Unlocking a locked-in Pension (RRSP)

[Explorer]

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

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.

Institutions, with the big bucks, have a hard time keeping up. Check what TD's breakdown by Province shows (last updated mid 2003, but doesn't show Sask. 2002 change), and none of the changes made since. www.tdcommercialbanking.com/trusts/legislativeguide.doc

Ontario has a new website : www.fsco.gov.on.ca
There is no mention of being able to unlock for non-residents.

A "World" Banking Institution I have an account with is demanding I fly to another Island to one of their Branches so they can verify my identity. I think it is easier to mail a Form 2033 and transfer to another Institution.

 

[Kreskin]

If someone was turning 55 but still working (another job, perhaps part time) and wanted to fully retire at age 60 and get more than the LIRA maximum from age 60-65 (an example age) they have another option (if they are in a restricted plan). At age 55 they could convert the LIRA to a LIF and transfer the difference between the minimum and maximum amounts, tax sheltered, to their regular RSP. At age 60 they can withdraw any of the transferred amount plus increase the LIF to the maximum withdrawal.

It's one way to manage the cashflow if immediately at age 55 the maximum amount is not required for income and one would prefer the withdrawal of larger than regular sums at a later date.

 

[Huckleberry]

I have two RRSP accounts - one from making contributions on my own, the other I got saddled with when I left a federal job. I live in Ontario. It is a major hassle having to manage two different accounts. If I had all the money in one RRSP account I would have a lot more investment flexibility. The whole idea of locked in RRSPs is just plain dumb. As has been said here, I could just as easily run it into the ground by bad investment decisions as I could with an unlocked one. This is just another example of big motherism on the part of the government.

 

[oldman]

Hi I am just letting everybody know that is interested that Constituency week is Nov 6 to 10 . There is still time for more signatures on the Online Petition . I will be sending it in on the 15th of October then shortly after will be releasing a press release to some of the papers with some excerpts from the Online Petition.

Take Care Bill C.

 

[Explorer]

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.

Kreskin,
It is almost two months since I was advised by OSFI that I could unlock my Locked-in RRSPs since I am a non-resident. One of the Major Banking Institutions, that has my account, is insisting I am covered by Ontario Rules and not Federal. I advised them that all railways are under Federal, as are banks, airlines, military, and hundreds of other companies and I even had to send them OSFI's website showing every company that is covered by Federal. The railway I worked for sent me a copy of the email they received from the 'Bank" asking what jurisdiction the railway falls under and how they should do it.

Another fellow non-resident is having a similar problem with London Life, who tells them he can unlock but since they don't have provisions for a non-resident to unlock then he CAN NOT.

So much for FIs keeping up. It is all the more reason there should be one set of rules right across Canada.

To qualify under the new non-residency rule you:
-Must have been out of the country for at least two years
-Must no longer be working for that Company

 

[Kreskin]

Kreskin,
It is almost two months since I was advised by OSFI that I could unlock my Locked-in RRSPs since I am a non-resident. One of the Major Banking Institutions, that has my account, is insisting I am covered by Ontario Rules and not Federal. I advised them that all railways are under Federal, as are banks, airlines, military, and hundreds of other companies and I even had to send them OSFI's website showing every company that is covered by Federal. The railway I worked for sent me a copy of the email they received from the 'Bank" asking what jurisdiction the railway falls under and how they should do it.

Another fellow non-resident is having a similar problem with London Life, who tells them he can unlock but since they don't have provisions for a non-resident to unlock then he CAN NOT.

So much for FIs keeping up. It is all the more reason there should be one set of rules right across Canada.

To qualify under the new non-residency rule you:
-Must have been out of the country for at least two years
-Must no longer be working for that Company

They probably completed the wrong lock-in addendum when the pension was transferred.

I can appreciate the frustration. Unfortunately alot of institutions don't have the most experienced staff working the phones, and not all seem to have the best service operations in place to handle everything. Getting past Suzie or Ned isn't always easy. I have transferred many pensions for clients. The most frustrating experience I've had is with one of the mid-size big 5 whose lock-in agreement differed from the pension act and they simply wouldn''t budge. I tried telling them they were governed by the act but they insisted otherwise.

Life shouldn't be so complicated.

 

[Explorer]

They probably completed the wrong lock-in addendum when the pension was transferred.

