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Financial Hardship Reasons for Unlocking Locked In RRSP - Withdrawal of Pension Funds | Canada

Locked-In RRSP Retirement Funds Can Be Unlocked and Withdrawn for Financial Hardship Reasons in Some Provinces

How to unlock locked-in RRSP funds for financial hardship reasons in Canada.If you’re thinking of withdrawing money from your locked-in RRSP or pension funds to help you during a financial hardship, it would be best to speak with a Credit Counsellor first. Other options may be available to you so that you won’t need to use these funds. If, however, you’d like to look into the reasons that allow you unlock and withdraw money from your Locked-in Retirement Account (LIRA), Life Income Fund (LIF), or Locked-in Retirement Income Fund (LRIF), we’ve got all the financial hardship reasons listed below.

Before we get to that, though, we should mention one important detail. To unlock pension funds, they must first be transferred out of an employer’s Registered Pension Plan (RPP) and into a LIRA or LIF in your name, and you typically must also be no longer employed by the company who created the pension.

Below are reasons that permit you to unlock locked-in pension funds. Every locked in pension is locked and preserved for your retirement under the legislation of either a specific province or under federal legislation. You’ll have to check your pension documentation to see which provincial legislation it is locked in under (the financial institution that holds the funds will also have this documentation if you can’t find yours). Beside each reason below are the provinces (or federal legislation) that permit you to withdraw funds for that reason.

Reasons to Unlock Locked-In Pension

Provinces That Allows for the Reason

Low Income - You expect your income to drop to a very low level

Ontario, BC, Alberta, SaskatchewanNova Scotia, NewfoundlandFederal

Potential Foreclosure

Ontario, BC, Alberta, Nova Scotia

Eviction for Being Behind on Rent or Mortgage Payments

Ontario, BC, Alberta, SaskatchewanNova Scotia, Newfoundland

First Month’s Rent and Security Deposit

Ontario, BC, Alberta, Saskatchewan, Newfoundland

High Medical or Disability Related Costs - You need money for medical expenses that are not covered by a medical plan or any other source, or you need to pay for renovations to your home that are required due to illness or disability.

Ontario, BC, Alberta, SaskatchewanNova Scotia, NewfoundlandFederal

No Longer a Canadian Resident

Ontario, Quebec, BC, Alberta, Manitoba, Saskatchewan, New BrunswickNova Scotia, NewfoundlandFederal

Shortened Life Expectancy

Ontario, Quebec, BC, Alberta, Manitoba, Saskatchewan, Nova Scotia, New Brunswick, NewfoundlandFederal

50% Unlocking - Can do this one time if you are 55 years old or older

Alberta, Manitoba, Federal

Small Balance Unlocking - If the balance of your locked-in funds are below a certain amount, you can unlock and withdraw the money

Ontario (you must be at least 55 and the balance less than $25,960), BC (balance must not exceed $12,980), Alberta (balance must not exceed $12,980 if you're under 65), Manitoba (balance cannot exceed $25,960 after a future value calculation is done), Saskatchewan (balance must not exceed $12,980), New Brunswick (withdrawal formula is based on your age), NewfoundlandFederal (balance must be less than $12,980)

Age 65 & Balance is Small

Quebec (balance can’t exceed $25,960), BC (balance can’t exceed $25,960), Alberta (balance can’t exceed $25,960), Nova Scotia (amounts under $32,450)

Note: All numbers listed in the table above are for 2022 (they go up a little every year)

Provincial Financial Hardship Unlocking (FHU) programs are intended to provide a one-time source of financial relief to locked-in account owners who are experiencing financial hardship.

The financial institution holding the locked-in retirement funds must review your situation to ensure it meets the requirements of the provincial legislation that govern their locked-in funds. The government is not involved in the decision to unlock your funds. All they have done is create the legislation for your province, and then it’s up to your financial institution to follow the legislation.

You don’t have to provide information about your other assets to qualify. All you need to fill out are the specific documents that apply to the reason why you are applying to withdraw your locked-in funds. There is often no charge for applying. However, provincial legislation does not prevent your financial institution from charging you a fee.

