he said. “When they get a letter that’s really complicated to understand, you’re not going to convince them right away.”
But in some cases, those who are playing catch-up — and have a lower personal or family income — will receive a substantial amount in government contributions over a 10-year period. As Riendeau put it, those who need the most help, “they can get $10,000 just by opening up the account and not even contributing,” provided they have had the disability tax credit for some time and not opened an account.
And sooner is better, he notes: every day, he sees people who are too old to open an RDSP and wish they did sooner.