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Locked-In RRSP Retirement Funds Can Be Unlocked and Withdrawn for Financial Hardship Reasons in Some Provinces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

Potential Foreclosure

Ontario, BC, Alberta, Nova Scotia

Eviction for Being Behind in Rent

Ontario, BC, Alberta, Nova Scotia

First Month’s Rent and Security Deposit

Ontario, BC, Alberta

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, Nova Scotia, Federal

No Longer a Canadian Resident

Ontario, Quebec, BC, Alberta, Manitoba, Saskatchewan, Nova Scotia, Federal

Shortened Life Expectancy

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

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 $22,360), BC (balance must not exceed $11,180), Alberta (balance must not exceed $11,180), Manitoba (balance cannot exceed $22,360 after a future value calculation is done), Saskatchewan (balance must not exceed $11,180), Federal (you must be at least 55 and the balance less than $27,950)

Age 65 & Balance is Small

Quebec (balance can’t exceed $22,360), BC (balance can’t exceed $22,360), Alberta (balance can’t exceed $22,360), Nova Scotia (amounts under $27,950)

Note: All numbers listed in the table above are for 2018 (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 Does Not Allow Unlocking Pension Funds 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.