How to Find the Best Help & Assistance

For all situations involving financial hardship – especially withdrawing locked-in funds – the ideal person to talk to first is a non-profit Credit Counsellor. They often find that many people make a difficult situation worse for themselves by taking actions that seem right at the time, but in the end only end up leaving them in a worse financial position. Experienced, well trained Credit Counsellors are true financial hardship experts. They can guide you through all your options and help you figure out what steps would be in your best interest and which would not. The nice thing is that an appointment with a non-profit Credit Counsellor is usually free, and they’re able to provide you with an objective perspective and very helpful information. To find a good non-profit credit counselling organization near you, click here.


Links to Provincial Rules for Unlocking Funds Due to Financial Hardship

Ontario Rules for Financial Hardship Unlocking

Ontario Rules for Unlocking Funds when there is No Hardship

BC Rules for Unlocking a Pension

Alberta Rules for Unlocking Funds Due to Financial Hardship

Manitoba Rules for Unlocking a Pension

Saskatchewan Rules for Unlocking a Pension

Quebec Rules for Unlocking a Pension

Nova Scotia Rules for Unlocking Funds Due to Financial Hardship

Nova Scotia - More Information About Unlocking Funds

New Brunswick Information About Unlocking Funds

Newfoundland - Eligibility for Unlocking Locked-In Retirement Savings for Financial Hardship

Prince Edward Island - Does not have its own laws and regulations governing pension plans

Federal Unlocking Options & Information for Financial Hardship


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Hi Kathleen, Sorry we can't help you in this area. Our only suggestion would be for you to maybe ask the government body that issues the form for help or see if the financial institution that holds your locked-in funds can help you.

Hi, Turning 55 early next year and will unlock some to pay off some debt & bills -about $20k. Don't need 50% as that would push my income to nearly 150k. LIRA held with an investment company. Just wondering about what fees are associated with unlocking. In reading your well informed column, I expect some to be held for government taxes. Just wondering what the estimated fees may typically be -govt and investment company. I haven't been able to see this information anywhere. So my plan is the unlocking to RRSP, then withdraw and then make RRSP contribution to end of year to offset the $20k. Haven't made RRSP contributions in years so have the contribution room ...thanks in advance for any and all advice!!!

Hi Bob, To answer your question, we're not aware of any fees that companies charge for unlocking or redeeming registered funds. What you will encounter, though, is the withholding tax. Financial institutions are required to withhold 30% of funds redeemed when the redemption amount is over $15,000. When you do your taxes at the end of the year, you'd then find out how much of the withheld money you get back based on your total tax bill for the year. Any other fees you pay would be fees associated with the specific invest your money was in. If your money was invested in a simple term deposit, then there likely won’t be any other fees. In regards to the rest of your financial plans you mention, we would encourage you to speak with a financial expert such as an accountant or financial planner – if you haven't already – to make sure that your next steps are moving you towards your long-term financial goals.

If you are still employed with the company you have the funds locked away with. I don't get that, especially if you're in a crisis and need quick cash. I am looking to move and some extra cash would help especially since I was denied a relocation package. They give those packages for people at the top which makes no sense. The less help you need, the more willing they are to give it to you.

My fin institution says my federal pension plan funds were locked in under provincial rules even though I was employed by the federal government. Is there any way that this can be corrected?

Sorry, we can't answer this question. Our best guess would be that it is locked under whatever legislation your employer chose to set it up under. In may provinces the provincial legislation can be preferable to the federal legislation. However, since you're asking this question, we would assume that it's not in your case.

Hello, I am now 55 and want to unlock about 30% of my LIRA -no hardship reason. But my investment company advisor says that I have to unlock all of my LIRA -100% and open a LIF. They then transfer the 30% to an RRSP which I can withdraw from. Also I would get a yearly LIF amount of $1800. However, I read on another financial column that I can choose to only unlock a portion of my LIRA -the 30% I only want. I'm confused as to which one is right! Or is it me just not understanding? Also if I can only do 30% is it that the LIF payments come from the 30%? I. really want remaining 70% to stay as a LIRA. Thank you

Sorry, we’re not the best ones to answer your question. Our knowledge is centered around the areas of financial hardship, budgeting, and general personal finance.

I was just wondering if there is a form or line in the Tax code for claiming the withhold tax collected from a financial hardship claim. Should I have received some sort of form (T4RIF ?) that would allow me to include it on my income tax form ? Sorry, just a little confused on this one.

