By Sheryl Smolkin
Read this article and comments on moneyville.ca
Sometimes life takes an unexpected turn and you’re suddenly out of work or facing huge expenses due to family illness without the means to pay the bills. It may not have crossed your mind that you might be able to access your locked-in retirement savings to help get you through the crisis.
The upside of going this route is that getting the money when you need it may help you avoid dire consequences like eviction or mortgage foreclosure. The downside is of course, that your future retirement income may be significantly eroded.
If you elected a transfer out of an Ontario workplace pension when you left a previous employer or the plan was wound up, the money was moved to a locked-in retirement account (LIRA), a life income fund (LIF) or locked-in retirement income fund (LRIF).
Normally, you must wait until you turn 55 before you can start receiving payments from your locked-in account and there are limits on the minimum and maximum payments you can receive in any one year.
The reason for this says Barry Gros, an actuary and senior executive with pension and benefits consultant Aon Hewitt, is because locking-in is meant to ensure that money set aside for retirement is used for that purpose.
However, you can unlock up to 50 per cent of your pension at the time of transfer and you might be able to gain special access to your locked-in accounts in a variety of other circumstances, including if you are facing specific forms of financial hardship. READ MORE