PENSIONS

iits-your-money
It’s Your Money
 Unlock 1 time up to 50% at age 55 or older
Unlocking as a Non Resident 100% at any age
Unlock for Financial Hardship see amount at any age
 Unlock for Shortened Life Expectancy 100% at any age
How does the Government determine my monthly pension ?
What is the Maximum amount of money I can withdraw per year ?

Unlock up to 50%

Unlock up to 50% of Federal Locked in Pensions at age 55 or older Subject to the transitional provisions, LIF contracts entered into after May 8, 2008 must include the option of permitting funds in a LIF to be transferred into a new type of locked-in retirement investment fund called a Restricted Life Income Fund (RLIF). In the year that they turn 55, or in any subsequent year, individuals will be allowed, upon the creation of an RLIF, to transfer 50 per cent of the RLIF?s value into a tax-deferred plan with no maximum annual withdrawal limit (that is, either an RRSP or an RRIF ), as long as this transfer happens within 60 days of the creation of the RLIF. After this point, the RLIF will be subject to the same limits upon maximum and minimum annual withdrawals, and to the same limits on extraordinary withdrawals, as a LIF. These regulatory changes will also serve to permit the direct transfer of funds from a locked-in RRSP contract entered into after May 8, 2008 to an RLIF, as well as the direct transfer, under certain circumstances, of pension benefit credits to an RLIF for the purpose of 50 per cent unlocking of such funds provided the age requirements are met.Individuals will not be permitted to transfer the remaining funds in an RLIF back to a LIF, nor can these monies be transferred back to a locked-in RRSP. Should the holder of an RLIF wish to transfer the funds back to a locked-in savings vehicle (for example, because they do not want a steady stream of retirement income at that time), a new instrument called a Restricted Locked-in Savings Plan (RLSP) has been provided for in the amendments, into which funds from an RLIF can be transferred. Funds transfers from an RLSP by the holder will only be permitted if they are into another RLSP, into an RLIF, into a life annuity, or under certain circumstances, to a pension plan if the pension plan permits such a transfer. Funds transfers from an RLIF by the holder will only be permitted into another RLIF, into an RLSP, or into a life annuity.These changes to the regulatory structure will ensure that the 50 per cent unlocking provision will only be applied once by any individual on any one locked-in fund.Any individual who meets the basic requirements of this provision, and who wishes to use this option at the creation of an RLIF, will be required to provide, to the carrier of the RLIF, an attestation from his or her spouse or common-law partner indicating that they also assent to this transfer. If an individual who wishes to use 50 per cent unlocking does not have a spouse or common-law partner, they will be required to provide an attestation to that effect. Everyone who uses this new option to unlock funds will be required to sign an attestation to the effect that they are aware that

back

(1) funds that are unlocked in this manner may lose the protection from creditors, (2) funds that are withdrawn may be taxable, and (3) they should seek professional advice about the financial and/or legal implications of a withdrawal of this nature. The required format for these attestations? which must be made before a notary public, commissioner, or other person authorized to take affidavits?will be contained in a new annex to the Pension Benefits Standards Regulations, 1985, in Schedule V to those Regulations.The changes will permit the funds, at the death of the holder of an RLIF or RLSP, to be paid to the survivor of the holder, in any of: a locked-in RRSP, an RLSP, a LIF, an RLIF, or to an immediate life annuity or a deferred life annuity. Additionally, at the death of the holder, the funds in an RLSP will, under certain circumstances, be allowed to be transferred into the federally regulated pension plan of the survivor, if the pension plan permits it.

back

Unlock 100% Non Resident

Interperation of NON RESIDENT from OSFI

Office of the Superintendent of Financial Institutions Canada

Department of Finance Canada

Pension Benefits Standard Act 1985 & Regulations PBSA Amendments May 8th. 2008

FROM THE REGULATIONS

Revision January 8, 2007

PBSA 1985 Sec. 28.4 GENERAL

28.4 (1) Where a plan provides pension benefits for a plan member or former member who has ceased to be a resident of Canada for at least two calendar years and has ceased employment with the employer who is a party to the plan or ceased membership in a multi-employer pension plan, the pension benefits or pension benefit credits applicable to that member or former member are exempt from the application of section 18 of the Act.

(2) For the purposes of this section, a plan member or former member shall be deemed to have been a resident of Canada throughout a calendar year if that member or former member has sojourned in Canada in the year for a period of, or periods the total of which is, 183 days or more. SOR/94-384, s. 6.

PBSA Update 26 Issue No. 26,

September 2006

8. Unlocking for Non-Residents: Correction of an Item in Update 12

Section 28.4 of the Pension Benefits Standards Regulations, 1985 (PBSR), was introduced to exempt plan members and former members who cease to be Canadian residents from the application of the locking-in requirements of section 18 of the PBSA.

