Unlocking a locked-in Pension (RRSP)

[Explorer]

RE: Unlocking a locked-in

www.ombudsmanforum.ca/whatis_e.asp

What is an "Ombudsman"?

An ombudsman is an independent, objective investigator of people's complaints against government agencies and other organizations, both public and private sectors. After a fair, thorough review, the ombudsman decides if the complaint is justified and makes recommendations to the organization in order to resolve the problem.

The two most common kinds of ombudsman in Canada and in other countries are:

* Legislative (or classical) ombudsman who are established by statute and who can report findings and recommendations to ministers of the Crown, to the provincial legislature or to Parliament.
* Executive Ombudsman who report only to the head of the organization whom they investigate, such as government departments or Crown corporations, universities/colleges or businesses.
(questions@ombudsmanforum.ca)

***********************************
I like the look of the first one there, namely LEGISLATIVE Ombudsman, especially if they could go after ALL the Provinces and the Federal Governemnt to get the SAME Rules and Regulations set up across Canada.

Looking at that website that may come under Canadian Heritage
www.pch.gc.ca/index_e.cfm

which, as they say: "Canadian Heritage is responsible for NATIONAL POLICIES and programs that promote Canadian content, foster cultural participation, active citizenship and participation in Canada's civic life, and STRENGTHEN CONNECTIONS among Canadians."


Meanwhile: join our Group to discuss this further:
ca.groups.yahoo.com/group/Locked-in_RRSP

 

[Jack]

RE: Unlocking a locked-in

I joined your Yahoo Group. You are absolutely right. Things have to change so that all Canadians have the same rights.

You start out in a Defined Pension. It could disappear and you have no recourse (I believe that is what happened with CN Express, and many more in the future)).

You transfer your pension to a locked-in account and now you are responsible for the investments. You may invest unwisely and lose everything or you may increase the value, and then there are subsequent choices, as far as I know:

LIF - Transfer, by age 69 to a Life Income Fund (being subject to a maximum withdrawal rate of 6 - 7%), and a subsequent Annuity at age 81 (locking in the interest rate forever, which today maybe 4%, and Insurance Companies keep everything when you die).

LRIF - Locked-in Retirement Income Fund where you continue to invest the way you want, but if there is NO increase the previous year you CAN NOT withdraw anything.

If this was UNLOCKED (as is Saskatchewan and ex MPs of Ontario) you can transfer it to a Regular RRSP, allowing you to withdraw WHATEVER you want WHENEVER you want (although subject to tax laws).

I can see where everyone should be treated equally and have the ability to transfer it all to a Regular RRSP.

I would advocate EVERYONE that is in this situation to FIGHT for your rights.

JF

 

[Explorer]

Sometimes you just don't have a choice. If your Company folds, your pension (if there was one) is transfered to a locked-in RRSP (LIRA) and you are under the Regulations that that Company came under. It's the luck of the draw in some cases. And it shouldn't be.

The Federal Government makes all the rules for Regular RRSPs with few exceptions (maybe Quebec). They are frequently making changes. It started out that you were not allowed ANY Foreign investments in your RRSP, then they slowly increased it to 20% then up to 30% and now it can be 100%. Then they changed it to allow a temporary withdrawal to buy your first home. You weren't allowed to take any out at all and now you can withdraw it all.

Why can't the rules for Locked-in RRSPs be changed so they are the same across the country like it is for Regular ones? People haven't withdrawn all their money from Regular RRSPs so they aren't likely to withdraw it all from a locked-in one, and so what if they did, it's their money. None of this existed 20, 30, or more years ago. It's time they fixed it. There are likely many baby boomers caught in this, also.

 

[Jack]

I think you should just go ahead with a Petition to the Federal Government. If they do something maybe the rest of the Provinces will follow (or they may take the initiative to go ahead first, like Saskatchewan did). You never know. I'll be one of the first voters, so there will be at least two. Anyone else??????

 

[Explorer]

RE: Unlocking a locked-in

Ok, you leave your money in the Company Pension Plan, as it is safe there, and then something like this happens:

The trustees of one of Canada's biggest pension funds have been charged with mismanagement after Ontario's pension regulator alleged they invested more than $225 million of their workers' pension money in questionable Caribbean resorts.

The Financial Services Commission of Ontario said on Wednesday it has laid 15 charges against trustees of the Canadian Commercial Workers Industry Pension Plan, claiming they broke the conditions of the Ontario Pension Benefits Act with numerous major investments over a two-year period.

