Unlocking funds from a pension plan or from a locked-in retirement savings plan
What is a locked-in retirement saving plan?
Federally regulated locked-in retirement saving plans include a life income fund, a restricted life income fund, a restricted locked-in savings plan and a locked-in registered retirement savings plan, and can hold funds originating from a federally regulated pension plan. The different types of locked-in retirement savings plans are defined in OSFI's glossary that can be found on our website.
What unlocking options are available, how much can be unlocked, and what forms are required?
The unlocking options available from a locked-in retirement savings plan or a pension plan, and the conditions that must be met to take advantage of them, are set out in sections 20, 20.1, 20.2, 20.3 and 28.4 of the Pension Benefits Standards Regulations, 1985 (PBSR).
Please note that not all unlocking options are available from a pension plan or from every locked-in retirement savings plan. The chart below provides a general description of the unlocking options, from where they are available, and a link to the forms that must be completed. A number of the unlocking provisions refer to the "Year's Maximum Pensionable Earnings" (YMPE) in determining whether funds can be unlocked and/or the amounts that can be unlocked. The YMPE is a dollar amount that is the maximum pensionable earnings under the Canada Pension Plan and changes annually based on a legislated formula. The YMPE for 2024 is $68,500.
Unlocking Options Available From Unlocking Amount ($) Required Form(s)
If a person is:
- experiencing financial difficulties because of low income; or,
- high medical or disability-related costs relative to income;
a certain amount may be withdrawn from a locked-in account.
The funds may be withdrawn as cash, or transferred to a tax-deferred savings vehicle such as a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF), subject to any applicable income tax rules.
- locked-in RRSP
- life income fund (LIF)
- restricted LIF (RLIF)
- restricted locked-in savings plan (RLSP)
The maximum amount that can be unlocked depends on the person’s expected income for the year – the withdrawal amount varies from 50% of the YMPE (or $34,250 in 2024) for $0 expected income to $0 when expected income is 75% or higher of the YMPE (or $51,375 for 2024)
High Medical or Disability-Related Expenditures
Depending on expected medical or disability-related expenditures, can unlock up to a maximum of 50% of the YMPE (or $34,250 in 2024) can be unlocked.
The 2024 YMPE is $68,500.
If the following criteria are met, then a person's pension may be withdrawn in cash or transferred to a tax-deferred savings vehicle such as an RRSP or a RRIF subject to any applicable income tax rules:
- the person has ceased to be a resident of Canada for at least 2 calendar years (the person is considered to be a resident of Canada in a calendar year if he or she has lived in Canada for 183 days or more in that year) and
- if the pension benefit is in a pension plan, the person has ceased employment with the sponsor of that pension plan.
- locked-in RRSP
- pension plan*
The total value of the pension benefit or locked-in account balance
No prescribed form required
Shortened life expectancy:
If a person has a shortened life expectancy (as certified by a physician) due to a physical or mental condition, the funds may be withdrawn in cash or transferred to a tax-deferred savings vehicle such as an RRSP or an RRIF subject to any applicable income tax rules.
- locked-in RRSP
- pension plan*
* If the funds are in a pension plan, the pension plan may provide a payment or a series of payments in lieu of a pension benefit, but is not required to do so. This option is not available if a person has already commenced their pension.
The total value of the person's pension benefit or locked-in account balance
No prescribed form required
Small pension benefit unlocking from a pension plan:
If a person has ceased membership in a pension plan and the value of their pension benefit is less than 20% of the YMPE for the calendar year in which their membership ceased, then the plan administrator can choose to pay out this amount in a lump sum.
The funds may be paid in cash or transferred to a tax-deferred savings vehicle such as an RRSP or an RRIF subject to any applicable income tax rules.
- pension plan
The total value of the person's pension benefit
No prescribed form
Terminating member would receive a termination statement from the plan administrator
Age 55 and over - One-time 50% unlocking:
If a person:
- will be 55 years of age or older within the calendar year; and,
- exercises the option within 60 days of when the funds are initially deposited in the RLIF;
they may transfer 50% of the funds in their RLIF into an RRSP or an RRIF. Cash can then be withdrawn, from either of these vehicles, subject to any applicable income tax rules. The funds cannot be taken directly in cash from an RLIF.
Up to 50% of the total value of the locked-in account balance
Form 2: Attestation Regarding Spouse/Common-Law Partner
Age 55 and over - Small account balance unlocking
- a person will be 55 years of age or older within the calendar year; and,
- the total value of all of assets in all of their locked-in RRSPs, restricted locked-in RRSPs, LIFs, and RLIFs are less than or equal to 50% of the YMPE (50% of $68,500 which is $34,250 for 2024);
the funds may be withdrawn as cash, or transferred to a tax-deferred savings vehicle, such as an RRSP or an RRIF subject to any applicable income tax rules.
- locked-in RRSP
Total value of the locked-in account balances.
Where can the forms required to unlock funds be obtained?
The necessary forms can be obtained from the financial institution that holds the locked-in retirement savings plan contract. Generic versions of the forms are available on OSFI's website in Word or PDF format and the specific links are provided in the chart in question 2 above. Any other forms required by a financial institution would be supplied by them.