Hi Kevin, The answer is yes. Whenever you redeem registered funds, the government considers the redemption to be income to you in the year that you redeem it. So, yes, your financial institution will mail you the equivalent of a T4 form that shows how much money you redeemed and how much tax was withheld (just like your employer gives you a T4 that shows how much they paid you for the year and how much tax they sent to the government on your behalf). You would then give this form to your accountant or enter the numbers into your tax software and maybe get some of that money withheld for tax back if you don’t end up owing that much. If you haven’t received this form already, contact your financial institution and see when they plan to mail it to you.

I have rrsp funds that have been transferred from employer pension plan to a nextstep plan with greatwest life after I left the company.They are currently locked in,the amount is only around $8000...can I unlock and withdraw in alberta using the small balance unlocking rule?

Yes, it sounds like you can unlock those funds using the small balance unlocking rule. A lot of people are unaware of this rule. So if you can print off something from the government of Alberta that shows this rule, then if the person at your financial institution is unfamiliar with it, they can see that it exists and work with you on this. Here's a page that shows the rule:

Question I lost my job and started getting EI and I found out it turned into a CERB automatically. I panicked during covid 19 and sold my locked in rrsp due to financial hardship. Is EI considered income? If so would I be penalized if my income is overstated ? If so how can I reverse this I don’t want to be fined 100k ? I don’t see any where in the list below that EI is considered income on the

Hi, Unfortunately we're not qualified to answer your questions. We'd suggest you speak with an accountant about this since it's a tax issue. If we were to offer a few comments as an unqualified observer, yes, it does appear that both EI and the CERB are taxable income (if you Google it, you can find the CRA stating both of these are taxable income on their website). We are guessing that you withdrew your money under the "Low Expected Income" reason. This asks you for your "expected" total income. This is only a guess and is subject to a degree of change - especially in light of world changing events such as COVID-19. A reasonable person is likely going to be a little more gracious than normal when reviewing hardship situations that result from COVID-19 (that seems to be universally expected these days). We are not experts in the Ontario Financial Hardship Unlocking legislation, but the new rules effective in 2014 state that "it is the responsibility of the financial institution which holds...[your] locked-in accounts" to review your situation and see if you qualify. If they determine that you qualify and release the funds to you, then it would appear that at that time you qualified. It's possible that you might also benefit from talking things over with a credit counsellor. Feel free to contact a non-profit credit counsellor near you and chat things over with them. They are not experts in this either, but they can possibly point you in the right direction and give you some peace of mind in going over your situation with someone who is knowledgeable about helping people in tough financial situations (their help is also free).

Thanks for your response. Yes I spoke to everyone from the accountant, Credit Counsellors and Td bank. And they keep giving me the same answer they don’t know. But would you say if employment insurance is not listed on the site than it is safe to assume that if I don’t see it on the list. Than they won’t fine me 100k for overstaying my income?

Unfortunately you've entered into an area that not a lot of people have direct experience in. We're glad to hear that you've sought advice from a number of people. In regard to being fined for overstating your income, your accountant should be able to advise you on that or possibly give you some direction in regard to contacting the government to seek some clarity on this issue.

With the pandemic worldwide difficulties many people are looking to access some extra funds. If a person will be in financial hardship because their employer is closing for good and there is no anticipation for new work can they access some funds even though they are only 38 years old?

Even though the government has made adjustments to some areas of our financial system to accommodate the COVID situation, redemption rules for locked-in funds so far remain the same. They are laws that would need to be amended by the provincial government. So, yes, you do have to be 55 to do the small balance redemption in Ontario. Based on your stated situation in Ontario, it sounds like the “Low Income” unlocking provision may be the only one that could come close to helping you. The details can be seen in these two places: and . Basically you can use the “Low Income” unlocking rule if your expected income for the next twelve months will be $39,133 or less.

Iam 33 years old and having a financial hardship in stage of my life. Can i unlock my Lira account with my bank? Its currently in a direct bokerage account for trading stocks.

In Saskatchewan, there are three reasons that can allow you to redeem your locked in funds early: 1) if you are no longer a Canadian resident, 2) if a doctor certifies that you have shortened life expectancy, or 3) your balance is less than $11,740. If your plans balance is less than $11,740, you can apply to your brokerage company to redeem your funds. If you’ve recently lost your job or had your hours reduced, you could see if you qualify for one of the new government income support programs: . You could also speak with a local, non-profit credit counsellor (1-888-527-8999) and see if they can find a way to help you make it through your current financial difficulty.

