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Is there any way my Manitoba locked in money can be withdrawn as a lump sum, such as financial hardship, shortened life expectancy or unlocking small pension balances?

Financial hardship is not a cause for providing locked-in funds in a lump sum. However, there are some circumstances in which you may be allowed to unlock.

If you think one of these may apply to you, discuss it with your plan administrator or financial institution. 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 qualify for a withdrawal all your pension or locked in money will be unlocked. You must withdraw all of your pension or money as a lump sum, or you can elect to transfer it to an RRSP or RRIF if permitted by the tax law.

However, if you qualify for a withdrawal due to a shortened life expectancy, you can withdraw all or any part of your pension or locked in money as a lump sum, or you can elect to transfer it to an RRSP or RRIF if permitted by the tax law.

Shortened life expectancy

If your pension plan permits it, money that is locked into your pension or locked in money you have in a Locked-in Retirement Account (LIRA) or Life Income Fund (LIF) may be withdrawn in a lump sum.

To do this, make a written request to your financial institution holding your LIRA or LIF. You will need a medical doctor to certify, in writing, that you have a considerably shortened life expectancy (which cannot exceed two years).

Also, if you are a plan member or a plan member/owner you cannot withdraw your pension or locked in money unless your spouse or common-law partner consents to giving up his or her up his or her right to a pension. This can only be done after you and your spouse or partner have been given the necessary information, and he or she consents to the withdraw by completing and signing Form 7 - Consent to Withdrawal From LIRA or LIF Due to Terminal Illness or Disability.

Policy Bulletin 4 - Withdrawal or Unlocking of LIRAs and LIFs provides additional information on shortened life expectancy.

Small amounts

If you have a "small amount" held in a pension plan, a Locked-in Retirement Account (LIRA) or Locked-in Life Income Fund (LIF), it can be paid in a lump sum. If you have a "small amount", the consent of your spouse or common-law partner is not required, because the amount is too small to provide a pension.

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 see if your locked in money is below the small amount limit so you can receive it as a lump sum, calculated by:

  • Annually adding 6% interest to the balance of your locked in money for each year from December 31 of the year in which you apply for the withdrawal, to the end of the year that you are age 65.
  • Checking to see if the balance of your locked in money is less than 40% of the YMPE for the year you apply for a withdrawal.

For example:

John will be age 55 on December 31st of the year he makes a written request for a withdrawal to his financial institution. The current balance of all of his LIRAs and LIFs is $5,000. Six percent interest is added annually to this balance from age 55 to age 65. The balance of his locked in money with interest is $8,954.25. For 2014, 40% of the YMPE is $21,000. Since the balance of John's locked in money (with interest of $8,954.25) is less than $21,000, his locked in money can be unlocked and paid to him as a lump sum.

Policy Bulletin 4 - Withdrawal or Unlocking of LIRAs and LIFs provides additional information on small amounts.

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Non-residents of Canada

If your pension plan permits it, money that is locked into your pension or locked in money you have in a Locked-in Retirement Account (LIRA) or Life Income Fund (LIF) 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 administrator of your pension plan or the financial institution holding your LIRA or LIF. 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. To receive proof of your status, you must apply to CRA by completing CRA Form NR73: Determination of Residency Status (Leaving Canada). This form can be obtained from CRA's website at www.cra.gc.ca or by calling 1-800-959-2221.

Also, if you are a plan member or a plan member/owner you cannot withdraw your pension or locked in money unless your spouse or common-law partner consents to giving up his or her up his or her right to a pension. This can only be done after you and your spouse or partner have been given the necessary information, and he or she consents to the withdraw by completing and Form 3 - Consent to Withdrawal for Non-residency Status.

Policy Bulletin 4 - Withdrawal or Unlocking of LIRAs and LIFs provides additional information on non-residency.

One-time 50% Transfer

(Once-in-a-Lifetime Unlocking)

You must be at least 55 years old to apply. If you belong to a pension plan that allows you to do so, or if you have locked in money in a LIF, you may apply for a one-time transfer of up to 50 percent of your locked in money from your pension plan or your LIF 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 LIF. If you wish to unlock 50 percent from different plans you must make a separate transfer request to each administrator or institution. The written request must

  1. Provide:
    • your name, address and date of birth,
    • the name of the spouse or common-law partner whose consent is required, and
    • any other information the administrator or the financial institution may require to begin the transfer process.
  2. Identify the plan or plans administered by the administrator or the financial institution from which the transfer is to be made. You may want to get help from your plan administrator or financial institution to make sure all your locked in money is identified.
  3. Confirm you have not made a one-time 50 percent unlocking transfer before.

While you may unlock 50 percent of your locked in money, that amount may be affected by amounts that may be payable to a former spouse or common-law partner, and amounts that may be required according to the Maintenance Enforcement Program of the Department of Justice.

Next, the administrator or institution must provide you with an application form together with the necessary information.

Also, if you are a plan member or a plan member/owner you cannot unlock and transfer 50 percent of your pension or locked in money unless your spouse or common-law partner consents to giving up his or her up his or her right to a pension. This can only be done after you and your spouse or partner have been given the necessary information, and he or she consents to the withdraw by completing and signing a transfer consent, Form 4 - Consent to One-time Transfer of Manitoba Locked in Money.

You have 30 days from receiving the application form and the necessary information to provide the administrator or financial institution with your completed application form together with the transfer consent completed by your spouse or common-law partner if required.

Next, the administrator or institution must request a written notice from the Office of the Superintendent - Pension Commission verifying that you have not unlocked 50 percent of your locked in money before. Usually the administrator or institution has 90 days to complete the transfer after providing you with the application form and the necessary information.

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.

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/labour/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.

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