Update12 indicated that a pension plan text must include this provision if the administrator wished to offer it to members or former members of its pension plan and that it was not available in relation to benefits already transferred to a locked-in RRSP.

OSFI has recently reviewed this policy and has concluded that there is no requirement that the plan text specifically provide for the provision set out in subsection 28.4(1) of the PBSR; and this provision can be added to an existing locked-in RRSP or LIF so that where the requirements of section 28.4 of the PBSR (non-residency conditions) are met, the pension benefit credit held in that RRSP or LIF can be unlocked.

By qualifying under this rule, you will be exempt from the “LOCKING-IN” Sec. 18 (1) of the Act and virtually revert to a regular RRSP account, you will still be required to pay taxes on the amount you receive based on your yearly income, and might be subject to a minimum withdrawal yearly as per the Income Tax Act

You DO NOT have to qualify as a “Non Resident” under Revenue Canada though this information can be found at Revenue Canada Determination of an Individual’s Residency Status “IT-221R3” You can also fill in an NR73 upon leaving Canada

Click here is the formal letter from OSFI in PDF

back

Unlock for Financial Hardship

Subject to the transitional provisions, contracts for LIFs, locked-in RRSPs, RLIFs and RLSPs that are entered into after May 8, 2008 must include the option of permitting individuals who meet one or both of the conditions for financial hardship set forth below to withdraw as cash an amount up to 50 per cent of Yearly Maximum Pensionable Earnings (YMPE)?in 2008, this 50 per cent limit stands at $22,450?from any combination of federally regulated LIFs, locked-in RRSPs, RLIFs or RLSPs, within a calendar year, as long as all withdrawals are done within 30 days.
Such withdrawals will be permitted by anyone, regardless of age, who holds a federally regulated LIF, locked-in RRSP, RLIF or RLSP created subject to the new regulations.
Condition 1?Medical or disability related expenditures:
This option is available to individuals that expect to make expenditures of more than 20 per cent of their income in any given calendar year upon medical treatment or upon assistive technology or other expenditures related to a condition or disability that has been attested to by a licensed Canadian physician. These individuals will be allowed to withdraw the total amount of their expected expenditures in any given calendar year, subject to the maximum 50 per cent of YMPE noted above.

back

Unlock for Low income

Any individual that expects to earn less than the low income limit of 75 per cent of YMPE?in 2008, $33,675?will be allowed to withdraw an amount based upon their expected income in any given calendar year. This maximum permitted withdrawal is calculated as (50 per cent YMPE) less (two-thirds of expected income for the year (less financial hardship withdrawals)).

Note that withdrawals based upon financial hardship will be permitted for those who meet both of these conditions, but total permitted withdrawals for any calendar year, regardless of reason, will not be permitted to exceed 50 per cent of YMPE.
Any individual who meets one or both of the basic requirements of this provision, and who wishes to use this option, will be required to provide certain attestations, to the carrier of the LIF, or RLIF, or issuer of the locked-in RRSP or RLSP.
Individuals making withdrawals based upon medical or disability related needs must provide:
a certification signed by a licensed Canadian physician that the treatment or assistive technology is required to accommodate a condition or disease (the form of this certification is not specified in the regulations, and is left to the discretion of the physician), and

an attestation by the holder of the LIF, locked-in RRSP, RLIF or RLSP that he or she expects to make expenditures greater than 20 per cent of his or her income, which must also disclose the amount of these expected expenditures.

Individuals making withdrawals based upon low income must provide an attestation that they expect their income to be less than 75 per cent of YMPE in the calendar year (not including financial hardship withdrawals), which must also disclose their expected income for the year.

back

Any individual who wishes to make use of this option will be required to provide, to the carrier of the LIF or RLIF, or the issuer of the locked-in RRSP or RLSP, an attestation from his or her spouse or common-law partner indicating that they also assent to this transfer. If an individual who wishes to use financial hardship unlocking does not have a spouse or common-law partner, they will be required to provide an attestation to that effect.

Everyone who uses this new option to unlock funds will be required to sign an attestation to the effect that they are aware that (1) funds that are unlocked in this manner may lose the protection from creditors, (2) funds that are withdrawn may be taxable, and (3) they should seek professional advice about the financial and/or legal implications of a withdrawal of this nature.

The required format for all these attestations?which must be made before a notary public, commissioner, or other person authorized to take affidavits?will be contained in a new annex to the Pension Benefits Standards Regulations, 1985, contained in Schedule V to those Regulations.

back

Small Balance Unlocking

Subject to the transitional provisions, contracts for LIFs, RLIFs, and RLSPs that are entered into after May 8, 2008 must include the option of permitting individuals, in the year that they turn 55, or in any subsequent year, and whose total holdings in federally regulated LIFs, locked-in RRSPs, RLIFs and RLSPs are less than the small balance limit of 50 per cent of Yearly Maximum Pensionable Earnings?in 2008, this 50 per cent limit stands at $22,450?to transfer all the funds into a tax-deferred plan with no maximum annual withdrawal limit (that is, either an RRSP or an RRIF), or to withdraw these funds as cash.
Note that this initiative will only allow for transfers and withdrawals from LIFs, RLIFs, and RLSPs, and will not apply to locked-in RRSPs.

