Unlocking a locked-in Pension (RRSP)

December 11th, 2007, 11:53 AM

Locked in Pension Survey
Hi All;
This is a survey I would recommend filling out. It is being done in British Columbia and recomended by CARP. Every province that unlocks pensions helps us accomplish it in Ontario and Federal.
It does not matter what Province your pension is in or if it is Federal. Everybody can fill this out if they wish.
Please also send this on to anybody you know that has a locked in pension.

Regards Bill Costello


You're invited to participate in a survey about retirement planning and private pension plans.
Will your pension be there for you? •

Do you have a private pension


• Have you ever needed ‘instant access’ to your locked-in private pension funds?
• Would you like to have the option to ‘instant access’?
If you answered ‘yes’ to any of the above questions then we want to hear from you!!
Please find below a link to a survey about retirement planning and private pension plans. Survey results will be used by Simon Fraser University researchers to generate policy alternatives with respect to the locking-in of private pension benefits.
CARP is happy to help with the research and urges former private pension members to complete the survey as thoroughly as possible. This survey is voluntary and you can withdraw at anytime. Your responses are confidential and will not be distributed to third parties.
In clicking on the below link you are consenting to participate in this study:

http://www.surveymonkey.com/s.aspx?sm=1DGgy793z6lQC0QFeX40_2fA_3d_3d

We thank-you in advance for your contribution to this important research.

January 10th, 2008, 09:01 AM

25% Pension Unlocking Reminder
Hi All ;

I am just reminding everyone who is going to be transferring the 25% out of their locked in fund into a RRIF or RRSP.

If You draw a income from your locked in fund during the year . Make sure that you transfer your yearly allowed income out of your locked in fund and put it aside in a account so that you can use it for income through out the year.

Do this((( BEFORE))) You transfer into a new LIF fund in order to draw your 25%.
If you do not do this you will not be able to draw from the NEW LIF until the next calendar year and would then have to withdraw from your 25% instead.

DO NOT just leave this up to your financial institution as we have found the advisers are not always fully informed of change..

Also Remember once you have transferred into a new LIF (((( You have only 60 days to make your 25% withdrawal . After that you have lost the opportunity. ))))

There have been new rules added to the FSCO web site since the New Year.

To check them out go here.
http://www.fsco.gov.on.ca/english/pensions/locked-inaccountchanges.asp#how25


Q: Is the maximum annual income payment amount in the first year of a New LIF calculated based on the original amount transferred into the New LIF, or is it calculated using the adjusted amount after a 25% unlocking withdrawal has been made? For example, a New LIF is purchased with $100,000 deposited into it from a LIRA on the date of purchase. Fifty days later, the owner withdraws 25%, which leaves $75,000 in the New LIF. Is the first year maximum annual income payment amount based on $100,000 or $75,000?
A: The maximum annual income payment for the first year is based on the balance of the New LIF at the start of the New LIF’s fiscal year, regardless of any amount subsequently withdrawn. In this example, the maximum would be based on $100,000.
(((((((Note, however, that if the money deposited into the New LIF came from an Old LIF, LRIF or another New LIF, the maximum annual income payment amount for the New LIF for that fiscal year would be zero.)))))))

WE are still going after 100% unlocking in Ontario as Saskatchewan did for their citizens in 2002.
If you are outraged how the Ontario government restricts the Retire's from (((Their Own Pension Money.))

((( This is Not Government Money.))) Please write to your Premier , Finance Minister , Minister Responsible for Seniors , And Your MPP and tell them you want these pensions unlocked 100%.

You All Take Care Bill Costello

January 10th, 2008, 04:35 PM

Dear Bill Costello,
I am a Canadian resident presently studying in the United States on an F1 Visa. I left my employer after 25 years and will receive a pay out sometime this month in the approximate amount of 150,000. I am in desperate need of this money. I need to unlock it in order to live.
My employer registered the pension plan in the province of Ontario. I worked most of my career in Newfoundland (5 years) and Quebec (20 years). When I returned to school in August, 2007 I left from Quebec.
I have opened two locked accounts to receive my monies; one in Toronto, Ontario and the other in Quebec City, Quebec. I am told in Quebec, that I can only have a monthly pay out totalling approximately 1,500 per month.
What are my options? Can I have the money deposited in Ontario and then withdraw the yearly amount as allowed and then withdraw the 25% one time only withdrawal? I am in desperate need of advice as the financial advisors in Canada have not helped and I receive the money within a few weeks.
Regards, George

January 10th, 2008, 09:49 PM

It shouldn't matter where your account is held. It matters under what pension act the locked-in funds are governed by. You can hold a number of locked-in accounts with different pension juridictions in one office in any province.