I can appreciate the frustration. Unfortunately alot of institutions don't have the most experienced staff working the phones, and not all seem to have the best service operations in place to handle everything. Getting past Suzie or Ned isn't always easy. I have transferred many pensions for clients. The most frustrating experience I've had is with one of the mid-size big 5 whose lock-in agreement differed from the pension act and they simply wouldn''t budge. I tried telling them they were governed by the act but they insisted otherwise.

Life shouldn't be so complicated.

You have got that right. Don't need anymore complications in life. I was in the Mutual Fund business myself and have transfered pensions and locked-in agreements. A lot of people, I found, didn't worry about the details just the sale. In my present case they didn't/don't even want to listen. Now that I have sent the various websites and which parts to read I will hopefully get results.

It should be a lot easier for everyone. It is fine that OSFI handles the Pension Part but once unlocked the rules COULD/SHOULD be the same across Canada.

 

[Guy Of All Trades]

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.

Bravo Explorer.......good for you. I'm in the same situation with my LIRA, living in the USA for the past 8 years. Would you please send any information on your approach with the OFSI. I was (8 years ago) employed by a company who came under the jurisdiction of the Federal Government. My Pension fund was transfered to an investment firm of my choosing.
Thanks

 

[Explorer]

Bravo Explorer.......good for you. I'm in the same situation with my LIRA, living in the USA for the past 8 years. Would you please send any information on your approach with the OFSI. I was (8 years ago) employed by a company who came under the jurisdiction of the Federal Government. My Pension fund was transfered to an investment firm of my choosing.
Thanks

Guy of All Trades. The Institution I am dealing with (now almost 3 months) still insists I am covered by Ontario Rules. I was transfering my other one to them but can't as they wrongfully say mine is Ontario's and the other is rightfully Federal. :-(

I finally wrote the whole thing up and sent it to OSFI and asked them to straighten it out.

If you are a non-resident of Canada and have been out of the country for at least two years you can totally unlock your Federally controlled LIRA. Just contact the Institution your LIRA is with and tell them that OSFI changed the rules this past spring.

 

[oldman]

This is a press release that Andrea Horwath MPP Hamilton East office sent to me to inform the many people that have been working in Ontario . Signing the Online petition and writing letters to the McGuinty government to Unlock Locked in Pensions ( LIF ) ( LIRA) ( LRIF ) for Seniors of the age of 55 years plus.

The Private Members Bill to Unlock Locked in Pension's will be presented At the start of Question Period on December 13 th. There will be a press conference at 1 p.m. in the Queen's Park Media Studio.

ATIKOKAN MAN INSPIRES BILL TO UNLOCK SENIORS’ PENSIONS
The idea behind an Atikokan man’s petition to unlock people’s locked-in pensions like they do in other provinces has found support at Queen’s Park.
Bill Costello’s mission to drive Ontario the way of Alberta, Saskatchewan and Manitoba and allow regular folks the same access to locked-in pensions that MPPs themselves have is realized in a private members bill about to be introduced by NDP member Andrea Horwath (MPP, Hamilton East).
Costello’s online petition calls for the government to relax restrictions on people’s access to their pension savings.
"I should be free to choose how to manage my pension investments and control my life savings any way I see fit," Costello argues. "After all, it’s my money."

"The fact that the Saskatchewan Government respects the wishes of their citizens and has opened the locked in pensions 100% makes a person wonder what motive the McGuinty Liberal Government has for keeping these pensions locked in," Costello said.

Saskatchewan has unlocked 100 per cent. The MPP's of Ontario had their pensions unlocked 100 per cent. Manitoba unlocked 50 per cent and are being lobbied to unlock the remaining 50 per cent and Alberta unlocked 50 per cent on November 1," Costello said.

"Why does the McGuinty Government in Ontario insist on restricting the amount seniors can withdraw from their funds? Why does the Liberal Government of Ontario want to continue to treat their seniors as second class citizens and say that they are too stupid to look after their own money?"
Horwath will be introducing her bill next week.
The online petition site is http://www.petitiononline.com/WRC101/petition.html
It is also to be mentioned that Bill Nafziger of Milverton , Carl Hansen of Keewatin , Grant Fleury of Sudbury and many other citizens of Ontario have been vigerously lobbying the Ontario Government for this change.

​

 

[Kreskin]

I can appreciate everyone wanting their pensions unlocked. My question is, if everyone needs all of their money now what do they intend to do next year and perhaps the next 25 years when their LIRA accounts are nil?