I live in Nova Scotia. I am 46 years old and have a small balance locked in RRSP under 11000 from my first ever job which eventually closed . Can I cash these funds out or move them to a regular RRSP?

Yes, if your RRSP is locked in under Nova Scotia or Federal legislation, you can unlock it because its a small balance and either withdraw it as cash (minus withholding tax) or you should be able to transfer it to a regular RRSP and then redeem any funds in the future if you really need them.

I contacted my bank who is holding my small balance locked in RRSP of 9000 and they told me I had to wait till I am 65 but I can access it at 55 can I not? Like I said I am 46 with the small balance under 11180 so I am confused on what I can do as there is also the small balance at 65 also.

Hi John, Sorry, we made a mistake. We thought that Nova Scotia allowed the unlocking of small balances regardless of your age. We just carefully reviewed Nova Scotia's unlocking rules, and your bank is right, they don't allow it at your age. If you look at Nova Scotia's "Form 12 - 2020 Financial Hardship Application", in section 4 it lists some criteria that you might qualify for if your situation is really tough. Copy and paste this link into your browser to view the document:

I recently had triple by pass surgery and my have not worked in the last 5 months ..income is very small ...i have 2 individual locked in rrsp from 2 different companys that went under years ago and the was paid a lump sump from both these companys . I would like info on thenookprocess to cash them out and the tax i woulg pay or penalties .thank you

Hi Blair, We hope you heal quickly from your surgery. In regard to withdrawing money from your locked in RRSPs, you'll need to make sure that you qualify for one of the rules above based on the provincial legislation that governs your plans. The tax you will pay depends on the amount you withdraw. 10% is withheld for income tax if you withdraw $5,000 or less. 20% is withheld if you withdraw between $5,000 and $15,000, and 30% is withheld for income tax if you redeem over $15,000. To look into this further and get your questions answered, we would suggest that you speak with a representative of the financial institution that holds your locked in funds.

What about PEI? Am I able to withdraw all of my pension pr just the amount that I personally added? Low income and awaiting CPP Long Term Disability Benefits to begin.

Hi Mark, To our knowledge, PEI doesn't offer any of the early withdrawal options listed above. Check your locked-in RRSP documents and see what province's locked in legislation they are registered under. It may not be PEI. Whatever province it is, those are the rules you will have to work with.

My husband has a LIF, in a self directed investing account, and is turning 55 in Jan 2021. Is he able take out 50% of its current value when he turns 55?

If his funds are locked in under Alberta, Manitoba, or Federal rules, then that may be an option. Check to see what legislation governs his plan. It will say on his documents, and then have a look at the rules for that province (or at the Federal rule if it’s locked by federal legislation).

I have a LIRA account based out of BC. I have been living in Alberta for the past 25 years and have just recently retired and started drawing funds from it. These funds are not enough to meet my monthly living expenses and I need to draw more than they are providing. The financial company that my plan is through can't seem to get past the red tape and have been of absolutely no help to me. What should I do? Thanks.

Hi Ken, Have a look at BC’s “Low Income” withdrawal provision. If your expected income over the next 12 months is less than $41,067, you may be able to withdraw additional funds.

hi, I want to unlock my LIRA under low income financial hardship, and although under employed, I estimated that my income over the next 12 months will be 38k allowing me to take out about $2000.00, which will make me eligible for step 2 small balance unlocking. what if I end up making more money then I estimated? thank you,

Since a Covid has been on the rise everywhere it has affected many families like myself financially. I’ve keep close contact with our premiers office who did provide me me and many others with a letter stating as of March 1st 2021 locked in pensions plans can be accessible due to financial hardship and to contact your financial institute for more information. I have contacted my financial institute who has no knowledge of this issue at all . They said they were overwhelmed with calls and questions about this unlocking of funds . I fall under every category to access my investment which I desperately need before I lose everything I have . Anyone with any information or comments they can share n the issue ?I have reached out to my premier again with no response yet Thanks

Hello, My question is: I have some amount from my previous job in Manitoba. I have since moved to Alberta 8 years ago and the money has since been transferred to BMO here in Alberta. Would I be able to unlock the LIRA due to financial hardship since I now live in Alberta? Or does the Manitoba rule still apply?(manitoba does not allow financial hardship as a reason for unlocking.) Your article is very helpful. Thank you

The provincial rules that the funds are locked in under are the rules that govern your locked in plan. Where you live now or in the future doesn't impact that. Your bank is bound to follow the legislation that your plan was originally locked in under.