As for your Ontario LIRA, since it is not already in a LIF there is no existing withdrawal mechanism. The income is created when the funds are moved from the LIRA to a LIF. In this case, according to what is said about the new legislation, you have 60 days from the transfer from the LIRA to the new LIF to withdraw up to 25%. You can take it as cash, subject to withholding tax, or you can move it to a regular RSP and control the dispersal as you need it.

If someone had an existing Ontario LIF they could withdraw their yearly maximum then transfer the remainder to a "new LIF" and withdraw 25% from the new account within 60 days of the switch.

January 14th, 2008, 09:20 AM

Hi George;

First of I will let you know that I am not a Financial Advisor. I am just a ordinary citizen that is fed up with the way government refuses to let people have control of their own pension money.

If your pension money in Quebec is regulated by Ontario policies then you could have it transferred to Ontario and regulated under Ontario rules.

If the Pension money is regulated under Quebec regulations. You can still transfer it to a Ontario institution but it will have to remain under Quebec Regulations.

If they are both under Ontario regulations , you could transfer them to one institution. then remove your yearly withdrawel . Then when you transfer them to a new LIF with draw the 25% and put it into a RRIF. If you take the full amount out in cash you will be hit with a substantial tax.

Another Option you may have is that seeing as you are studying in the States , maybe you could move there as a permanent resident for 2 years.

If you live out of Canada for 2 years under Ontario Rules you are able to unlock 100%.
I dont know what the tax implications are but you should be able to find out from your financial institution.

I hope this has helped you a bit Regards Bill Costello

January 14th, 2008, 09:45 AM

Hi Kreskin:

Quote [" As for your Ontario LIRA, since it is not already in a LIF there is no existing withdrawal mechanism. The income is created when the funds are moved from the LIRA to a LIF. In this case, according to what is said about the new legislation, you have 60 days from the transfer from the LIRA to the new LIF to withdraw up to 25%. You can take it as cash, subject to withholding tax, or you can move it to a regular RSP and control the dispersal as you need it. "]

Kerskin;
I am not 100% sure on this and George would have to talk to his Financial institution.

Seeing as a person does not have to transfer into a New LIF until the 31 of December 2008.
Wouldn't George be able to move his LIRA into A LIRF ,Set up to withdraw his Yearly income and then withdraw that income and then transfer into the New LIF and then withdraw his 25% within the 60 allotted days ?

Just a thought as I have said I am not a financial advisor.

It is too bad that this Ontario Government wouldn't unlock 100% as Saskatchewan did for their Citizens in 2002 .

It would be cheaper for the Financial institutions ( Less red tape ), Cheaper for Government
. Better for the economy.
Better for people that are having financle hardship. ( they wouldn't have to pay the Ontario government $200 - $600 to get at their hard earned pensions).

Regards Bill Costello

February 18th, 2008, 10:42 PM

I have an RRSP with a financial company, very poplular one, you get freedom when your 55, so 14 years ago they took my pension they put it in an RRSP, I was told when my ex turned 55, I would be able to cash it out. This was my ex husbands work pension, I got half on our deviorce. I was mislead for 14 years that I could cash it out, I wasn't told how to invest, or any other options. I'm just wondering How many other people have their pensions with this company, and also are not told the their RRSPs are locked in with the Federal Goverment and they can only get 5% every month, mine comes to $40.00 per month, not much to live on. The only person making money of my RRSP is my financial consultant, when I approached him, he said he didn't know it was a Federal Pension, isn't that what he is there for to know these things, and advise me what to do, 14 years ago if he gave me advise I could have put $40.00 a month in another RRSP, and now I would have approx $7,000.
I lost not only my pension, $7,000 I could have been building up all these years, and what about all the interest my RRSP has gathered in 14 years. Plus this consultant gets commission on my RRSP for the last 14 years.
There must be some way to recover what is rightfully mine.
Please anyone with any comments, suggestions, or similiar situations please let me know.
Thank you for reading this, hopefully it will help other people.

February 28th, 2008, 09:13 AM

Federal Pension LIF 50% Unlocking

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Hi All; I am just updating you on what is happening in case you haven't seen this. It is time to get after the Ontario Liberals again as now the Federal government has allowed 50% unlocking of Federal locked in pensions.

This is a letter I just received from Bill Gleberzon of CARP.
The 2008 Federal Budget has a number of good improvements for LIF-holders. The following paragraph is from our analysis of the budget:

"Choices for federally regulated Locked-In Fund (LIF) - holders, such as, for those 55 years or older, conversion of up to $22,450 into to a tax deferred saving vehicle as well as an one time conversion of up to 50% of the principal into a tax deferred savings vehicle with no maximum withdrawal limits – also the option to unlock up to $22,450 for those with financial hardship."