 

[oldman]

I can appreciate everyone wanting their pensions unlocked. My question is, if everyone needs all of their money now what do they intend to do next year and perhaps the next 25 years when their LIRA accounts are nil?

Kreskin. It is not a Question of need all of the time. My fund is building faster then I am allowed to take the money out. I would be still regulating my fund so as the money doesn't run out.

It is a mater of principle . A person should have the ability to regulate the amount of money they wish to take out. Just as the citizens of Sask. Man. and Alberta have.

As I have said a thousand times if people were smart enough to save money for a healthy retirement .

I am sure they are smart enough to regulate their funds so they do not run out.

Also A person may want to take their money out of a government regulated portfolio and invest it elsewhere.

Also we were told that if we invested in these funds we would be able to take the money out at a lower tax rate when we ceased to work. This is not the case because they regulate the amount you take out so that when you & your spouse pass away they will have a big tax grab when your last tax bill comes due.


Oldman

 

[Kreskin]

Kreskin. It is not a Question of need all of the time. My fund is building faster then I am allowed to take the money out. I would be still regulating my fund so as the money doesn't run out.

It is a mater of principle . A person should have the ability to regulate the amount of money they wish to take out. Just as the citizens of Sask. Man. and Alberta have.

As I have said a thousand times if people were smart enough to save money for a healthy retirement .

I am sure they are smart enough to regulate their funds so they do not run out.

Also A person may want to take their money out of a government regulated portfolio and invest it elsewhere.

Also we were told that if we invested in these funds we would be able to take the money out at a lower tax rate when we ceased to work. This is not the case because they regulate the amount you take out so that when you & your spouse pass away they will have a big tax grab when your last tax bill comes due.


Oldman

I'm all for increasing limits and think a person should try to de-register as much as they can without impacting other sources of income.

Every year the maximum limit increases. If one is in his mid 70's and 80's and is outperforming the existing maximum limits he's doing a heck of a job investing it. Don't count on exceeding those limits forever.

 

[Explorer]

Kreskin,

I guess we'll just have to learn to budget, just like when we were working. Is it fair to only be allowed to remove 6 or so % a year even if you are getting a 30 or 40% return? Is it fair that we have to borrow to buy a car when we can pay cash for it? Is it fair that we leave it in so it can grow and the Government will get more in taxes when we die? I would rather pay the tax now and not pay any more, but then I am a non-resident.

 

[oldman]

Hi; To anybody that is interested in unlocking locked in pensions . The Ontario Minister of Finance is asking for input from the public for the 2007 Budget .

This is a good time to send in submissions requesting that the Government unlock LIF's , LIRF's & LIRA's
These funds are our own money they are not government run programs Yet the Ontario government is still trying to keep the control of these funds from their rightful owners.

http://www.fin.gov.on.ca/english/consultations/prebud07/calendar.html

The Ontario government unlocked these funds for themselves .

Just as they gave themselves a 31% raise . Yet they have no interest in unlocking the money for the rest of Ontario people.

Saskatchewan . Manitoba Alberta & New Brunswick have unlocked the funds for their people.

It just may be that the Ontario government uses the money from these funds to pay for their raise as when Seniors pass away and then the money is passed to the person's estate it becomes unlocked immediately and then is taxed by the Ontario government at the highest rate.


The only other way these funds become unlocked is if one spouse passes away then they become unlocked for the other spouse.
Or you reach the age of 90. How many of us will reach that age as the average lifespan of a man is around 77 & a women a few years past that.

I was talking to a senior yesterday and she said " Why are You working so hard to unlock these funds .You will be 65 next year and then they will be unlocked"

THIS IS NOT SO. These funds will not come unlocked automatically.

I would advise everybody that has a locked in pension plan to have a serious look at it or else you will be in for a sad surprise when you retire.

Now is the time to lobby the government as more and more people and organizations are getting behind the movement to unlock these funds and every letter that is mailed into your MPP, Premier & Finance Minister helps.

Regards Bill Costello

 

[oldman]

To the people that are interested Andrea Horwath NDP presented the private members bill to unlock locked in pensions.

This is the statement she gave in the legislature.


Excerpt from hansard
Official Record of the Ontario Legislature

MEMBER’S STATEMENT
Wednesday, December 20, 2006

It’s time the McGuinty government allowed Ontario’s 1.7 million seniors to unlock their locked-in pensions. Bill 175, my private members bill, would allow seniors to withdraw up to 100 per cent of their locked-in pension funds. This one measure would instantly add to our seniors’ financial independence and quality of life at no cost to the taxpayer.

