Risks losing home

Question: I am a former airline employee. I left in August, 2003 and, because of company restructuring, I have only recently received my pension as a locked-in RRSP. I desperately need a portion of my pension because of hardship. I could lose my house without this money.

My pension is under Federal regulations because I was employed in a transportation industry. The only means to release it is to be terminally ill, unlike Ontario law which provides many exceptions to those who may need their money earlier than they thought.

Is there any way that I can reach this money? It seems unreal that I could lose my house with my own money, that I put into to my pension, sitting in a bank!!! – J.M.

Gordon’s answer: It is unreal and unfair. It is also, unfortunately, true. This is hard to believe but the federal government is so far behind the times on this that a person with tens or even hundreds of thousands of dollars in a locked-in account could lose their home.

If you check the FAQs page at the website for the Superintendent of Financial Institutions,ou see that the very first item deals with this issue, which suggests they get a lot of inquiries. The answer is categorical: locked-in funds cannot be withdrawn at any time, for any reason. The only suggestion the site offers is: “If your pension funds were transferable when you terminated employment, then it is possible to purchase an immediate life annuity or a Life Income Fund (LIF) at any time with the funds in your locked-in RRSP.” Of course, there is a cap on how much money you can withdraw from a LIF in any given year.

It’s about time the politicians in Ottawa stopped bashing each other and paid attention to hardship cases such as this. Ontario, Alberta, and several other provinces already have rules in place that allow access to locked-in money in this type of situation. So it’s not a case of the Feds setting some kind of precedent here. Action is long overdue. Let’s see some!

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