Archived—Project Summaries 2006-2007 - The St. Christopher House

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588 Queen Street West, 2nd Floor
Toronto, Ontario
M6J 1E3
Tel: 416-532-4828
Fax: 416-532-8739

1. Are RRSPs Appropriate for Low-Income Families?


"Good data is now available that shows how RRSP withdrawals made during retirement can result in a clawback of the Guaranteed Income Supplement. But there is virtually no comprehensive data available on the combined effect of the clawbacks at the federal, provincial and municipal levels. During his work as a research fellow with St. Christopher House, Richard Shillington characterized this combination of clawbacks as the "stacking effect". For example, RRSP income can result in a series of financial penalties for vulnerable consumers related to the GST refund, social housing subsidies, prescription drug plans, subsidized fee-for-service programs and nursing homes. As well, the withdrawals are taxed and have the potential to increase a person's marginal tax rate. These are complicated scenarios that few have the expertise to address."

The aim of this project will be to analyze RRSPs from both the public policy and industry perspectives and to define the circumstances when RRSPs are not wise investment vehicles. The emphasis will be on developing a detailed understanding of the interaction of income support systems and RRSP income.

This project will draw on St. Christopher House's wide range of contacts within the public and private sectors in order to form a team of advisors to work with a lead researcher. A lead researcher will form a technical support committee composed of consultants and analysts from both the public and private sector that will meet on a regular basis. The Technical Committee will guide the research process and will develop case studies to examine the interplay between RRSP investing, taxation and income support programs. SCH has found case studies to be a highly effective and relatively objective way to educate and engage in dialogue with the financial services community. SCH will be building on this technique here. The case studies will be quite detailed and look at multiple income support systems and scenarios over the course of a lifetime.

The researcher will first carry out a thorough literature review. Then, in consultation with the committee, a detailed research framework will be developed that will guide the research. The framework will guide the researcher's work and will be assessed by the methodologist to ensure it is germane to the desired outcomes of the project.

Once the initial data collection and analysis have occurred, the researcher will lead the Technical Committee in developing a framework or set of parameters that indicate the key conclusions of the project. This framework of parameters will be distributed to a wider group of policy analysts for comment. This reference group will consist of a small group of people who have participated in the multi-stakeholder policy research process that St. Christopher House is carrying out with the Toronto City Summit Alliance. A few examples of this wider group include a TD Bank economist and the Caledon Institute of Social Policy. The above research method was assessed by Ayasha Mayr Handel who is a Toronto methodologist currently completing her Master of Social Work at the University of Toronto.

The results of the project will be useful on many levels including: helping individuals decide whether an RRSP is the best choice of retirement savings plan; helping government policy-makers reform policies that have perverse, if unintended, consequences for low-income Canadians; and, providing financial advisors with key information they can use when selling RRSPs and other pension plans and providing financial advice.

SCH will distribute the report widely and submit articles based on the research to the mainstream press, ethnic media as well as social policy networks. The report will also be available on the St. Christopher House website.

2. The High Cost of Access to Financial Services for Newcomers to Canada and People with Limited Education


"Studies on access to basic banking services, credit, and fringe lending have described the inadequacy of the financial services industry in informing and providing appropriate services for a wide range of Canadian consumers. However, there has been little detailed research on the motives and habits of vulnerable users of financial services and the consequences of their exclusion from financial services. Newcomers to Canada (within the last two years) and native-born Canadians with limited education are two groups that stand out as particularly vulnerable consumers due to their unfamiliarity with services and consumer protection laws as well as their sometimes limited capacity to make appropriate financial choices. What are some of the direct effects of the lack of access to financial services faced by new immigrants and low-education adults?"

SCH proposes to develop a more detailed understanding of the experiences of newcomers and those with limited education in the financial services marketplace. In order to develop appropriate financial literacy approaches, "we need to understand in much more detail how these groups are financially excluded". This understanding and data could be used to inform public policy, financial service delivery, as well as financial literacy efforts by financial institutions and non-profit groups.


Stage 1 — SCH will conduct a literature review to gather background information to guide the development of a survey and assess existing gaps in research on this issue.

Stage 2 — SCH will conduct a survey to gather descriptive data on the financial habits, needs and access issues faced by these populations. SCH will survey 100 new immigrants and 100 low-income individuals with low education (defined as having low literacy or not having completed grade twelve). Based on its work at its Financial Advocacy and Problem Solving (FAPS) Program, SCH has observed that these two populations have high proportions of individuals with low financial literacy and who lack access to mainstream financial services. As such, they are well situated to articulate the financial habits and barriers of those with low financial literacy in accessing mainstream financial services. The sample will be derived through outreach to SCH's clients, the clients of other community- based social service agencies and through active recruiting outside mainstream and alternative financial institutions as well as posting flyers in key community hubs. The data gathered in stage one will guide the research questions posed in stage two.

Stage 3 — In this stage, SCH will use personal accounts to gather more in-depth information about the issues faced by these populations. SCH will use focus groups (same recruiting method as stage 2). There will be 5 focus groups of ten people each for low-income low-education consumers and 5 focus groups of ten people each of new immigrants. Focus groups participants will be from SCH client base in Toronto. SCH will gather this qualitative data in a report summarizing the common themes it observed in these focus groups in order to provide more detailed information on the barriers faced by these populations.

Secondly, SCH will also conduct a series of key informant telephone interviews with frontline agencies in three other Canadian cities. For these interviews SCH is considering settlement agencies, employment agencies, and adult education and skills training programs in Vancouver, Montreal and Halifax. SCH will gather further information from these agencies regarding the needs and experiences of newcomers and those with limited education and it will also check the relevance and utility of the data already gathered in the surveys and focus groups. SCH will also gather their ideas and suggestions regarding how they and other agencies could use and apply the findings from our report.

Stage 4 — Based on the focus groups SCH will recruit ten key informants (five newcomers, five low education consumers) and develop their personal stories as case studies to more clearly illustrate the lived impact of the lack of access to mainstream financial services.

The above research method was assessed by Ayasha Mayr Handel who is a Toronto methodologist, currently completing her Master of Social Work at the University of Toronto.

The report will be distributed to other consumer groups across Canada and available on the St. Christopher House website.