About RESP

What is an RESP?

A registered education savings plan (RESP) is a savings vehicle that allows subscribers such as parents, grandparents, friends and other family members to save for the post-secondary education of a child or other beneficiaries. Today’s job market demands higher education and specialized skills. An RESP is a great way to proactively save for your child’s education so that when they are ready to start, you can help them finance it.

Your RESP is registered with the Canada Revenue Agency. Although your contributions are not deductible from taxable income, they continue to accumulate, tax-free until your child or other beneficiaries require the funds. RESPs offer an additional feature that sets them apart from other registered accounts and other portfolios, in the form of government grants.

What is an RESP?

How can an RESP help you save?

Opening an RESP can help you save for your child's education, but that's not all. Here are some other benefits you get when you open an RESP:

  • Government grants - You get government grants like the Canada Education Savings Grant (CESG) and provincial grants (depending on where you live) that are not available in a registered retirement savings plan (RESP) or a tax-free savings account (TFSA).
  • Tax-deferred growth — You can earn tax-deferred income. This income may be taxable once in the hands of your child who, because he or she is a student, will pay little or no tax.
  • Peace of mind — You can rest assured that when your child is ready for post-secondary education, you will be able to help them finance it.

Getting an education gives you a head start

More than ever, the Canadian and global labor markets demand bachelor's degrees and specialized skills at the post-secondary level.

Some compelling facts about the costs of education in Canada:

  • In 2018, tuition fees across Canada increased by an average of 3.3%,, to total $6,838 per year. This increase was higher than the inflation rate of 2.24%—and some provinces saw even sharper increases.
  • According to a 2017 Ipsos survey, more than 75% of Canadian graduates under the age of 40 say they regret having taken on student debt. Statistics Canada data shows that the average university graduate accumulates $26,000 in debt by the end of their studies.
At the same time, the cost of education continues to skyrocket. Find out what it will cost in the future to send your kids to college or university when the time is right for them to go to school.

Frequently Asked Questions

We invest to protect your principal and will return it to you once your child is ready to attend post-secondary education. To provide this protection, we invest your principal in securities such as fixed-income government and investment-grade corporate bonds which are lower risk, investments. Protecting your principal is one of our investment objectives and we're proud to say that we have upheld our promise of providing principal protection throughout our history.

Full-time studies are eligible at institutions ranging from community colleges, CEGEPs and universities to part-time studies at vocational, technical, trade and religious schools. We recognize distance learning and correspondence courses, too. Any program of three weeks or more that qualifies under the Income Tax Act in Canada is eligible. If your child is studying outside of Canada, any full-time university program of three weeks or more is eligible; any other post-secondary program abroad must be of 13 weeks or more in duration.

We focus on long-term value by investing to protect your principal while earning long-term positive returns. To protect your principal in your RESP, we invest your contributions in more stable securities such as:

  1. Government bonds
  2. Investment grade corporate bonds (bonds assessed as high quality by the ratings agencies indicating a strong potential of repaying the loans)
Once your child is ready to attend post-secondary education, you can withdraw your principal. To maximize the value of your RESP, the income that your principal earns over the life of your RESP is invested in higher return securities such as:
  1. A mix of Canadian equities
  2. S. Equity Exchange Traded Funds (ETFs)
  3. Real Estate and Infrastructure ETFs
  4. International Equity ETFs
Our investment approach is built exclusively for RESPS. This means that we invest on a long-term time-horizon to grow the Plan assets so that when your child turns 18, the funds are there for their post-secondary education.

If your child doesn't pursue post-secondary education, you have a number of options.

  • You could transfer your CST Advantage Plan to another child
  • You could transfer your CST Advantage Plan to an Individual or Family Savings Plan with CST (please understand that you would lose the group plan benefits)
  • You may be able to transfer some or all your income to your Registered Retirement Savings Plan (RRSP) tax-free
  • You may be able to transfer some or all your income to a Registered Disability Savings Plan (RDSP) tax-free
  • You may be able to withdraw the income (at your marginal tax rate plus an addition 20%)
We will work with you to assess all of your options. Please remember, however, that, in the case the child does not pursue post-secondary education, the government requires that all of its unused grants be returned.

Getting An Education Means Getting Ahead