CARP, Canada’s Association for the Fifty-Plus, supports my bill “100 per cent”.

Bill 175 would unlock the vault of pension savings that McGuinty Liberal MPPs are withholding from locked-in pensioners while they themselves care for themselves and their own life savings plans.

I’m sure many people would be surprised to learn that once pensions are locked-in, it is virtually impossible for Ontario seniors to access their money. Only at age 90 can seniors withdraw their funds completely. Until then, they are limited to scant withdrawals of 2.5 to 6.2 per cent of the principal.

Alberta, Saskatchewan, Manitoba and New Brunswick and the federal government have already changed their laws to enable seniors to access some, or all, of their locked-in pensions. But in Ontario, only 61 MPPs have the freedom to unlock their pensions. For everyone else, these pensions are locked tight, cannot be withdrawn except in dire financial circumstances and only with government approval.

Why should our seniors have to put up their hand and ask permission to access their own money, which they saved up over a lifetime of hard work?

Unlike the McGuinty Liberals, I trust seniors to manage their own money. Let’s unlock pensions in Ontario for our seniors. They have worked hard all their lives and deserve to reap the fruits of their contributions. Seniors deserve the right to access and control their locked-in pensions and the McGuinty government should respect that right.

 

[oldman]

Hi :

A friend asked me to put this in the forums
Anna can be reached through me at l6oldman@yahoo.ca
The first letter in my address is a small L

or can be reached directly by joining the group RRSP forum at Yahoo
http://ca.groups.yahoo.com/group/Locked-in_RRSP/

Any former Federal Civil Servants on the site?

Hi all
I'm a former Federal Civil Servant and former member of the Public
Service Alliance of Canada for 20+ years. I have a locked in pension. I
contacted the PSAC and have been given a contact name with whom I'll be
discussing potential political lobbying to unlock Federal pensions. If
you are interested in pursuing this with PSAC let me know. The more
complaints they get the better.
Thanks
Anna Pollock

 

[oldman]

This is a letter that a friend sent to Mr.Ted Arnott one of the MPP's that voted to unlock MPP pensions in 1999. Yet does not feel that the people of Ontario should have the same privilege.

It seems that he does not want to answer the Question put to him.

It seems that some MPP's think they don't have to answer questions from people that are not in their constituency.

They are making the rules and regulations that all people of Ontario have to follow.
Therefor they should answer to all people of Ontario.

Truth Motivated bu Honesty , integrity ????????

Good morning Mr. Arnott,

Irrespective of your most evasive reply to me this past week, I am still waiting for your answer to the following question.

Would you be willing to immediately transfer all your MPP pension assets that are currently in RRSP format into a Pension in a Locked-In format?

Having now read your article on global warming (the March 2nd edition of the Wellington Advertiser) entitled "Inconvenient Truth", it is obvious both you and Al Gore have something in common.

Not to undermine the issue of global warming in any way, I found it very interesting that just days after Mr. Gore's recent visit to Toronto, the media was then reporting about Mr. Gore's own substantial home hydro bill ... Mr. Gore's own personal Inconvenient Truth". Not following what you preach certainly leaves one's credibility very much in question ... wouldn't you agree Mr. Arnott? The old adage surfaces again. Nothing is ever quite as it first appears.

Mr. Arnott ... Let's again discuss your own "Inconvenient Truth", to which you have kept noticeably silent. For you, your voting record shows you found it both ethically and morally acceptable that 61 MPPs (of all party affiliations) be given the right to transfer all their Locked-In Pension assets to Pensions in RRSP formats, courtesy of Bill 27 (1999). The Toronto Star reported in 2002 that this magnanimous gift to your brethren cost taxpayers in excess of $20 million. In addition, the Pension reform of the day left you personally with an RRSP pension.

Why is it that the concept of excessive pension regulation by the Financial Services Commission of Ontario is so detestable to you and all other MPPs? At the same time though, you find such excessive pension regulation so OK for your constituents, both within your riding and across the province? Why is that?

As I said at the beginning . my question still awaits an answer from you. You can choose to answer it now or you can to choose to answer it often in public forum as the election nears.

Mr. Arnott ... I'm retired ... I have nothing but time and as such you have just become one of my personal projects leading up to election day.

