OSPC - FAQS - Overview of Manitoba Pension Laws
Unlocking or Accessing Pension Funds
The main objective of The Pension Benefits Act (the act) is to protect employees' rights to the benefits that are promised under private pension plans. The following are answers to frequently asked questions (FAQ) about Manitoba's pension laws. You should refer to the act for further information on Manitoba's pension laws. To find out the details of your particular pension plan (the terms of your plan may be more generous than required by the act), you should contact the plan administrator.
NOTE: Descriptions of the various pension plan options and terms discussed in these answers can be found at the bottom of the page.
Is there any way my Manitoba locked in money can be withdrawn as a lump sum, such as financial hardship, shortened life expectancy or unlocking small pension balances?
The circumstances in which you may be allowed to unlock are provided below. If you think one of these may apply to you, discuss it with your plan administrator or financial institution holding your locked in money. Your plan administrator or institution is responsible for giving you the necessary information (stated by the regulation), and providing and approving any required forms.
Financial Hardship
A Locked-In Retirement Account (LIRA) or Life Income Fund (LIF) owner may apply to withdraw all or part of their funds due to financial hardship under certain conditions. These conditions are low expected income, medical expenses, rental arrears & mortgage arrears.
Policy Bulletin 14 - Hardship Withdrawals from Locked-In Retirement Accounts (LIRAs) and Life Income Funds (LIFs) provides additional information on financial hardship unlocking.
Shortened life expectancy
Locked in money you have in a LIRA or LIF, or money that is locked into your pension plan (if the plan permits) may be withdrawn in a lump sum.
To do this, make a written request to your financial institution holding your LIRA or LIF, or to your pension plan. You will need a medical doctor licensed to practise medicine in Canada to certify in writing that you have a considerably shortened life expectancy (which cannot exceed two years).
Policy Bulletin 4 - Withdrawal or Unlocking of LIRAs and LIFs provides additional information on shortened life expectancy.
Small amounts
Locked in money you have in a LIRA or LIF can be paid in a lump sum if it is considered a small amount.
If you belong to a pension plan, money that is locked into your pension must be withdrawn as a lump sum when you terminate membership in the pension plan if the amount is a small amount as stated in the act.
If you have locked in money in a LIRA or LIF, you must submit a written request for a withdrawal to the financial institution holding your LIRA or LIF. The institution will determine if your locked in money is below the small amount limit so you can receive it as a lump sum
Policy Bulletin 4 - Withdrawal or Unlocking of LIRAs and LIFs provides additional information on small amounts.
Non-residents of Canada
Locked in money you have in a LIRA or LIF, or money that is locked into your pension plan (if the plan permits) may be withdrawn in a lump sum if you are no longer a Canadian resident for at least two calendar years.
To do this, make a written request to the financial institution holding your LIRA or LIF, or the administrator of your pension plan. You will need proof of your status as a non-resident by providing the institution with written confirmation from Canada Revenue Agency (CRA) that you qualify as a non-resident, and proof that you have not been a Canadian resident for at least two calendar years.
Policy Bulletin 4 - Withdrawal or Unlocking of LIRAs and LIFs provides additional information on non-residency.
One-time 50% Transfer
You must be at least 55 years old to apply. If you have locked in money in a LIRA or LIF, or if you belong to a pension plan that allows you to do so, you may apply for a once in a lifetime transfer of up to 50 percent of your locked in money from your LIRA or LIF, or your pension plan, to a prescribed Registered Retirement Income Fund (RRIF).
A RRIF is a personal retirement income fund as defined in the Income Tax Act (Canada). A prescribed RRIF is the same as a RRIF, except that it is also subject to certain rules set out in Manitoba's act and regulations. Funds in a prescribed RRIF are not locked in. To do this, first make a written request to the administrator of your pension plan or the financial institution holding your or LIRA LIF. If you wish to unlock 50 percent from different plans you must make a separate transfer request to each administrator or institution.
Policy Bulletin 3 - One-time 50% Transfer (Unlocking) Transfer Requests for Written Notice Prescribed Registered Retirement Income Funds provides additional information on the one-time 50 percent unlocking of your Manitoba locked in money.
Full Unlocking (100%)
A LIRA or LIF owner who is at least 65 years old may apply to unlock the balance in one or more of their LIRAs and LIFs. The unlocked funds may be withdrawn as a taxable benefit or be transferred to a RRSP or RRIF if permitted under the Income Tax Act (Canada).
Policy Bulletin 4 - Withdrawal or Unlocking of LIRAs and LIFs provides additional information on full unlocking.
Beware of Unlocking Schemes
Manitobans should be wary about possible illegal schemes being offered for unlocking locked in money. The ads for these schemes usually claim that locked in money can be converted into cash on a tax-free basis.
LIRA and LIF owners are strongly advised that if an offer sounds too good to be true, then it probably is, and may in fact be illegal. If you are thinking about an investment that seems to be too good to be true, first contact the Office of the Superintendent - Pension Commission, the Manitoba Securities Commission, or get qualified financial or tax advice.
See Avoiding Pension Scams for further information.
For information on unlocking or accessing your pension funds contact your plan administrator or financial institution.
If you have more questions about the act or regulations, contact the Office of Superintendent - Pension Commission at (204) 945-2740 in Winnipeg; 1-800-282-8069, extension 2740 toll free; or go to www.gov.mb.ca/pension.
Definitions
Defined Benefit Pension Plan: is a plan in which you as a member earn a pension based on service and earnings. These plans can be contributory (employees must make contributions) or non-contributory (the company makes contributions).
Defined Contribution or Money Purchase Pension Plan: is a plan in which you receive, at retirement, the pension that can be bought through your company, based on the value of the contributions you (if required by the plan) and your employer made, plus interest.
Locked-in Retirement Account (LIRA) is an investment that allows your money (pension benefits) to continue to grow and accumulate interest while being held (or locked in) in the fund until you retire. LIRAs replace locked-in, Registered Retirement Savings Plans (RRSPs), although they operate in the same way. A LIRA is a RRSP that is governed by the Manitoba act and holds locked-in pension funds until they are used for retirement.
Life Income Fund (LIF) is an investment that pays an adjustable amount of retirement income to the LIF owner, based on prescribed annuity factors. It must be at least the minimum amount stated in the federal Income Tax Act and the maximum amount stated in the regulations under the Manitoba act.
Manitoba locked in money means locked in money or funds earned by plan members working in Manitoba just before they terminated their membership in a pension plan, retired, died or separated, which was transferred from the pension plan to a LIRA or LIF, and is subject to the act and regulation.
Plan member/owner is a former member of a pension plan who transferred funds to a LIRA or LIF.
(Prescribed) Registered Retirement Income Fund (RRIF) is a personal retirement income fund that is governed by the federal Income Tax Act (Canada). A prescribed RRIF is the same as a RRIF but is subject to certain rules under the act and regulations. Funds in a prescribed RRIF are not locked in.
Registered Retirement Savings Plan (RRSP) is a personal retirement savings plan governed by the federal Income Tax Act.
Transfer Consent in the written consent of the plan member or LIF owner's spouse or common-law partner to a one-time 50% transfer.
Year's Maximum Pensionable Earnings (YMPE) is the term used to refer to employment earnings on which the Canada Pension Plan contributions and benefits are calculated.
