Pooled (group) RESPs, which are offered by scholarship trust firms, pool the contributions of many families. Subscribers commit to contributing a fixed amount regularly. The funds from all subscribers are invested in a mix of conservative fixed-income products and managed by the firm. Earnings are paid out to the individual beneficiaries when they attend a qualifying institution.

Some clients choose group plans because they offer a simple, disciplined way to save for their children’s education.

However, there are some key drawbacks to group plans when compared with self-directed RESPs.

“[With group plans,] clients don’t have the flexibility in terms of stopping or restarting contributions,” says Jamie Golombek, managing director of tax and estate planning with the private wealth-management division of Canadian Imperial Bank of Commerce in Toronto, “or in terms of investment options.”

As well, if a beneficiary in a group plan doesn’t pursue post-secondary education, income could be forfeited to the beneficiaries of other subscribers in the group plan, increasing the amount of income those beneficiaries receive.