You obviously have had great difficulty telling your neighbours about your "Inconvenient Truth". I may not live in your riding but for me, that is irrelevant. I have lived in Wellington County in the past and I have been around this region long before you were born. Further, as you are a graduate of Arthur District High School (the former Wellington County School Board), I feel I have a vested interest in ensuring that you find your way back ... to finding that ability ... to tell the truth ... rather than dance around it.

I suggest you think seriously about telling your "Inconvenient Truth" now! Remember the funeral scenario we discussed in your office on February 2nd?

We will surely be crossing paths,

Kenneth Elliott

 

[oldman]

I received this in a E-Mail it is from the Archives of The Taxpayers Federation
It made my blood boil !

MPP Pension Fiasco: A $10 Million Taxpayer Mugging?
Imagine if you overpaid into your RRSP a few years back only to be notified by the Canada Customs and Revenue Agency (CCRA) that you now owe big-time taxes - let's say $10 million - on this overpayment. But don't worry Ontario taxpayers will pick up the tab for your mistake. If you're one of approximately 300 current or former MPPs, this is precisely what is happening.

This is the side issue - albeit a $10 million side issue - that has popped up right in the middle of the Ontario PC leadership campaign and it doesn't look good for former Finance Minister Ernie Eves who is leading the race to succeed outgoing PC leader and Premier, Mike Harris. In Mr. Eves defense, his officials have suggested that the timing of this "news" is suspect is probably the work of mischief-making Liberals who are trying to sully his image. Fair enough, there is likely some validity in this suspicion.

Nonetheless, it appears as though Ontario really messed up in 1996 in the way it wound down the gold-plated MPP pension plan. Of course, the concept of abolishing the plan was the right thing to do as was converting paid up amounts for MPPs in RRSP contributions. At issue is the manner in which this concept was executed.

The problem was (and is) that the Ontario government contributed too much into these RRSPs in direct contravention of overwhelming expert advice. Instead it relied on one outside opinion that said what they were doing was legal and acceptable under the Income Tax Act and relevant pension and RRSP legislation.

Some $54 million was withdrawn from the old MPP pension scheme and topped up with another $55 million from general revenues. This $109 million was in turn funneled into RRSP accounts for current and former MPPs or survivors.

The payouts into the RRSP scheme were quite impressive. Former Premier Bob Rae along with NDP colleagues Bud Wildman, Floyd Laughren and Dave Cooke received payments of $1 million or more. And current MPPs like Grit Sean Conway also made out very well. As for Ernie Eves and Mike Harris, their payments were $810,000 and $864,000 respectively.

In setting up this conversion, officials from the provincial Ministry of Finance, a major accounting firm, a prominent Toronto law firm, and Ottawa (including then DM of Finance and now Bank of Canada Governor, David Dodge) all warned Ontario against proceeding as it planned. But Ontario ignored this advice and counsel and marched ahead.

Now fast forward to 2002 and the 300 current and former MPPs have been asked to withdraw excessive contributions to their pension schemes, sometimes up to 50% and 60% of the original RRSP amount. But withdrawing this money counts as income which is subject to income tax. This is where the province (read: Taxpayers) will step in and pay out $10 million to cover the tax bills owing.

This boondoggle yields some fundamental questions. To start, it must be determined if Ontario actually received a 'ruling' from Ottawa. A ruling is a binding interpretation of tax implications (decided by CCRA and Justice) in advance of a financial transaction. If Ottawa gave a formal ruling, then Mr.Eves and crew did nothing wrong and the matter should be dropped.

However, if a formal ruling was not obtained, then other questions arise. Why wasn't a formal ruling sought? Was Mr. Eves was in a conflict of interest in pushing this scheme through when he stood to personally benefit? And is it fair that taxpayers absorb this entire $10 million hit or should former MPPs share in paying some of the taxes owing? At the very least, taxpayers deserve some answers to these $10 million questions.

 

[trogen]

What if I split my locked in RRSPs across different financial institutions so that each instuition holds less than $8,740.
That way according to the "Unlocking Provisions of the Employment Pension Plans Act" Page 2, I should be able to withdraw as cash.
Is that possible? Or am I interpreting this incorrectly?
Please advise. I only have $11,000 worth or locked in RRSPs that I can really use towards my ever growing debt.

Thanks in advance..[FONT=Times New Roman,Times New Roman]
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