This is not only good for federally regulated LIF holders but for our campaign in Ontario as an enhancement that the Ontario Government should adopt -- from unlocking $25% to unlocking 50% as well as increasing the amount that can be unlocked to $22,450.


Key in to the Federal Department of Finance and go to The Federal Budget Index under LIfe Income Funds.

Regards Bill Costello

February 28th, 2008, 09:55 AM

Nobody is treated equally in Canada, just ask the white man. We won't go there. I imagine the locked in rule is for your own protection. We have an excellent broker, quite well known actually, and yes we have a locked in RRSP until we turn 55 (husband got a buy out from his company that he worked for for 30 years) so our RRSP is substantially large, so it is all invested into various stocks etc. We do not want to pull out our money, we would rather scrimp than do that, it is making us awesome amounts of money. Don't quite understand all the ins and outs of this sort of thing, but learning as we go along, but we also pay this group well to look after us and they do. We are quite happy with ours and how it is working for us. I do know that sometime one has to take it out because they have no other choice. But if you do not have to don't, the taxes will kill you, not worth it.

February 28th, 2008, 09:58 AM

Yes we lost a bit of money recently but nothing to get worked up over, as it is a long term deal. So we will get it back. But for some they lost a lot, I have a couple of friends who did, and do not talk to much about it. I think they have to keep it in longer now to get some money back.

February 28th, 2008, 10:00 AM

yes we lost a bit of money but our rrsp is long term so we will get that back. But if you were short term and lost, you may want to keep it in to get some of that back.

February 29th, 2008, 08:13 AM

Hi Harleyhunny ;
(Quote) " yes we have a locked in RRSP until we turn 55 (husband got a buy out from his company that he worked for for 30 years "

I am just letting you know at this time . No pension becomes fully unlocked at 55 except for the Province of Saskatchewan.
Some other provinces and Hopefully in the near future Federal have partial unlocking,
As for the rest . You are allowed to draw out approximately 6% a year.

If a person is able to unlock their fund. This does not mean that those funds have to be removed from their current investment. The only things that change with unlocking is that if a person needs more then the 6% that the government regulates. A person will be able to access their own money and Not be restricted with government dictatorship rules.

Regards Bill C

February 29th, 2008, 09:11 AM

Thanks Bill for the information but I don't think ours works that way, because at 55 we can either use that money to live on, or husband can continue to work until he is 60-65, and keep that money in and working. The money is ours to do with at 55 according to our broker. I don't quite understand the whole thing yet, I guess that is why we pay someone else to look after it, etc, and our interests as well. We have lots of stock and monies into all kinds of things.
How is happened was, that my husband worked for a company for 28 years, the company was bought out by another company (BC Rail/CN), he was given a 2 year salary and and extra 20,000.00 as an incentive to take the buy out (they wanted to rehire at cheaper wages so really did not want the seasoned workers), then on top of that they were given their pensions money (accrued over all those years) to put into a locked in RRSP, which he can use when he turns 55, we do not touch that money, we had the other put into a spousal rrsp's that we could draw from, and just an account for this purpose. We did not know too much about rrsp's and such when we got this money, (it was kind of scarey as it was a substantial amount of money, it was like winning the lottery only it was earned), so I got a broker to handle it all, and he does very well. We are still learning, but we are quite happy with the way ours is being handled. I am also glad that we have not had to touch that money,or need to.
Thanks again.

March 3rd, 2008, 09:19 AM

Hi Harleyhunny ;

I am sorry to tell you . unless you live in Saskatchewan . If your pension is in a locked in RRSP in Canada and no matter what your Broker tells you your pension will not become fully unlocked at 55 - 65 . in many cases. Not until you are 90 years of age , unless legislation is changed.
Why do you think My self , CARP the Association for the 50 Plus and many other people are fighting this issue across Canada for the last few year to change this unjust legislation?

As of now . Saskatchewan allows unlocking of 100% , Alberta 50% , Manitoba 50% , Ontario 25% , New Brunswick 25% .

The federal government is bringing in legislation to Unlock 50% if passed.

The only other way would be that your pension could be unlocked is if your pension is small , as many jurisdictions allowed unlocking of small amounts.

From your explanation of your pension. It sounds as if your pension will fall under Federal Legislation. You may be one of the lucky ones.

There are thousands of people in Canada that are not allowed to unlock more then 6% from their pensions at retirement , and as They Retire they suddenly realize that what we have been telling them is True.

