FAQs

PENSIONS/RRSPs

If your pension plan is one of the over 1,200 private pension plans that are covered by federal regulations, you may contact OSFI for assistance and an officer will be able to provide you with the name and phone number of the plan administrator.

Pension questions received by OSFI tend to be technical and specific to an individual's situation, and are handled on a case-by-case basis. A list of private pension plans under federal jurisdiction can be found in the Who We Regulate section of OSFI's website. All other private pension plans in Canada are provincially regulated. Useful information on pensions is also contained in the Pension Guide for Members of Federally Regulated Private Pension Plans (Adobe Acrobat Reader is required).

Q. I am presently experiencing financial difficulties. I would like to have access to my pension funds but I have been told that the funds are locked in. How can I access my funds?
A. The PBSA does NOT allow access to locked-in funds due to financial difficulties at any time. 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.

Q. When does my pension plan money become locked in?
A. While you are a member of a pension plan your money and entitlement are locked in. If you cease membership in the plan, the PBSA requires as a minimum that your pension money be locked in if:

• For service after 1986 you have two years of membership in the pension plan.
• For service prior to 1987 you are 45 years of age and have 10 years of employment or plan membership.

Q. Can I use my locked-in registered retirement savings plan (RRSP) as collateral for a loan?
A. No. The Pension Benefits Standards Act, 1985 (PBSA) and its Regulations prohibit an assignment, making a charge against, anticipating or using your locked-in RRSPs, including using your RRSP as a security. Any transaction attempting to do so is void.

Q. Can I remove the growth/interest from my defined contribution (money purchase) pension plan when returns on my mutual fund investment account are high?
A. No. You cannot remove the principal and interest while a member of a pension plan. If after two years you cease to be a member, both the principal and interest are locked in.

Q. If I declare personal bankruptcy, can my pension be seized by my creditors?
A. No. A pension benefit cannot be seized as long as it remains in a pension plan or in a locked-in vehicle such as a locked-in RRSP. Once you begin receiving a regular pension benefit payment (pension), creditors may have access to that income.

Q. Can a creditor force me to use my federal locked-in RRSP to pay off my debts?
A. No. However, if you choose to convert your funds to a Life-Income Fund (LIF), or to purchase an immediate life annuity, the monthly or annual payments could be seized by a creditor.

Q. Can social services/welfare force me to convert my federal locked-in RRSP to a LIF and use my annual payment to reduce my social assistance payments?
A. No.

Q. Can a pension plan file an actuarial report with an effective date other than at the plan's year-end?
A. The effective date of actuarial reports should be at the plan's year-end, unless OSFI has approved an alternate date. Please refer to PBSA Update No. 18, article number 5. OSFI will accept an actuarial report prepared at an alternate date if the report is filed as a result of an amendment that changes the plan's liabilities or contribution requirements. OSFI will also accept an actuarial report, with an effective date earlier than the required plan year-end, when the report is filed for the purpose of increasing the current contributions to the plan. Under these circumstances, the regular year-end actuarial report must also be filed at the required date.

This policy is in line with OSFI's mandate of protecting the rights and interests of plan members and beneficiaries.

Q. Are pension plans allowed to operate in a deficit position?
A. Yes. Federal pension legislation allows a pension plan to operate in a deficit position.

Pension plan administrators must submit valuation reports to OSFI at least every three years indicating the funded status of the plan. OSFI has the authority to ask for valuation reports at any time, in the event that doing so appears warranted. This is generally the same approach followed by provincial pension regulators.

If a valuation report indicates that a plan is under-funded on plan termination basis, the administrator must fund the plan by making special payments over a five-year period. As well, an under-funded plan is required to file a valuation report every year until the plan no longer has a deficit.

Q. Why are pension plans allowed to operate in a deficit position?
A. The Pension Benefits Standards Act, 1985, recognizes that pension plans may at times find themselves in deficit positions as a result of a variety of factors such as benefit increases, changes in actuarial assumptions resulting in actuarial losses to the fund, and downturns in the financial markets. These deficits may be too high for sponsors to absorb in one short and ultimately discourage benefit improvments. That is why the legislation allows for plans to run deficits with the proviso that the plan sponsor make up the shortfall within a period of five years. At the same time OSFI's policy is to require the submission of annual valuation reports until the deficits are funded.

Q. Can I unlock small amounts when I leave my pension plan?
A. Your pension plan may provide for the unlocking of small amounts as an optional provision. Check with your plan sponsor when you are terminating from your plan. If your annual pension benefit payable is less than 4% of the YMPE for the calendar year in which you cease to be a member your plan may provide for the pension benefit credit to be paid out.

Q. Can I unlock small amounts from my RRSP?
A. No. The regulations governing RRSP's currently to not provide for the unlocking of small amounts from RRSP's.

