Unlocking Pension funds due to financial hardship

I recently came across someone who was financially impacted by the recent economic downturn. Although they were not over the age of 50, they were desperate to access their Locked in Retirement Account (LIRA).

With a little research I found this information right off the government of Alberta Website.

If you are facing a situation of financial hardship, you may apply to the Superintendent of Pensions, no more than twice in a twelve-month period, for a release of some or all of the funds in your LIRA or LIF.

There are a number of situations of financial hardship:

  1. You or your pension partner risk eviction from your principal residence due to overdue rent, or you have received notice that if payment is not made, the Sheriff will seize your property to reimburse your landlord for rent arrears.
  2. You or your pension partner risk foreclosure of a mortgage on your principal residence due to a debt secured against that residence.
  3. You or your pension partner require first and last month’s rent (or security deposit) on a principal residence.
  4. You, your pension partner or dependent face medical expenses that are not covered by any insurance, and a physician certifies that the treatment, medication or medical aid is reasonable to treat the illness or disability.
  5. You require alterations to your primary residence to adapt to your disability, or your pension partner’s or your dependent’s disability.
  6. Your estimated income for the next 12 months is less than two thirds of the Year’s Maximum Pensionable Earnings (YMPE). (For the year 2010, your expected income is less than $31,467.)
  7. Canada Revenue Agency (CRA) has started legal proceedings against you to pay overdue personal income taxes.
  8. You are a registered debtor under the Maintenance Enforcement Act of Alberta and child maintenance payments are in arrears.
  9. You find yourself in a situation of financial difficulty that does not fall under the above categories, but that the Superintendent considers would reasonably qualify as financial hardship.

You do not have to provide information about your other assets or prove you have no other assets to qualify for a financial hardship withdrawal,
however, certain documents, specific to each circumstance outlined on the previous page, must be included with the application form.

  1. A copy of the eviction notice / distress for rent document. If you live in Alberta, written confirmation from the Homelessness and Eviction Prevention Fund, denying your request for funding through that program.
  2. A copy of the foreclosure notice.
  3. A copy of the lease/tenancy agreement, including the monthly rental cost (and/or the security deposit) of the rental unit, and a letter from the Homelessness and Eviction Prevention Fund, confirming that your request for funding through that program was denied.
  4. A copy of the invoice or estimate for medical treatment or medication, and a physician’s written opinion that the treatment is reasonable for the patient.
  5. A copy of the cost estimate to alter the primary residence; a copy of a physician’s opinion that the you, your pension partner or dependant has a disability; and a written confirmation that the alterations are not covered by public health care, private insurance or other Government programs.
  6. Completion of the Statement of Expected Income section of the application.
  7. A copy of the Writ of Seizure or Requirement to Pay (RTP), issued by Canada Revenue Agency with respect to your personal income tax arrears.
  8. A copy of the Maintenance Enforcement Order or statement of arrears from the Alberta Maintenance Enforcement Program.
  9. Your written explanation detailing the specific hardship and the costs that you face, including copies of invoices, statements, or other documents as proof of the financial hardship.

Along with your completed application, you must also include a copy of the most recent statement of your locked-in account. There is no charge to make an application. If your application is successful, you will receive written consent from the Superintendent of Pensions to a release of funds from your LIRA or LIF due to financial hardship. This consent must be presented to your financial institution holding your locked-in funds in order to have the monies released.

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace.For more information you can follow him on Twitter @JimYih or visit his other websites Group Benefits Online and Advisor Think Box.

14 Responses to Unlocking Pension funds due to financial hardship

  1. Pension Release is a flexible alternative to purchasing an annuity. If you are 55 years of age or over and have a suitable amount in your pension fund then you can release a tax–free cash lump sum of up to 25% of that pension without having to retire or take an income.

  2. Depending on the company you worked for in earning the pension, the provincial boards may not be the right ones to unlock the LIRA. I just went through a month long back-and-forth with the Alberta Government before learning this.

    If the company you worked for is federally regulated, you have to fill out three forms from http://www.osfi.gc.ca. Rather than sending these to the government, once you fill these out, you get them signed by a notary public, commissioner of oaths, or one of those types, and deal directly with the bank holding the funds.

    After going through that process, however, I am now looking for extraordinary means of accessing the account as nothing short of a last resort. No deal for me.

    • Hi, i worked and have a vested bc pension of 77000 it was transferred to BMO into a LIF ? that is not accessible. I am in desperate financial hardship. BC has a new act to request funds under hardship but the regulations are not yet written so I can not make a request i will qualify, my bank knows everyone knows but I am unable to get help. Does anyone know were I am able to get help. I already applied to bc welfare and i am barely living on the 590 dollars i get..

  3. I can’t understand why I can’t get acress to my money I live in Newfoundland the investment that I have is a locked in pension the company I worked with closed the store near me and I had no choice back then and the bank tells me I have to be 55 before I can touch it I don’t think this is right can you tell me where to get acess to it

    • Hi Goldie,
      Unfortunately your bank is correct. If the pension legislation is Newfoundland then there is no way to access the funds prior to turning 55 years old…

  4. Hi Jeff Bush here I reside in Hamilton On. I have a situation. This started when My Employer of 33 years dissolved my position and moved the jobs to the States. please note never been unemployed. They gave me a settlement which disqualified me from EI til Sept 09,2012, that’s 1 1/2 years. I have not been able to get a job in my residing area in my field of compressor manufacturing and repair.
    Their was a window at 55 that i was eligible to get my pension. I decided to take my pension from the company since I was 55 and had to act to get income in the future. I had to rent part of my house out and survive on my pension of 321.00 a month.
    I would like some advise on how to get some of my pension money to survive quickly.
    We can go into further detail because their is more to tell serious reply’s please

    Desperate Jeff

    • Jim,

      Great article, thanks. I have a LIRA account and tried to withdraw some funds due to serious hardship. I live in Montreal but my LIRA pension under Federal Jurisdiction/registration (my LIRA was from my previous employee Bank). Was told cannot withdraw funds due to hardship, only if income lower than 20k/yr apprx.

      Is this true, is there any way I can withdraw money due to hardship? Your help would be greatly appreciated.

      Cyril

    • Hi Jeff,
      Did you leave your pension with the company (i.e. now taking a monthly pension) or move to a LIRA at a financial institution? If you moved it to a bank what is the legislation of the LIRA? How old are you? I may be late to answering this question but if still need help let me know.
      Best, Craig

  5. I really need some advice of who can help me access my funds. I am in a time of need and would give a percentage to someone who knows jow to get me my funds.

  6. The options 8 and 9 are no longer on the updated application. Or maybe I am wrong. I am dealing with personal Financial Hardship. I need access to some of the funds. Is there others ways.

    Alex Dion

  7. It’s unfortunate that though we live in AB, the legislation that applies to our LIRA is SK as that is where the pension originated. SK makes it really difficult to access those funds. No financial hardship stipulation at all….

  8. Is there an updated application for option number nine. I looked up applications and they only go up to option 8

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