An education-saving incentive would provide ongoing contributions for children up to age 15
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Education is critical area of concern for parents. However, many of them aren’t aware of the educational benefits and incentives they could be taking advantage of — which include a particular savings instrument for the Registered Education Savings Plan (RESP).
According to a recent Ipsos survey, education is the top priority for Canadians with children under the age of 14, with 92% saying that saving for education is just as important as paying off debt and saving for retirement. And while 52% said they take advantage of government incentives available through RESPs, only 32% of parents eligible for the Canada Learning Bond (CLB) said they were not aware of the benefit.
“Through the Canada Learning Bond (CLB), the government will contribute an initial $500 per child, then $100 each year until the age of 15 to a maximum of $2,000,” said Knowledge First Financial, a not-for-profit corporation and investment fund manager, administrator, and distributor of RESPs.
The firm said that as of July 1, CLB eligibility is determined based on the following guidelines:
RESP contributions are not required to receive CLB. Once the initial $500 CLB is placed in an RESP, the ongoing $100 CLB contributions are made automatically each year based on eligibility.
“A child who receives the full $2,000 CLB amount beginning as a newborn could see RESP savings grow to $3,200 in 15 years, based on a 5% rate of return and the power of compound monthly growth,” the firm said. “No tax is paid on the income earned until the money is withdrawn by the student.”
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According to a recent Ipsos survey, education is the top priority for Canadians with children under the age of 14, with 92% saying that saving for education is just as important as paying off debt and saving for retirement. And while 52% said they take advantage of government incentives available through RESPs, only 32% of parents eligible for the Canada Learning Bond (CLB) said they were not aware of the benefit.
“Through the Canada Learning Bond (CLB), the government will contribute an initial $500 per child, then $100 each year until the age of 15 to a maximum of $2,000,” said Knowledge First Financial, a not-for-profit corporation and investment fund manager, administrator, and distributor of RESPs.
The firm said that as of July 1, CLB eligibility is determined based on the following guidelines:
- A family with up to three children and an adjusted net family income of $45,916 or less
- A family with 4 children and an adjusted net family income of $51,809 or less
- Net family income threshold increases with each additional child
RESP contributions are not required to receive CLB. Once the initial $500 CLB is placed in an RESP, the ongoing $100 CLB contributions are made automatically each year based on eligibility.
“A child who receives the full $2,000 CLB amount beginning as a newborn could see RESP savings grow to $3,200 in 15 years, based on a 5% rate of return and the power of compound monthly growth,” the firm said. “No tax is paid on the income earned until the money is withdrawn by the student.”
Related stories:
Does the gender gap extend to college savings?
Debt-saddled students expecting to double down
