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.
Is there any way my Manitoba locked in money can be withdrawn as a lump sum, such as financial hardship, shortened life expectancy or unlocking small pension balances?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.
If you are a pension plan member or a plan member/owner, and the account balance is not a small amount, you cannot apply to unlock your pension or locked-in money unless your spouse or common-law partner consents by completing the form prescribed for each of the below provisions. This can only be done after you and your spouse or partner have been given the necessary information.
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 and dental expenses, rental arrears, and 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Locked-in money in your LIRA or LIF, or, if the plan permits, your pension, may be withdrawn in a lump sum.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
The locked in money you have in LIRAs and LIFs can be paid in a lump sum if it is considered a small amount. You must submit a written request for a withdrawal to the financial institution(s) holding your LIRAs and LIFs. The institution will determine if your locked in money is below the small amount limit so you can receive it as a lump sum.
If you belong to a pension plan, your pension can be withdrawn as a lump sum when you terminate membership in the pension plan if the pension is a small amount as stated in The Pension Benefits Act (Act).
The consent of your spouse or common-law partner is not required, because the amount is too small to provide a pension.
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 may be withdrawn in a lump sum if you are no longer a Canadian resident for at least two calendar years.
If you belong to a pension plan, and the pension plan permits it, your pension may be withdrawn in a lump sum if you are no longer a Canadian resident.
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.
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 are retiring from 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 within 30 days of the first request.
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.
