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How To Access Your Locked-in RRSP in a Crisis

Posted by on Jan 10, 2011 in Moneyville, Retirement | 1 comment

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

One Comment

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  1. philip james

    The pension system for Canadians is terribly flawed.

    The system favors those who have been self employed and purchased RRSP,s as compared to those who worked for a company. Both were set up to provide retirement income.
    Lets take a company locked in pension of 500,000 .
    Lets compare an RRSP.at the same dollar value 500.000. The locked in pensioner will have is funds handed to him or her in dribbles and drabs until age 90. Only a percentage is available each year. Those with RRSP,s there is no limit of withdrawal.and to get more of your money , the RRSP holders will never have to apply to the FSCO, and pay a fee ranging fro 200.00 to 600.00..
    Also thanks to Bill 27 61 MPPs with locked in pensions had their pensions totally unlocked including Dalton McGuinty. This could even be against the charter of rights and freedoms. Philip


  1. Today's economy media pack – 2011.01.14 | Today's economy blog - [...] Sheryl Smolkin. How to access your RRSP in a crisis. “Sometimes life takes an unexpected turn and you’re suddenly…
  2. Today’s economy media pack – 2011.01.14 | BrighterLife.ca - [...] Sheryl Smolkin. How to access your RRSP in a crisis. “Sometimes life takes an unexpected turn and you’re suddenly…

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