The people charged include senior executives of the major supermarket chains and senior officials of the United Food and Commercial Workers union, which represents 310,000 mainly supermarket employees.

The charges are regulatory, not criminal. Each carries a penalty of up to $100,000.

 

[Explorer]

RE: Unlocking a locked-in

To go along with the Petition to have Ontario Unlock their peoples Locked-in RRSPs:
www.PetitionOnline.com/WRC101/petition.html

There is now a Petition to the Federal Government to do the same:
www.petitiononline.com/Unlock06/petition.html

You may be in this situation now or perhaps will be in the future. It is up to You to protect Your rights. Sign the Petition(s).

 

[Explorer]

MPPs of Ontario are crying they dont have a pension plan. Excuse me! They get one, they transfer it to a locked-in plan, and promptly unlock it. Can we do that? Hah!

www.torontosun.com/News/Columnists/Blizzard_Christina/2006/07/21/1695079.html

If that is not still there then you can email me and I will email you the story.

Sign the Petitions. Stop this nonsense.

I am a non-resident living in the Philippines. I have a young family. The 7 year old has been in the hospital for about a week with pneumonia and dengue. The pneumonia is ok but the dengue (the worst part) is two more days.

I am NOT covered by Canadian Medicare, nor anything else from Canada. I would still like to handle my money. My wife has never and will never seen this much money. Her family will bleed her dry in a week if something was to happen to me. I would like to be able to set up a trust and look after those I want to, as I want to. Is that tooooooooo much to ask.

Give us a break. Sign the Petitions.................

 

[Kreskin]

Have you tried transferring the locked in pension to the Phillipines? I know in Canada you can transfer in locked-in retirement accounts from elsewhere. Maybe the Phillipines administrator will loosen the rules for you.

 

[Semperfi_dani]

RE: Unlocking a locked-in

The best page to look for anything to do with Pensions, Registered accounts or otherwise is the CRA (Canada Revenue Agency) website. All investment firms base their policies on the CRA documentation. You can download the docs in PDF or HTML file. Ultimately, the investment firms cannot make exceptions unless its stated as a credible exception in the CRA.

I know that you can unlock your locked in account if you permanantly move from Canada..but not sure of the specifics.

So check the CRA.

 

[Explorer]

Re: RE: Unlocking a locked-in Pension (RRSP)

Have you tried transferring the locked in pension to the Phillipines? I know in Canada you can transfer in locked-in retirement accounts from elsewhere. Maybe the Phillipines administrator will loosen the rules for you.

With a name like yours maybe you could help me do that. Unfortunately Locked-in Plans are not allowed out of the country.

 

[Explorer]

Re: RE: Unlocking a locked-in

The best page to look for anything to do with Pensions, Registered accounts or otherwise is the CRA (Canada Revenue Agency) website. All investment firms base their policies on the CRA documentation. You can download the docs in PDF or HTML file. Ultimately, the investment firms cannot make exceptions unless its stated as a credible exception in the CRA.

I know that you can unlock your locked in account if you permanantly move from Canada..but not sure of the specifics.

So check the CRA.

You are WRONG about everyone being able to unlock their accounts if they permanently move away. I am recognized (you have to apply for it) by the Canadian Government as being a permanent non-resident and I am not allowed, although a couple of Provinces do allow it.

The Rules can be changed though. The Conservative MPPs in Ontario gave themselves healthy lump sum (we're talking $800,000 to $1 million) locked-in pensions and they PROMPTlY passed Bill 27 in 1999 to allow themselves (only) to unlock them. Now they are crying because they don't have a Pension Plan.

And the Federal Conservatives just voted themselves healthy increases in pay.

How about doing something for the little guy, and it doesn't cost anyone anything. You would think a Minority Government would think about things like that!!!

 

[Explorer]

To add to the confusion some Provinces allow those with Locked-in RRSPs or LIRAs to start withdrawing using a LRIF or a LIF, Federal only allows you to use a LIF, meaning you MUST take out an annuity at 80 and lock in your return at whatever the current rate is then.

Some people that are affected will be required to lock in their's this year. Would you like to have to lock-in at today's rates? I doubt it. Will you wait until it is too late to do something?

Now I understand Alberta has just changed their Rules to allow Albertans to withdraw 50%, effective Aug., 2006. Do you want 50% or 100%? I want 100%. Sign the Petitions or let us help you start one for your Province.