Any individual who meets the basic age and small total balance requirements of this provision, and who wishes to make use of this option, will be required to provide an attestation, to the carrier of the LIF or RLIF, or issuer of the RLSP, showing their total holdings in federally regulated LIFs, locked-in RRSPs, RLIFs and RLSPs, with all financial intermediaries, and attesting that this total is less than the limit for the current year. (Note that this individual will not be required to list or include in this total any holdings that he or she may have in similar funds that are subject to provincial regulation.)

Any individual who wishes to use this option will be required to provide, to the carrier of the LIF or RLIF, or issuer of the RLSP, an attestation from his or her spouse or common-law partner indicating that they also assent to this transfer or withdrawal. If an individual who wishes to use small balance unlocking does not have a spouse or common-law partner, they will be required to provide an attestation to that effect.

Everyone who uses this new option to unlock funds will be required to sign an attestation to the effect that they are aware that (1) funds that are unlocked in this manner may lose the protection from creditors, (2) funds that are withdrawn may be taxable, and (3) they should seek professional advice about the financial and/or legal implications of a withdrawal of this nature.

The required format for these attestations?which must be made before a notary public, commissioner, or other person authorized to take affidavits?will be contained in a new annex to the Pension Benefits Standards Regulations, 1985, contained in Schedule V to those Regulations.

back

Unlock for Shortened Life Expectancy

Pension Benefits Standards Regulations, 1985
FROM THE REGULATIONS
PORTABILITY OF PENSION BENEFIT CREDITS

20.1. (3) The contract or arrangement establishing a life income fund may provide that, where a physician certifies that, owing to mental or physical disability, the life expectancy of the holder of the life income fund is likely to be shortened considerably, the funds in the life income fund may be paid to the holder in a lump sum. SOR/95-551, s. 4; SOR/97-448, s. 1; SOR/2001-194, s. 4.
_________________________________
Unlike the provincial wording where a physician licensed to practice medicine in Canada certifies that, owing to mental or physical disability, the life expectancy of the holder of the life income fund is lightly to be shortened to less than 2 years. The Federal rule is more vague.

back

How does the Government determine my monthly pension ?

Do you have a LIRA, LRIF or LIF Pension and hate that the Federal Government can tell you how much of YOUR MONEY you can withdraw every year, regardless how good your investments have been. Facts that the amount you can withdraw have decreased every year, meaning more for the government. The amount is based on the cansim B14013 (10 year bond) or V122487, and as you can see it has gone down every year. The rates that are paid in a year are based on the Bank of Canada 10 year bond rate on November of the prior year see for your self at 10 YEAR LOOKUP ( click on the dated and select V122487)

November Bank of Canada rates are what dictates the amount you will receive in the following year
2000 = 5.63, 2001 = 5.66, 2002 = 5.55, 2003 = 5.24, 2004 = 4.87, 2005 = 4.20, 2006 = 4.03, 2007 = 4.22, 2008 = 4.00, 2009 = 3.84, 2010 = 3.60, As you can see your yearly pension will decrease every year based on the CANSIM rates of the Bank of Canada, so if your principal amount has not increased over the year, then you will get less money every year (HOW LOW CAN IT GO?)

back

What is the Maximum amount of money I can withdraw in per year ?

What is the maximum amount of money I am allowed to take out of my Life Income Fund (LIF) under the Pension Benefit Standards Regulations?
Section 26 of the Pension Benefits Standards Act, 1985 (PBSA) gives pension plan members the opportunity, upon ceasing membership in the plan – but before becoming eligible to retire and draw a pension – to transfer the value of that pension to another pension plan or a “Retirement Savings Plan”, as defined in the PBSA Regulations. This option is also available to a member’s survivor, in the event of the member’s death.
Section 19.1 of the Regulations states that a Retirement Savings Plan, into which a pension benefit credit can be transferred, is a Life Income Fund or a Locked-in Registered Retirement Savings Plan.
The periodic income from the LIF is subject to minimum and maximum limits. The maximum limit is defined in Section 20.1 of the Regulations, and is intended to maintain a retirement income for the member.
The “LIF Maximum Payment Amount Table” provides users with values representing fractions of the fund, which may be drawn during the year by former plan members whose pension benefit credits have been transferred to a LIF. OSFI will update the table annually, using the prevailing applicable Canadian Socio-economic Information Management (CANSIM) interest rate (B14013).also referred to as series (V122487)

back