It is really too bad that many people don't really look in to their pensions more thoroughly, as many of them get the shock of their lives when they retire.

Instead of drawing X number of dollars as they have planed on . They are only allowed to withdraw around 6%. then at approximately 80 if you live that long and markets are right there is still 64% of your funds in the Locked in plan. At that time if both the holder and the spouse have passed away the money will then go to their estate.

Great You say . The money will go to my Children.

Not so !!! When the money goes to the estate it is now taxed at the highest rate before it goes to your children.

You can believe this or not.

It is time the people right across Canada started looking into their locked in pensions and started mailing their Premiers ,Finance Ministers , MP's and MPP's and demand that these pensions be unlocked 100%.

IT IS YOUR MONEY. Money you worked hard for and should have the right to spend and save as you wish.

We do not need some government bureaucrat telling us how to handle our money when they cant even handle the tax payers money properly.

For further information go to http://unlockinglockedinpensions.blogspot.com/ or to the CARP web site . Click on LIF on the left side of the page(( The site is down now but should be up shortly ))

Regards Bill Costello

March 25th, 2008, 09:21 AM

Hi Everybody;
Here is a artile that Grant has sent out to a number of papers .

Locked-In Pensions: Live Poor Die Rich
March 17, 2008
Many retirees today living with locked-in pensions are barely getting by and are increasingly becoming poorer with each round of rate hikes of their most basic needs. Some are often faced with no other choice but to give up the home they’ve worked for all their lives in order to obtain additional money just to survive.
The real costs facing seniors, especially in the current economic climate, are escalating uncontrollably due in large part to the rising price of energy to heat their homes, gasoline for their cars, water and sewer charges, endless property tax hikes and the rising costs for food.
If you are one of these people depending on your Ontario regulated LIF or LRIF pension to see you through these tough times, the money in your locked-in pension will outlive 99.9% of you. That’s right, according to Statistics Canada, less than one half of one percent of our seniors will ever reach 90 years of age, which is the age that you would get the final 50% of the balance of the money in your locked-in pension. Therefore, 99.9% of you with LIF’s or LRIF’s will certainly die with at least 50% of your pension money left behind to your successor all the while living out your golden years staring into your pension fund without ever getting to actually use the bulk of it. Even at the average life expectancy of 78 for a male and 82 for a female, the government still only allows a paltry 11 to 12% annual access to your locked-in pension at those ages. This is why you will certainly live poor and die rich when it comes to your locked-in pension.
The Ontario government, which regulates access to your locked-in pensions, is out of touch with the 6% annual access it grants seniors to their own pension money. They appear oblivious to the plight of these pensioners and provide no practical means to increase the rate of access to those with locked-in pensions to meet the ever-increasing real cost of living. While other provinces and the Federal government allow from 50% to 100% access to their regulated locked-in pensions, the Ontario government continues to remain far behind with a one-time access of only 25%. They continue to ignore and refuse to listen to the will of its seniors who are seeking 100% access to their locked-in pensions instead of remaining shackled with this out-dated indifferent legislation.
This is completely unacceptable and cruel to those seniors who would normally be able to afford to keep up with the rising cost of living if greater or full access to their locked-in pensions would be made available to them as was done for 61 Ontario MPP’s back in 1999 when they passed legislation that unlocked their own locked-in pensions. The Liberal government today, continues to support the double standard that it’s current leader hypocritically and eloquently denounced back in 1999 when legislation was passed to exclusively unlock MPP’s pensions 100% while ignoring all other Ontarians with similar pensions.

Further, the Ontario government is clearly inconsistent with its own economic strategies when on one hand it allows providers of essential services to set their own pricing based on the free market model of supply and demand, and on the other hand, through discriminatory and archaic legislation, prevents it’s senior population from keeping up to these market driven rising costs by fixing a limited amount of access to their private locked-in pensions. How can this paradox be allowed to continue when those with locked-in pensions aren’t allowed the same freedom of access to their pensions to keep up with the market’s unrestricted freedom to set pricing of goods, services, taxes and other basic necessities.
The current policies and philosophy regarding locked-in pensions were developed back in the day when the day-to-day costs of these basic necessities rarely rose at all. Those days are long gone, but the outdated legislation governing Ontario’s locked-in pensions are not. Tight government interference with seniors’ private locked-in pensions simply must be eliminated in order to allow these folks a fighting chance to keep up with the ever increasing real cost of living, especially when they don’t often have any other means to increase their income other than through their LIF or LRIF pensions.
The Ontario government’s insistence on limiting its seniors ability to manage these burgeoning costs with its paternalism over their own pension money is bordering on white collar elder abuse and is outright shameful. This government is completely out of touch with its senior population and continues to ignore private members bills, lobbying by private citizens, prominent financial experts such as Jack Mintz, Malcolm Hamilton, Gordon Pape etc., petitions with thousands of signatures, CARP and the Ontario Coalition of Independent LIF Holders.
It’s time for the Ontario government to do as Saskatchewan did in 2002 and eliminate locked-in pensions altogether thereby allowing 100% access to Ontario seniors’ private pensions and thus the opportunity to keep up with the spiralling personal cost of living by managing the money in their own LIF and LRIF pensions as they see fit.
Ultimately, if the Ontario government does not abolish these archaic "out of touch" regulations and end the control over its seniors’ LIF’s and LRIF’s, 99.9% of Ontarians with locked-in pensions will surely continue to live poorly and die rich, leaving the majority of their money behind that could have been used to provide them with the quality of life they’ve earned for themselves while alive.


