Financial Planning -> Pensions -> Registered Pension Plans (RPPs) - Unlocking locked-in pension funds

Unlocking Your Locked-in Pension Accounts

Some provinces allow the "unlocking" of all or a portion of a LIRA, LIF or LRIF under certain circumstances.  Some of the circumstances include:

Some provinces allow the "unlocking" of all or a portion of  a locked-in account without the above restrictions.  For information by province, follow the links to your pension plan regulator, in the table of RPP regulators, or the following links:

Federally-regulated pension plans

Under some circumstances, when your employment with the pension plan provider ends, it may be possible to have your plan paid out instead of being transferred to a locked-in account, if the value in the plan is low, or if you have a shortened life expectancy.  Check with your plan administrator.

If your federally-regulated pension plans has been transferred to a:

then the following unlocking provisions are available:

Small balance unlocking

Individuals 55 or over with LIF holdings of less than 50% of the Yearly Maximum Pensionable Earnings (YMPE, 50% = $25,550 in 2013) will be able to wind up their accounts with the option to convert to a tax-deferred savings vehicle, such as an RRSP or RRIF.

One-time 50% unlocking

Individuals 55 or older will be entitled to a one-time conversion of up to 50% of holdings value into a tax-deferred savings vehicle with no maximum withdrawal limits.

Financial hardship unlocking

The amount that can be unlocked is:

1. Low income - the amount is based on the expected income (line 236 on your tax return) for the year, and varies from a withdrawal of 50% of the YMPE (50% = $25,550 for 2013) for $0 in expected income, to no withdrawal allowed when expected income is 75% of the YMPE (75% = $38,325 for 2013)
2. High medical or disability related costs - the amount of medical expenses can be unlocked, up to a maximum of 50% of the YMPE, as long as medical expenses exceed 20% of the YMPE (20% = $10,220 for 2013).  The medical expenses can include expenses of the plan holder or others, including a spouse or dependant.

Non-resident unlocking

If you are no longer employed by the employer from which the pension funds originated, and you have been a non-resident of Canada for at least 2 consecutive years, then you can unlock the total value of your plan funds.

Shortened life expectancy unlocking

If a physician has certified that you have a shortened life expectancy due to a physical or mental disability, then the total value of your plan funds can be unlocked.

The yearly maximum pensionable earnings (YMPE), is the maximum amount on which contributions to the Canada Pension Plan (CPP) are based.  Thresholds which are based on the YMPE will change each year as the YMPE changes.  See the CPP/EI page for the YMPE.

Note that the unlocking of these funds will lose the protection from creditors provided to locked-in funds.

The Office of the Superintendent of Financial Institutions Canada information on Pension Unlocking provides more information on federally-regulated pension plans.

See also - links to all information on TaxTips.ca related to persons with disabilities.

Tax Tip:  Contact the regulator of your pension plan to determine what you can do with your LIRA - don't rely solely on information from your financial institution.

Revised: May 17, 2013