Q. Who is required to provide information to me on my pension plan? Do I have to make an access to information to the OSFI for this information?
A. The plan sponsor is required by law to provide members and former members with certain information concerning your pension plan. You should not have to make an access to information request to the OSFI for information concerning your pension plan.

Q. What information about my pension plan am I entitled to receive as member or former member (pensioner or retiree)?
A. Information Provided to Plan Members:

Members and their spouses or common-law partners are entitled to information about their pension plan and their pension entitlements. It is the duty of the administrator to provide this information in a timely way.

Information That the Administrator Must Provide

• Pension plan booklet
• Personal annual statement — must be provided within six months of the plan's year end
• Retirement statement — must be provided within 30 days of a member's retirement
• Termination statement — must be provided within 30 days of termination
• Survivor benefit statement — must be provided within 30 days of notice of death

A retiree is not defined as a member of a pension plan under the Pension Benefits Standards Act however paragraph 28.(1)(c ) provides that each member and former member of the plan, every other person entitled to pension benefits (retirees) or refunds under the plan and their spouses may, once in each year of the operation of the plan, either personally or by an agent authorized in writing for that purpose, examine the documents or information filed with the Superintendent under certain sections of the Act and Regulations.

Information the Administrator Must Disclose on Request

A member, a former member, a retiree and their spouse or common-law partner, any person with entitlements under the plan, or an authorized agent of any of these, may request or review certain documents held by the administrator, including the following:

• Annual information returns;
• Financial statements, including plan expenses;
• Actuarial reports;
• Plan text;
• Plan amendments; and
• Statement of Investment Policies and Procedures

Documents must be made available for inspection at least once in a calendar year. This information must be made available where the member is employed or at a mutually agreed upon place. The administrator may charge a reasonable fee for photocopies.

Please refer the Pension Guide for Federally Regulated Pension Plans for general information an Administrator must provide or disclose on request to a member, former member, retiree and their spouse or common law partner. PBSA Update, Issue No. 17 summarizes the changes made in 1998 to the disclosure requirements of the Act. Both documents are available on the OSFI website www.osfi-bsif.gc.ca.

Q. What is the maximum amount of money I am allowed to take out of my Life Income Fund (LIF) under the Pension Benefit Standards Regulations?

A. Section 26 of the Pension Benefits Standards Act, 1985 (PBSA) gives pension plan members the opportunity, upon ceasing membership in the plan - but before becoming eligible to retire and draw a pension - to transfer the value of that pension to another pension plan or a "Retirement Savings Plan", as defined in the PBSA Regulations. This option is also available to a member's survivor, in the event of the member's death.

Section 19.1 of the Regulations states that a Retirement Savings Plan, into which a pension benefit credit can be transferred, is a Life Income Fund or a Locked-in Registered Retirement Savings Plan.

The rules underlying the LIF (described in Section 20.1 of the Regulations) require that the former plan member, in whose name it has been initiated, draw income from it until the time when it must be wound up (no later than age 80), with the proceeds being used to purchase an annuity.

The periodic income from the LIF is subject to minimum and maximum limits. The maximum limit is defined in Section 20.1 of the Regulations, and is intended to prevent members from exhausting their funds, so that the proceeds at wind up will allow for the purchase of a life annuity.

The "LIF Maximum Payment Amount Table" provides users with values representing fractions of the fund, which may be drawn during the year by former plan members whose pension benefit credits have been transferred to a LIF. OSFI will update the table annually, using the prevailing applicable Canadian Socio-economic Information Management (CANSIM) interest rate (B14013).

Life Income Fund: LIF Maximum Payment Amount Table

Note: Where this information conflicts with the Pension Benefits Standards Act ("PBSA"), 1985, or Regulations (PBSR), the PBSA or PBSR will govern.

Interest rate assumption used in the table:

In determining the maximum limit applicable to the income from a LIF in a given year, the rules underlying the LIF require the following interest assumption:

1. The CANSIM B14013 rate in effect during the preceding month of November for the first 15 years, and
2. 6.00% for the years remaining to the end of the year in which the LIF owner attains 90 years of age.

The CANSIM B14013 rate for November 2005 was 4.20%. Therefore, the maximum limit applicable to income to be drawn from any federally-regulated LIF during 2006 is determined according to the following interest assumption:

1. 4.20% for the first 15 years, and
2. 6.00% for the years remaining to the end of the year in which the LIF owner attains 90 years of age. (Assumption to age 90 is for the purpose of maximum payment calculation only. The balance of a LIF must be used to purchase a life annuity by the end of the year in which the LIF owner attains 80 years of age. )

Percentages shown must be prorated for the initial fiscal year if less than twelve months. Part of a month is treated as a full month.

2006 Maximum Annual Payment Amount Table for an OSFI Life Income Fund (LIF)

This table has 4 columns:

1. Age at January 1, 2006
2. New age during 2006
3. Years to end of year age 90 is attained
4. Maximum payment as a percentage of the LIF balance as at January 1, 2006.