Grant Fleury,
Ontario Coalition of Independent LIF Holders
Sudbury

March 27th, 2008, 11:37 AM

Hello everyone

Anyone had any experience transferring omers pensions (commuted value) into an IPP under an incorporated company after age of 55.

Any advice would be appreciated.

Gord

April 2nd, 2008, 09:07 AM

A Letter on Deaf ears
Hi Everybody;
Well here is another letter sent out to a government that doesn't really care what the people of Ontario want.

Apparently all they want to do is line their pockets. After voting them selves a 35% raise just before Christmas , they are lining their pockets again with another raise. They are the highest paid MPP's in Canada.

Maybe that is why they refuse to unlock our money.

They need that money when each senior passes away and they tax their estate at the highest rate so that they will be able to keep their pockets full of money.

Hon Dalton McGuinty; ???????

Dear Dalton ;

As you may have noticed . The Federal Government is now going to allow the unlocking of 50% of Federal Locked-in pensions in Canada.

This means that well over 50% of the Citizens of Canada will have a privilege that is being denied to the Citizens of Ontario.

Federal 50% , Alberta 50% , Saskatchewan 100% , Manitoba 50% ,((( Ontario 25% )))

I have heard that British Columbia is also considering unlocking 50%.

Your past Finance Minister Greg Sorbara during a interview concerning locked-in pensions in answer to the Question
" Do senior citizens really need protection from unscrupulous investors?"

On a CBC Radio interview Stated .

" I don't think that this has any thing to do with protecting senior citizens from investors whether unscrupulous or not. "

Your Now Current Finance Minister Dwight Duncan now States . " the Ontario government is concerned that full unlocking of locked-in accounts could put retirement income at risk. The rational is simple , these funds are important in ensuring that seniors are provided with a regular income stream throughout retirement despite the uncertainty of an individuals life expectancy , future investment ,returns and inflation."

It appears that your Finance Ministers answers depend on is if there is a election or not.

Before a election Your government isn't concerned if a Senior is capable of looking after their own funds . ((( I would like to remind you this is our own funds )))

Now that the election is over Your government is saying in a nice way that only the Seniors in Ontario are to Stupid to look after their ((( OWN FUNDS ))) Not government money !!!

We were smart enough to save money for retirement. We are also smart enough to use it and invest it wisely.

PEOPLE AND ORGANIZATIONS THAT SUPPORT UNLOCKING LOCKED IN PENSIONS 100% .

Jack M. Mintz Professor Of Business Economics ,Rotman School of Management ,

Malcolm Hamilton,Actuary ,Mercer Human Resource Consulting Toronto ,


Gordon Pape , Renowned Financial Expert ,

One Thousand Eight Hundred Signatures on the online Petition that has requested that the Government of Ontario Unlock LIRF , LIRA , LIF 100%

CD Howe Institute , Canadian Economic And Social Policy Think Tank,

CARP , National Advocacy Organization For The 50 Plus , 250,000 members in Ontario ,

The Common Front For Retirement Security , 2 Million Members across Canada .

The Ontario Coalition of Independent Locked-in Fund Holders ,

Ontario Coalition of Senior Citizens Organizations.

My Question Is why does the Liberal Government of Ontario Refuse to unlock Locked-in Pensions 100 %.

Especially when A good Number of Current Liberal MPP'S will enjoy this Privilege at the age of 55 or when they retire.

Bill Costello

April 11th, 2008, 04:41 PM

Hi Everybody;

I just thought that I would let everybody know that the 50 plus site has opened up a forum strictly on pensions. It would be a good place to check out if you have questions on any pensions as hopefully some one there will respond and help you out.
http://discuss.50plus.com/ipb/index.php...

Take Care Bill C