 

[Explorer]

RE: Unlocking a locked-in

Ok, I still think everyone should be treated equally and be allowed to unlock their funds.

I have just been notified from OFSI that as a person under Federal Jurisdiction, that is a non resident of Canada, I am allowed to unlock everything.

Thank you, thank you, thank you.

Now, I believe you should ALL sign the petitions and have the same rights. Good luck.

 

[Semperfi_dani]

RE: Unlocking a locked-in

I told you so. You said I was wrong, but I knew that you could. I only work in an investment firm and deal with locked in accounts every week of my life, so what do I know?

 

[Explorer]

Re: RE: Unlocking a locked-in

I told you so. You said I was wrong, but I knew that you could. I only work in an investment firm and deal with locked in accounts every week of my life, so what do I know?

Nice to hear, but you didn't say it just went through in the last four weeks. That would have made a difference. I was told NO by OFSI earlier in the year and someone else told me a change was JUST made so I emailed them again. OFSI's web site says it is under review.

BTW I got out of the investment business as I found people didn't bother keeping up with things. I am very happy to hear you do. If you are in the neighborhood I'll buy you a beer sometime.

 

[Explorer]

Re: RE: Unlocking a locked-in

I told you so. You said I was wrong, but I knew that you could. I only work in an investment firm and deal with locked in accounts every week of my life, so what do I know?

Nice to hear, but you didn't say it just went through in the last four weeks. That would have made a difference. I was told NO by OFSI earlier in the year and someone else told me a change was JUST made so I emailed them again. OFSI's web site says it is under review.

BTW I got out of the investment business as I found people didn't bother keeping up with things. I am very happy to hear you do. If you are in the neighborhood I'll buy you a beer sometime.

This may be because of the CAPSA study. In that case it may apply to anyone that is a non-resident that is covered by the Pension Benefits Standards Regulations (Federal or Provincial), and also to those who are in dire need, have a small locked-in account, or shortened life span.

I would also think it applies to those who have converted to a LIF or a LRIF.

Maybe you can enlighten everyone? And if you knew why didn't you mention it?

 

[Kreskin]

There can be significant consequences to FI's if they contravene pension acts. You won't find many FI's these days not keeping up with the rules. For example, under BC, Alberta and Manitoba jurisdictions, the financial institution must provide an equivalent pension if it pays out the locked in portion contrary to the regulations. All an Investment Advisor need to do is pick up the telephone and phone their registered plan centre to check on any rule, new or old. IA's aren't expected to know every last rule associated with locked in accounts, but would be expected to know where to find out the specifics for each individual case.

By the way, BC, Alberta and Quebec have always allowed for breakage for those non resident more than 2 years. I don't know if the other provinces have caught up to that rule yet.

 

[Explorer]

Re: RE: Unlocking a locked-in Pension (RRSP)

There can be significant consequences to FI's if they contravene pension acts. You won't find many FI's these days not keeping up with the rules. For example, under BC, Alberta and Manitoba jurisdictions, the financial institution must provide an equivalent pension if it pays out the locked in portion contrary to the regulations. All an Investment Advisor need to do is pick up the telephone and phone their registered plan centre to check on any rule, new or old. IA's aren't expected to know every last rule associated with locked in accounts, but would be expected to know where to find out the specifics for each individual case.

By the way, BC, Alberta and Quebec have always allowed for breakage for those non resident more than 2 years. I don't know if the other provinces have caught up to that rule yet.

New Brunswick and Ontario also allow for this, and Saskatchewan is open to everyone unlocking, while Manitoba would allow a 50% unlocking. As to every FI being up to date check BMO Investorline website. They show Saskatchewan (updated 2006) as NOT being able to unlock and that law was passed in 2002.

 

[Kreskin]

Thanks for the heads up. I didn't see the Ontario listed but read up on Manitoba. One needs to be careful with it as can be one-time up to 50%. If a person wanted to reduce the tax burden and withdraw 25% this year and 25% next year they would be SOL next year.

 

[tamarin]

Pensions should be difficult to open and that's the intent of related legislation where it exists. If you're going to transfer funds to your own management or an investment's firm's supervision you'd better hope they're geniuses. In Ontario I know teachers who elected to move their funds to private management in the stock euphoria preceding 2000. They got scorched. Only consider unlocking a pension under extraordinary conditions. If your plan is defined benefit you've got it made.