Can I Get Access to my Locked-In Pension Funds?

Often we squirrel away funds transferred from an Ontario registered pension plan into a locked-in account known as a LIRA, LIF or LRIF.

They’re ‘locked in’ because these savings are meant for our retirement, and aren’t to be disbursed until we are in need of retirement income.

However, there are exceptions to this rule – for those going through financial hardship and those who are not.

Financial hardship

As of January 1, 2014, the province has new rules for seeking locked-in pension funds due to financial hardship.

Under these rules, there are four categories of financial hardship

• Low expected income
• To pay first and last months’ rent
• Being in arrears of rent or debt against your principal residence (aka, a mortgage)
• Medical expenses

Applicants are able to make an appeal based on one of these categories. It is up to the financial institution that administered the lock-in account who will determine if the appeal meets the requirements to unlock the pension money.

Non-hardship

There are also several non-hardship grounds that someone can seek an early release of their locked-in money.

• If your life expectancy is lowered to two years or less
• If you are a non-resident of Canada and two years have passed since you left Canada
• If the amount of money transferred into your locked-in account is greater than limits under the federal Income Tax Act
• If you are 55 years or older and the total value of the funds is under $21,000

However, there are some key points to remember about non-hardship applications.

• Taking your money out of the locked-in account may impact your eligibility for some government benefits and social assistance
• Creditor protections under the Pension Benefits Act no longer apply to the withdrawn money and may be seized by creditors
• Withdrawn money is subject to income tax
• A completed and signed version of your application must be sent to the administering financial institution within 60 days of the signage date
• If your spouse’s consent is required, their signature must be included on your application. This also must be signed within 60 days before the financial institution receives your final application

RESEARCH SOURCES:

https://www.fsco.gov.on.ca/en/pensions/lockedin/Pages/nonhardshipunlocking.aspx