What are the responsibilities of the financial institution or advisor to verify the accuracy of an individual's certifications?
The Pension Benefits Standards Regulations, 1985 do not require that financial institutions or advisors verify the figures provided by a client.
The role of the notary public, commissioner, or other person authorized to take affidavits is to verify and witness the individual's signature, not to verify the contents of what the individual is certifying to be true.
Do the unlocking options affect the pensions of those who were or are employed by the Government of Canada?
The federal government's public service pension plan is governed by the Public Service Superannuation Act (PSSA), not the Pension Benefits Standards Act, 1985 (PBSA). The Treasury Board of Canada Secretariat is responsible for matters relating to pensions for federal government employees. Questions regarding benefits payable under this plan should be directed to the Treasury Board of Canada Secretariat. Their toll-free number is 1-800-561-7930.
The PSSA provides that funds can be transferred from the public service pension plan to a locked-in RRSP, a life income fund, or a restricted life income fund so the Pension Benefits Standards Regulations, 1985 (PBSR) provisions regarding these types of vehicles will apply to any funds transferred from the public service pension plan to these vehicles.
Can the unlocking options be combined? Can two options be used in the same calendar year?
Yes, as long as all the conditions for unlocking under the relevant option(s) are met. For example, if after using the one-time 50% unlocking option, the amount left in the Restricted Life Income Fund meets the small balance requirements, then that option can be used, either in the same year or in any subsequent year.
Is the maximum annual income withdrawal from a life income fund (LIF) or a restricted life income fund (RLIF) separate and in addition to the unlocking options?
Yes. The maximum annual amount that may be withdrawn from a LIF or an RLIF is separate from, and in addition to, any unlocking that is done under the one-time 50%, small account balance or financial hardship options. However, funds withdrawn from a LIF or an RLIF must be included in your expected income in a calendar year under the financial hardship unlocking formula.
Are the interests of spouses or common-law partners protected when pension funds are unlocked?
If a person who has a spouse or common-law partner, wishes to unlock funds under financial hardship, one-time 50% or small account balance unlocking, then the spouse or common-law partner must sign Form 2: Attestation Regarding Spouse/Common-Law Partner that attests that they consent to the unlocking (see also questions 2 and 11 regarding this form).
If a person does not have a spouse or common-law partner, then they must attest to this on the same form.
If a person wishes to unlock funds under shortened life or non-residency unlocking, spousal consent is not required under the Pension Benefits Standards Act, 1985 or the Pension Benefits Standards Regulations, 1985; however, a financial institution may request a form of spousal consent as part of its administrative procedures.
What is an attestation?
An attestation means that the person making the attestation is certifying that to the best of their knowledge, the information in the form they are signing is true and accurate. All attestations must be made before a notary public, commissioner, or other person authorized to take sworn affidavits.
If a person lives outside of Canada, do they have to make the attestation in front of a Canadian notary public, commissioner or other person authorized to take sworn affidavits?
No. An attestation may be made outside of Canada as long as it is made before a qualified person (i.e. a notary public, commissioner or other person authorized to take sworn affidavits) in the person's country of residence.
Does a spouse or common-law partner have to make their attestation at the same time as the person withdrawing the funds? Do the attestations have to be made in front of the same person?
No. A spouse or common-law partner does not have to make their attestation at the same time that the fund holder makes their attestation and the attestations do not have to be made before the same qualified person (i.e. a notary public, commissioner or other person authorized to take sworn affidavits).
What if the spouse or common-law partner cannot be located to sign the form?
If someone has a spouse or common law partner, their consent is required before the funds can be unlocked under financial hardship, one-time 50% or small account balance unlocking. The spouse or common law partner's consent is provided by completing Form 2 of Schedule V of the Pension Benefits Standards Regulations, 1985 (Form 2).
If someone is no longer living with their former common-law partner, then no consent is required from them because that person is no longer considered a common-law partner under the Pension Benefits Standards Act, 1985.
If someone does not have a common-law partner, but has a spouse from whom they have separated but not divorced, that person is still considered to be the spouse and their consent is required unless a court order or agreement that provides for the distribution of property clearly and unambiguously provides that the spouse no longer has a right to a share of the funds that the person is seeking to unlock. Such a court order or agreement should be noted and attached to Form 2. In a case where no such court order or agreement exists and the spouse cannot be located, legal advice should be sought to determine the options available.
If a person transferred funds from a federal locked-in registered retirement savings plan (RRSP) into a life income fund (LIF), can the funds be moved back into a locked-in registered retirement savings plan?
If the fund holder has not reached age 71, he or she may transfer the funds in the LIF back into a locked-in RRSP. Age 71 is the maximum age set by the Income Tax Act. For information about RRSP options at age 71, please refer to the Canada Revenue Agency's website.
If a person wishes to unlock funds due to high medical or disability-related expenditures and they reside outside of Canada, do the unlocking forms have to be signed by a Canadian physician?
No, the required forms do not need to be signed by a Canadian physician. The person may wish to review whether funds can be unlocked because the person has met the non-residency conditions described in the table in question 2.