Hello, any chance that another unlocking justification in the near future could be the great possibility of economies crashing? It already seems unfair that we can’t access our own money as we see fit, but being forced to keep our money in an account that has a high probability of losing in this volatile market and economy due to covid should require a choice to take it out.

While you may not be able to remove your money from the locked-in plan, you probably have the ability to choose what types of funds your money is invested in. So if you're not comfortable exposing your money to market volatility, you should be able to choose a more conservative fund with far less volatility. Setup a meeting with the company that holds your locked-in funds and have them reassess your risk tolerance and your financial goals. It sounds like it may be a good time to re-evaluate your investments and re-allocate them accordingly.

I recently lost my job and have a LIRA. I have applied for EI. Can I apply for Financial Hardship under "Low Income"? Must i include my EI in the calculation or is that excluded? Will withdrawing from my LIRA delay my EI Payments?

Hi Stephen, We’re sorry to hear you lost your job. To be able to withdraw your locked in funds under the “Low Income” reason, this would have to be a provision of the provincial legislation your funds are locked in under. So if you live in Ontario, BC, Alberta, Nova Scotia, or have a Federal locked in plan, that would be an option (see the chart above in the article). In regard to including your EI in the income calculation, you’ll need to carefully read what they are asking in the form and then answer the question to the best of your knowledge. In regard to your EI payments being effected by withdrawing funds from your locked in plan, that’s a good question we don’t know the answer to. It may be wise to review the EI rules to make sure you don’t disadvantage yourself in any way. Generally speaking in an ideal world, we’d suggest you leave your locked in funds as a last resort until EI and every other option is exhausted. However, we recognize that these days things are often far from ideal for many people.

Hi, To withdraw money from your locked in RRSP, you're supposed to follow the withdrawal rules that govern your plan. These generally try to keep you from withdrawing the money until your retirement. However, if you have a financial hardship that meets the criteria of one of the reasons listed above in the article and the provincial legislation your funds are locked in under allows that reason, then you can withdraw money early based on the early withdrawal rule that you qualify under. If you have any questions about your locked-in funds, speak with the financial institution that holds the funds. They can tell you which provincial legislation your funds are locked in under, and if you believe that you may qualify to unlock funds early based on an allowable reason, they should be able to help you with that too.

I am a non-resident of Canada since 2015 and have $100,000 in a locked in mutual account. I would like to transfer this money to the country I am now living in. I have called three times and have received three different answers from three different people. Do you have any suggestions for moving forward?

Sorry, we don't have any experience with transferring locked-in funds out of the country. If you read through the provincial or federal rules that govern your locked-in funds, you should be able to see what the provisions are. It may be that you have to wait until the appropriate retirement age to redeem the funds and then transfer them, but we don't know and haven't looked into it. The fact that you were given three different opinions by your financial institution probably shows that this is something that is so rarely done that few people know the exact answer. This is another reason why you should look at the rules that lock in your funds. If you know the correct rules, then you can cite them and insist that they be followed. If you are able to move the funds, this might accelerate the process since you then won't have to wait for people at the financial institution to make time to sit down and find relevant rules from scratch. Being shown in advance which rules they need to read over would likely help them quite a bit.

Sorry, unfortunately taking money out of a locked in plan to pay off credit card debt isn't a reason that is allowed under any provincial or federal rules. The only debt you can pull money out for is if you're facing potential foreclosure on your home. Our best suggestion in you case, however, is to speak with a non-profit credit counsellor. They can help you explore all your options to deal with your credit card and get your finances back on track as quickly as possible. It's possible that they can help you explore a much broader range of options than you would be aware of. We'd suggest giving the Credit Counselling Society a call at 1-888-527-8999. You can even chat with them anonymously if that's the most comfortable for you.

I already had to withdraw funds for my lyra account this year. I was unable to work because of a personal tragedy and because of mental illness. I'm now in a position where I still cannot work and yet I still need to pay my bills and eat. I don't understand why if it's my money I can't withdraw a second time. I'm not looking to withdraw over what I have in the account. And I'm not looking to live until I'm 65 anyway. So what do I need to do to withdraw again this year?